THE  LIBRARY 

OF 

THE  UNIVERSITY 
OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 


SELECTED  CASES 


ON  THE 


LAW    OF    CONTRACTS 


BY 

ERNEST  W.  flUFFCUT 

LATE  DEAN  OF  THE  CORNELL  UNIVERSITY  COLLEGE  OF  LAW 
AND 

EDWIN  H.  WOODRUFF 

PROFESSOR  IN  THE  CORNELL  UNIVERSITY  COLLEGE  OF  LAW 


THIRD  EDITION  REVISED  AND  ENLARGED 
BY 

EDWIN  H.  WOODRUFF 


ALBANY,  N.  Y. 

BANKS  &  COMPANY 

1913 


COPYRIGHT,  1913 
BY  BANKS  &  COMPANY 


•ft 

N 
I 

PREFACE  TO  THE  THIRD  EDITION. 

In  the  present,  third,  edition  of  this  collection  of  .cases,  the  work 
has  been  entirely  revised,  and  amplified  by  additional  cases  and  many 
new  annotations.  The  purpose  of  the  book  is  to  furnish  a  compact 
and,  at  the  same  time,  comprehensive  selection  of  authoritative  mate- 
rial for  the  study  and  discussion  of  the  principles  of  the  law  of  con- 
tract. The  work  is  now  designed  primarily  to  be  used  alone  as  the 
basis  of  instruction,  although  it  may  also  be  used  conveniently  with 
lectures  or  a  standard  treatise. 

The  arrangement  of  topics  follows  that  of  Sir  William  Anson  in 
his  Principles  of  the  English  Law  of  Contracts,  whose  general  plan 
has  served  as  a  model  for  some  other  treatises  on  the  subject.  This 
case  book,  however,  covers  some  topics  not  dealt  with  in  his  book; 
and  some  that  are  treated  there  are  not  included  here.  Two  chap- 
ters appearing  in  the  former  editions  of  this  book,  namely,  Capacity 
of  Parties,  and  Impairing  the  Obligation  of  Contract,  are  omitted  in 
this  edition,  as  these  are  topics  which  are  commonly  discussed  in  the 
courses  on  Persons  and  Constitutional  Law  in  the  usual  law  school 
curriculum. 

In  many  of  the  cases  the  statement  of  facts  has,  for  the  sake  of  brev- 
ity, been  either  re-written  or  abridged,  without  calling  special  attention 
to  the  matter.  For  the  same  reason,  the  practice,  now  common, 
of  omitting  unnecessary  portions  of  the  opinions,  has  been  followed; 
but  such  omissions  are  always  indicated.  In  this  as  in  the  preceding 
editions,  the  principal  text  consists  of  American  cases,  although 
English  cases  are  represented  in  the  notes  and  in  the  discussions  in 
the  opinions. 

A  new  feature  and  one  that,  it  is  hoped,  may  prove  of  value,  is  the 
reference  note  appended  to  substantially  every  case.  This  note  re- 
fers the  student:  (1)  to  the  notes  in  the  Cyclopedia  of  Law  and 
Procedure  where  there  will  be  found  copious  citations  of  cases,  ar- 

iii 


734028 


IV  PREFACE  1*0  THE  THIRD  EDITION. 

ranged  alphabetically  by  States,  thus  making  readily  accessible  to 
the  student  a  list  of  cases  from  his  own  jurisdiction  upon  the  points 
of  the  principal  case;  (2)  to  Professor  Williston's  valuable  notes  to 
Wald's  edition  of  Sir  Frederick  Pollock's  Principles  of  Contract,  Pro- 
fessor Williston's  citations  being  likewise  arranged  alphabetically  by 
States;  (3)  to  exhaustive  subject  notes  in  the  Lawyers'  Reports  Anno- 
tated; (4)  to  critical  comment  and  to  leading  articles  in  various  legal 
periodicals  in  which  the  doctrine  of  the  principal  case  is  discussed  or 
involved. 

E.  H.  W. 

COLLEGE  OF  LAW,  CORNELL  UNIVERSITY, 
September,  1913. 


TABLE  OF  CONTENTS. 

PART  I. 
FOKMATION  OF  CONTRACT. 

CHAPTER  I. 
OFFER  AND  ACCEPTANCE. 

PAGE 

Contract  springs  from  acceptance  of  offer  1 

Offer  and  acceptance  may  be  made  by  words  or  conduct 6 

Offer  must  be  communicated  9 

(i.)  Ignorance  of  offered  promise  9 

(it.)  Ignorance  of  offered  act 9 

( tit. )  Ignorance  of  offered  terms  11 

Communication  of  acceptance , . . . .  16 

Manner  of  communication  of  acceptance  21 

Offer  may  lapse  or  be  revoked 36 

(t.)   Lapse    36 

a.  Lapse   by  death    36 

b.  Lapse  by  failure  to  accept  in  prescribed  manner 39 

c.  Lapse  by  expiration  of  time  42 

( ii. )   Revocation     48 

a.  Offer  may  be  revoked  before  acceptance 48 

6.  Offer  under  seal  irrevocable    62 

c.  Must  revocation  be  communicated  ?  64 

Offer  made  to  unascertained  persons   69 

(t.)   Offer  of  rewards    69 

( it. )   Invitations  to  treat    73 

Offer  must  contemplate  legal  relations 77 

Acceptance  must  be  absolute   7ft 

CHAPTER  II. 
FORM  AND  CONSIDERATION. 

Contract  of  record    90 

Contract  under  seal 95 

(i. )   What  constitutes  a  seal  95 

(ii. )   Effect  of  seal 97 

(iii. )   Delivery   103 

Statute  of  frauds   106 

(i.)   Requirements  of  form 107 

(it. )   Provisions  of  fourth  section  124 

T 


Vi  TABLE   OF    CONTENTS. 

PAGl 

a.  Promise  of  executor   124 

6.  Promise  to  answer  for  debt  of  another  127 

c.  Agreement  in  consideration  of  marriage 135 

d.  Contract  for  sale  of  land  139 

e.  Agreement  not  to  be  performed  within  one  year 141 

( tit. )   Provisions  of  seventeenth  section 156 

Consideration   166 

(»'. )   Necessity  of  consideration 166 

(tt. )   Adequacy  of  consideration 171 

Three  tests  of  reality  of  consideration. 

a.  Did  the  promisee  suffer  any  detriment?  179 

6.  Was  the  detriment  of  any  ascertainable  value? 184 

Prima  facie  impossibility   184 

Uncertainty    188 

Forbearance  to  sue  194 

Compromise    199 

Gratuitous  undertakings  205 

c.  Was  the  detriment  more  than  the  promisee  was  legally  bound  to 

suffer?    211 

Delivering  property  wrongfully  withheld   211 

Performance  of  public  duty  212 

Promise  to  perform  existing  contract 214 

Extension  of  debt  230 

Payment  of  smaller  sum  in  satisfaction  of  larger    232 

Composition  with  creditors    243 

Mutual  subscriptions   246 

(in.)   Legality  of  consideration    254 

(iv.)   Past  consideration   254 

Consideration  moved  by  previous  request  259 

Voluntarily  doing  what  another  was  legally  bound  to  do 260 

Reviving  agreement  barred  by  rule  of  law 263 

CHAPTER  III. 
REALITY  OF  CONSENT. 

Mistake   269 

( i. )   Non-agreement  in  terms   269 

(ii. )   As  to  nature  or  existence  of  contract 271 

(tit.)   As  to  identity  of  person  with  whom  contract  is  made 278 

( iv. )   As  to  subject-matter  of  contract 283 

c.  As  to  identity  of  subject-matter 283 

6.  As  to  existence  of  subject-matter 284 

c.  Mistake  of  one  party,  known  to  the  other  298 

Misrepresentation    302 

(t.)   Distinguished  from  fraud  302 

(it.)   Distinguished  from  terms   302 

(iii.)   Effects  of  misrepresentation  305 

a.  In    contracts    generally    305 

Z>.  In  contracts  uberrimce  fidei ; 309 


TABLE   OF    CONTENTS.  vii 

PAGH 

c.  Estoppel    315 

Fraud 316 

(i.)  Essential  features  316 

a.  It  is  a  false  representation  316 

6.  It  is  a  representation  of  fact 330 

c.  Made  with  knowledge  of  falsity,  or  recklessly   338 

d.  Made  with  intent  that  it  be  acted  upon  by  person  injured 342 

e.  It  must  actually  deceive  344 

(it.)   Remedies  for  fraud  346 

Duress    348 

Undue  influence  357 

CHAPTER  IV. 
LEGALITY  OF  OBJECT. 

Nature  of  illegality  in  contract 361 

(i.)  Contracts  illegal  by  statute 361 

a.  General  rules  of  construction  361 

6.  Contracts  in  breach  of  Sunday  statutes  363 

c.  Wagers  in  general  368 

d.  Wagers  on  rise  and  fall  of  prices  370 

e.  Wagering  policies 379 

(ti.)   Contracts  illegal  at  common  law 383 

In  general 383 

Agreements  tending  to  injure  the  State  with  other  States 389 

Agreements  tending  to  injure  the  public  service 389 

Agreements  tending  to  pervert  the  course  of  justice 396 

( 1.)   Stifling  criminal  proceedings 396 

(2.)   Arbitration    399 

( 3. )   Determining  jurisdiction  404 

Agreements  tending  to  abuse  of  legal  process 406 

Agreements  contrary  to  good  morals  410 

Agreements  affecting  the  freedom  or  security  of  marriage 412 

Agreements  in  restraint  of  trade 415 

Effect  of  illegality  upon  contracts 424 

(i.)   Divisibility     424 

(it.)   The  intention  of  the  parties  434 

(tit.)   Securities  for  money  due  on  illegal  contract 442 

(iv.)   Relief  from  contract  known  to  be  illegal 451 

(t>.)  Conflict  of  laws  454 

PART  II. 

THE  OPERATION  OF  CONTRACT. 
CHAPTER  I. 

THE  LIMITS  OF  THE  CONTBACTUAL  OBLIGATION. 

Third  party  incurring  liabilities  458 

THird  party  acquiring  rights:  Promise  for  benefit  of  third  party 461 


Viii  TABLE   OF    CONTENTS. 

CHAPTER  II. 

THE  ASSIGNMENT  or  CONTRACT.  PAGE 

Assignment  by  act  of  parties   499 

(i. )    Assignment  of  liabilities   499 

(it. )    Assignment  of  rights   : 510 

a.  At  common  law  BID 

6.  In    equity    614 

c.  By  statute  518 

d.  Requisites  of  assignment 519 

e.  By  the  law  merchant :  negotiability   526 

Assignment  by  operation  of  law 532 

(i.)   Assignment  of  obligations  upon  transfer  of  interests  in  land 532 

o.  Leasehold  interests   532 

6.  Freehold  interests    536 

(it.)    Assignment  of  obligations  upon  marriage 541 

(in. )   Assignment  of  obligations  by  death  542 

CHAPTER  III. 
JOINT  OBLIGATIONS. 

Joint  promises 55 1 

(i.)   Joint  promisors 551 

( it. )   Joint  promisees   558 

Joint  and  several  promises  560 

(i.)   Joint  and  several  promisors 560 

(it.)   Joint  or  several  promisees 563 

PART  III. 
THE  INTERPRETATION  OF  CONTRACT. 

CHAPTER  I. 

.          RULES    RELATING    TO    EVIDENCE 

Proof  of  document 567 

Evidence  as  to  fact  of  agreement 569 

Evidence  as  to  terms  of  contract 570 

a.  Supplementary  and  collateral  terms   570 

6.  Explanation  of  terms 570 

c.  Usages  of  trade 573 

CHAPTER  II. 

RULES   RELATING  TO  CONSTRUCTION. 

General  rules   577 

Rules  as  to  time  and  penalties 580 


TABLE   OF    CONTENTS.  IX 

PAET  IV. 
DISCHARGE  OF  CONTRACT. 

CHAPTER  I. 

DISCHARGE  OF  CONTRACT  BY  AGREEMENT.  PAGE 

Waiver  588 

Substituted  contract    592 

Provisions  for  discharge 598 

CHAPTER  II. 
DISCHARGE  OF  CONTRACT  BY  PERFORMANCE. 

Payment    604 

Tender    612 

Alternative  performance   614 

Substantial  performance   617 

Performance  to  satisfaction 621 

CHAPTER  III. 
DISCHARGE  OF  CONTRACT  BY  BREACH. 

Forms  of  discharge  by  breach 627 

( i. )    Renunciation  before  performance  due  627 

( t'i. )    Impossibility  created  by  one  party  before  performance  due 639 

(Hi. )    Renunciation  in  course  of  performance   641 

( iv. )   Impossibility  created  by  one  party  in  course  of  performance 652 

( v. )   Failure  of  performance  of  a  term  in  the  contract 653 

a.  Conditional  and  unconditional  performance  in  general 65.3 

6.  Divisible  and  installment  contracts 668 

c.  Vital  term  or  condition,  and  non-vital  or  subsididary  term   679 

Remedies  for  breach  of  contract  693 

( i. )    Damages    693 

(ft.)   Specific  performance  and  injunction  •. 697 

Discharge  of  right  of  action  for  breach „ 707 

(f.)   By  consent  of  the  parties 707 

o.  Release    707 

6.  Accord  and  satisfaction 709 

(if. )   By  judgment    717 

(fff.)   By  lapse  of  time   726 

CHAPTER  IV. 
IMPOSSIBILITY  OF  PERFORMANCE. 

General   rule    730 

Exceptions     .  732 


X  TABLE   OF    CONTENTS. 

PAQB 

(».)   Legal  impossibility   732 

(ii.)   Destruction  of  subject-matter  735 

(tit.)   Death  or  disability  of  party  in  contract  for  personal  service 749 

CHAPTER  V. 

DlSCHABGE   BY   OPERATION    OF   LAW. 

Merger 752 

Alteration  or  loss  of  written  instrument  763 

Bankruptcy  760 

INDEX  766 


TABLE  OF  CASES. 


Where  n.  ia  prefixed  to  the  page  number,  the  case  is  either  digested, 
quoted,  or  referred  to,  in  a  note. 


PAGE 

Abbott  v.  Doane 227 

Ackert  v.  Barker 406 

Adams  v.  Adams n.  415 

Adams  v.  Gillig ».  338 

Adams  v.  Kuehn  462 

Adams  v.  Messinger 697 

Adams  v.  Union  Ry n.  493 

Alexander  v.  Brogley 276 

Alexander  v.  Morgan n.  541 

Alie  v.  Nadeau 724 

Allen  v.  Brown  518 

Allen  v.  Collier  728 

Allen  v.  Colliery  Engineers'  Co. .  723 

Aller  v.  Aller  97 

American  Bonding  Co.  v.  B.  &. 

O.  R.  R 502 

Anderson  v.  May 730 

Anderson  v.  Rice n.  649 

Angus  v.  Scully 742 

Anheuser-Busch  Brewing  Assoc. 

v.  Mason  439 

Anthony  v.  Harrison n.  101 

Arend  v.  Smith n.  229 

Arkansas  Valley  Smelting  Co.  v. 

Belden  Mining  Co 499 

Baker  v.  Holt  80 

Bal  v.  Van  Staden  n.  27 

Bandman  v.  Finn  n.  717 

Bangor  Bank  v.  Treat 561 

Barnes  v.  Hekla  Ins.  Co 495 

Barrett  v.  Garden n.  102 

Bartholomew  v.  Jackson 9 

Baston  v.  Toronto  Co n.  77 

Bates  v.  Babcock    n.  140 

Bay  v.  Williams n.  495 

Beach  v.  First  M.  E.  Church . .   n.  39 
Beaupre"  v.  Telegraph  Co n.  76 


PAGE 
Beck  etc.  Co.  v.  Colorado  etc. 

Co  n582 

Beebe  v.  Johnson 184 

Bellows  v.  Sowles  124 

Bender  v.  Been 102 

Bernard  v.  Taylor 451 

Bigelow  v.  Stilphens n.  758 

Billington  v.  Cahill  n.  149 

Bird  v.  Munroe  107 

Bishop  v.  Eaton 30 

Bishop  v.  Palmer 428 

Bixby  v.  Moore  n.  430 

Blade  v.  Noland 758 

Blaisdell  v.  Ahern 409 

Blake  v.  Ins.  Co n.  26 

Board  of  Trade  v.  Christie  Co . .  n.  376 

Boggs  v.  Curtin  564 

Boignieres  v.  Boulon 410 

Borden  v.  Borden  461 

Boston  &  Me.  R.  R.  v.  Bartlett.  49 

Boston  Ice  Co.  v.  Potter 278 

Bradley  v.  Levy n.  649 

Bragg  v.  Wetzell 551 

Brauer  v.  Shaw 27 

Brill  v.  Tuttle ».  523 

Britton  v.  Turner n.  751 

Brooks  v.  Ball  n.  179 

Brown  v.  Farmers'  L.  &  T.  Co.  . .«.  114 

Brown  v.  Foster 621 

Brown  v.  Kinsey  442 

Brown  v.  Montgomery n.  330 

Brusie  v.  Peck  &  Co 660 

Bryant  v.  Isburgh 690 

Buchanan  v.  Tilden ti.  480 

Buckley  v.  Gray  n.  487 

Buffalo  and  Lancaster  Land  Co. 

v.  Bellevue  Co n.  739 

Burnett  v.  Gwynne 520 


TABLE   OF    CASES. 


PAGE 

Cadwell  v.  Blake  tin.  660,  664 

Callisher  v.  Bischoffsheim n.  195 

Candee  v.  Smith  «.  554 

Capen  v.  Barrows  n.  564 

Carter  v.  United  Ins.  Co 514 

Gary  v.  Gruman  n.  697 

Case  v.  Case  n.  498 

Catskill  Bank  v.  Messenger.  .  .  .n.  553 

Chalfant  v.  Payton  n.  413 

Chamberlain  v.  Dunlop  «.  546 

Chatham  Furnace  Co.  v.  Moffatt  338 

Chicago,  etc.  Ry.  v.  Dane 59 

Choice  v.  Moseley  n.  615 

Clandeboye,  The  318 

Clapp  v.  Pawtucket  Inst.  for 

Saving  n.  564 

Clark  v.  Marsiglia  651 

Clark  v.  Mayor  n.  649 

Clark  v.  Russel  ;  .  .  n.  55 

Clarksville  Land  Co.  v.  Harri- 

man  n.  739 

Clason  v.  Bailey  118 

Clayton  v.  Clark  239 

Clifton  v.  Jackson  Iron  Co 752 

dough  v.  Seay  757 

Colby  v.  Dearborn  568 

Coleman  v.  Applegarth  64 

Collyer  &  Co.  v.  Moulton 590 

Compton  v.  Jones  512 

Connolly  v.  Sullivan  649 

Connor  v.  Stanley n.  359 

Conrow  v.  Little  346 

Cook  v.  Bradley 166 

Cooke  v.  Millard  n.  163 

Cordes  v.  Miller 732 

Cort  v.  Lassard 703 

Cosgrove  v.  Cummings n.  102 

Coster  v.  City  of  Albany n.  498 

Coyner  v.  Lynde  214 

Cowley  v.  Patch  n.  552 

Crane  v.  Ailing  n.  553 

Crocker  v.  Beal  n.  559 

Cross  v.  Cross  413 

Crouch  v.  Gutmann  n.  619 

Croyle  v.  Moses  n.  318 

Crumlish's  Adm'r  v.  Central 

Imp.  Co 458 

Culton  v.  Gilcrist  n.  84 

Cummings  v.  Bluestone  Co. .  .  .  n.  423 
Cummings  v.  The  People 560 


PAGB 

Curtis  v.  Smith  n.  64fl 

Curtis  v.  VanBergh   n.  587 

Davis  v.  Bronson   n.  652 

Davis  v.  Reisinger   301 

Davis    Sewing    Machine    Co.    T. 

Richards    33 

Davison  v.  Von  Lingen   302 

Da  we  v.  Morris  333 

Dawkins  v.  Sappington   71 

Day  v.  Caton  n.  21 

Dearborn  v.  Bowman   254 

Delamater  v.  Miller   640 

Delaware  &  Hudson  Co.  v.  Pa. 

Coal  Co 401 

Delaware  Co.  v.  Diebold  Co n.  502 

Dennis  v.  Maxfield   n.  688 

Derby  v.  Johnson   646 

Devlin  v.  Mayor n.  506 

Dexter  v.  Norton   735 

Diamond  Match  Co.  v.  Roeber.  .      415 
Dickinson   v.   Calahan's  Adm'rs     542 

Di  lorio  v.  Di  Brasio 194 

Dille  v.  White  604 

Dingley  v.  Oler  n.  637 

Doheny  v.  Lacy  359 

Doherty  v.  Hill   n.  117 

Donnell  v.  Manson   n.  559 

Doolittle  v.  McCullough    n.  649 

Dougherty  v.  Catlett n.  141 

Douglass  v.  Scott   n.  282 

Doyle  v.  Dixon 149 

Drake  v.  White   n.  741 

Dreifus  v.  Columbian  Exposition 

Co 592 

Dunham  v.  Co n.  395 

Dunham  v.  Pettee    n.  657 

Dunning  v.  Leavitt n.  498 

Dunton  v.  Dunton   n.  179 

Duplex  Safety  Boiler  Co.  v.  Gar- 
den         624 

Durfee  v.  O'Brien   153 

Durnherr  v.  Rau  483 

Dusenberry  v.  Hoyt  263 

Easterly  v.  Barber  n.  558 

Economy   Bldg.   Assoc.   v.   West 

Jersey  Co 485 

Edmunds     v.     Merchants'     Des- 
patch Co 280 


TABLE   OF    CASES. 


Xlll 


PAGE 

Eldred  v.  Bank  n.  554 

Eliason  v.  Henshaw  39 

Elliott  v.  Bell  n  552 

Elliott  v.  Caldwell  n.  620 

Emmeluth  v.  Home  Benefit  As- 

soc «•  564 

Endriss  v.  Belle  Isle  Ice  Co 216 

Erie  Ry.  v.  Union  Locomotive 

Co 424 

Evans  v.  McCormick  n.  36 

Ewing  v.  Wightman  n.  657 

Faulkner  v.  Faulkner    n.  462 

Fay  &  Co.  v.  Jenks  &  Co n.  561 

Ferguson  v.  Coleman   369 

Ferrier  v.  Storer n.  45 

Field  v.  Kieser   116 

Field  v.  The  Mayor   515 

Fink  v.  Cox   179 

Fish  v.  Cleland   330 

Fishell  v.  Gray   431 

Fisher  v.  Deering 534 

Fisher  v.  Seltzer  48 

Fitch  v.  Snedaker  69 

Flegal  v.  Hoover n.  717 

Fogg  v.  Portsmouth  Athenaeum         6 

Fonseca  v.  Steamship  Co 11 

Foster  v.  Hooper  n.  554 

Foster  v.  Metts  195 

Fowler  v.  Callan   n.  409 

Freyman  v.  Knecht 689 

Galusha  v.  Sherman 354 

Ganson  v.  Madigan 570 

Gerli  v.  Poidebard  Silk  Co n.  679 

German  Alliance  Ins.  Co.  v. 

Home  Water  Co 487 

Gibbs  v.  Bait.  Gas  Co n.  423 

Gibson  v.  Pelkie 284 

Gifford  v.  Corrigan 493 

Gilbert  v.  Finch  554 

Gillespie  Tool  Co.  v.  Wilson  .  .  .  619 

Gitler  v.  Russian  Co n.  406 

Goddard  v.  Binney  160 

Goldberg  v.  Eastern  Brewing 

Co 721 

Gordon  v.  George 532 

Gordon  v.  Street n.  326 

Gorham  Adm'r  v.  Meacham. ...  103 
Goshen  Nat.  Bank  v.  Bingham.  531 


PACK 

Goss  v.  Ellison  n.  553 

Graham  Paper  Co.  v.  Pembroke.  523 

Grandin  v.  Grandin  n.  200 

Grant  v.  Porter  n.  231) 

Gray  v.  Central  R.  R.  of  N.  J.. .«.  698 

Gray  v.  Gardner  601 

Gray  v.  Smith n.  663 

Graves  v.  Johnson 435 

Great  Northern  Ry.  v.  Witham  n,  61 
Great  Western  Turnpike  Co.  v. 

Shafer  151 

Green  v.  Boston  &  Lowell  R.  R. 

Co n.  697 

Green  v.  Gilbert  n.  751 

Greentree  v.  Rosenstock  n.  526 

Greenwood  v.  Law 164 

Griffin  v.  Colver  n.  697 

Grigsby  v.  Stapelton 327 

Gunning  v.  Royal 204 

Gwynn  v.  Hitchner 622 

Hadley  v.  Baxendale   n.  696 

Hale  v.  Spaulding 552 

Hale  v.  Trout 641 

Hall  v.  Perkins   357 

Hall  v.  Stevens   n.  611 

Hamer  v.  Sidway  . 174 

Hamilton  v.  Home  Ins.  Co n.  400 

Hamilton  v.  Liverpool  Ins.  Co..     399 

Hamilton  v.  Love  n.  698 

Handy  v.  St.  Paul  Pub.  Co 363 

Hart  v.  Georgia  R.  R 192 

Hart  v.  Lyon n.  539 

Hawkins  v.  Graham n.  625 

Hayes  v.  Willio  510 

Hazard  v.  New  England  Ins.  Co.w.  283 

Heaton  v.  Angier   510 

Hecht  v.  Batcheller 290 

Heckemann  v.  Young «.  554 

Heermans  v.  Ellsworth n.  523 

Henthorn  v.  Fraser    n.  27 

Hewitt  v,  Anderson   n.  73 

Heyn  v.  Philips 139 

Hickey  v.  O'Brien 58 

Hicks  v.  Burhans   259 

Hill    v.    Grigsby 654 

Hill   v.   Morse n.  558 

Hirth  v.  Graham 157 

Hobbs  v.  Massasoit  Co 20 

Holmes  v.   Evans..  .  .n.  117 


xiv 


TABLE   OF   CASES. 


PAGB 

Eoshor  v.  Kautz  n.  179 

Hough   v.   Barton 513 

Household  Ins.   Co.  v.  Grant . .  n.    26 

Howard  v.  Daly   n.  724 

Howarth  v.  Warmser 541 

Howell  v.  James  Lumber  Co ....     668 

Hudson  v.  Hudson n.  649 

Hughes  v.  Wamsutta  Mills 734 

Hull  v.  Johnson 714 

Hull  v.  Ruggles n.  438 

Hunnewell  v.  Duxbury 342 

Hunt  v.  Hunt n.  137 

Hutchinson  v.  Cummings «.  662 

Indiana,  etc.  Ry.  v.  Adamson . .  n.  559 
Inhabitants    of    Middlefield    v. 

Mills  Knitting  Co 539 

Ireland   v.   Mackintosh n.  265 

Isley  v.  Jewett «.  264 

Jaffray  v.  Davis   232 

Jeffries  v.  Ferguson  Adm'r....     557 
Jessel  v.  Williamsburgh  Ins.  Co.     512 

Johnson  v.  Brooks n.  702 

Johnson  v.  Harvey n.  558 

Johnson's  Adm'r  v.  Seller 225 

Johnston  v.  Fargo 385 

Jordan  v.  Dobbins   n.  39 

Kadish  v.  Young n.  652 

Kauffman  v.  Raeder 692 

Keightley  v.  Watson n.  564 

Keller  v.  Holderman 77 

Kellett  v.  Robie 588 

Kellogg  v.  Olmstead 230 

Kelly  v.  Ins.  Co n.  636 

Kennedy  v.  Welch 448 

Keuka   College  v.   Ray n.  248 

Kidder  v.  Kidder 707 

King  v.  Duluth  etc.  Ry 220 

King  v.  King n.  433 

Kleeman  v.   Collins n.  113 

Knight  v.  Abbott 612 

Kountz  v.  Kirkpa trick tu  698 

Kromer   v.    Heini 709 

Kurtz  v.  Frank 411 

Kyle  v.  Kavanagh 283 

Lacy  v.  Getman  547 


PAGB 

Laidlaw  v.  Organ  316 

Lapish  v.  Wells n.  318 

La  Rue  v.  Groezinger  n.  505 

La  wall  v.  Groman n.  487 

Lawrence  v.  Fox 468 

Lawrence  v.  Miller n.  751 

Lee  v.  Griffin «.  163 

Lehow  v.  Simont on 463 

Lewis  v.  Clay n.  275 

Lewis  v.  Jewell 344 

Liberty  Wall  Paper  Co.  v. 

Stoner  Co. n.  507 

Lingenfelder  v.  Wainwright 

Brewing  Co 217 

Long  v.  White  n.  160 

Lorah  v.  Nissley 95 

Los  Angeles  Traction  Co.  v. 

Wilshire  53 

Loud  v.  Pomona  Co n».  660,  663 

Love  v.  Harvey 368 

Lucas  v.  West.  Union  Tel.  Co..  n.  27 
Lufkin  Rule  Co.  v.  Fringeli.  .n.  423 

McAllester  v.  Sprague n.  554 

McCandless  v.  Allegheny  Co... n.  213 

McClair  v.  Austin n.  649 

McClure  v.  Briggs n.  623 

McClurg  v.  Terry 78 

McComb  v.  Kittridge n.  232 

McCulloch  v.  Ins.  Co n.  28 

McKenzie  v.  Harrison  n.  596 

McKinney  v.  Alvis    511 

McKnight  v.  Bell n.  141 

McKown  v.  Furgason 341 

Maclay  v.   Harvey 42 

McMillan  v.  Ames 62 

McRaven  v.   Crisler 664 

Malone  v.  Boston  A  W.  R.  R 14 

Manchester  v.   Braedner 726 

Manhattan  Life  Ins.  Co.  v.  Buck.n.  751 

Mann  v.  Sprout 613 

Manning  v.   Sprague n.  408 

Manter  v.  Churchill n.  198 

Martin  v.    Hill n.  307 

Martin  v.  Meles 251 

Mason    v.   Eldred n.  554 

Masson  v.  Bovet  n.  348 

Materne    v.    Horwitz 383 

Matlock  v.  Gibson «.  102 

May  v.  Hanson   563 


TABLE   OF    CASES. 


PAGE 

May   v.   Williams 130 

Maynard  v.  Maynard    n.  330 

Mellon  v.  Davidson n.  118 

Merrill    v.    Packer n.  385 

Merrill   v.    Peaslee n.  414 

Merritt  v.  Earle n.  367 

Miles  v.  Schmidt    403 

Miles  Medical   Co.  v.  Park ....  n.  424 

Miller  v.  Covert 717 

Mills  v.  Wyman 255 

Minehan  v.  Hill 201 

Minneapolis  &  St.  L.  Ry.  v.  Co- 
lumbus Rolling  Mill 79 

Minnesota  Oil  Co.  v.  Collier  ...       46 

Mittenthal  v.  Mascagni 404 

Mohr  v.  Miesen 370 

Moody  v.  Moody : n.  460 

Moore   v.   Elmer n.  260 

Moore  v.  Mut.  Reserve  Assoc. . .  n.  348 

Moore  v.  Phoenix  Ins.  Co 598 

Morehouse  v.  Second  Nat.  Bank 

of   Oswego 711 

Morse  v.  Woodworth 348 

Mott  v.  Oppenheimer n.  539 

Moulton  v.  Kershaw 73 

Muir  v.  Schenck 525 

Mummenhoff  v.  Randall 298 

Murray  v.  Mumf ord n.  559 

Myrick  v.  Dame «.  559 

National     Contracting     Co.     v. 

Hudson  R.  Co n.  402 

National  Distilling  Co.  v.  Cream 

City  Co 441 

Nelson  v.  Plimpton  Elevating 

Co 662 

Neufville  v.  Stuart  n.  83 

New  v.  Walker  445 

New  York  etc.  Co.  v.  Memphis 

Water  Co n.  515 

New  York  Bank  Note  Co.  v.  The 

Hamilton  Bank  Note  Co 507 

Niblo  v.  Binsse n.  743 

Nickelson  v.  Wilson n.  398 

Noice  v.  Brown n.  415 

Nolan  v.  Whitney 617 

Nolton  v.  R.  R n.  483 

Norrington  v.  Wright 671 

Northern  v.  State  156 

Northrup  v.  Northrup  653 


Nugent  v.  Wolfe. 


PAGE 

127 


O'Brien   v.    Young 90 

Odell  v.  Gray n.  531 

Odell   v.   Webendorfer n.  149 

O'Donnell  v.  Leeman 114 

O'Malley  v.  Hitchner 622 

Page    v.   Krekey «.  275 

Page  v.  Shainwald  n.  368 

Pakas   v.   Hollingshead n.  679 

Palmer  v.  Merrill 519 

Pangborn    v.    West  lake 361 

Parsons    v.    Phelan n.  141 

Partridge  v.  Hood 396 

Pearce  v.  Langfit  n.  26 

Pearsoll  v.  Chapin n,  347 

Pearson  v.  Williams'  Adm'rs..     615 

Pelletreau   v.    Brennan n.  118 

Pennell    v.    Delta    Transporta- 
tion   Co 573 

People  v.  Globe  Mut.  Ins.  Co. . .  n.  735 

People  v.  Harrison n.  562 

People  ea>  rel  Eagle  v.  Keyser . .  n.  559 

Perkins  v.  Lockwood 245 

Perry  v.  Mt.  Hope  Co n.  27 

Philadelphia  v.   Reeves n.  522 

Phillips    v.    Commissioners ....  n.  408 

Phillips  v.  Moore   n.  45 

Phoenix  Life  Ins.  Co.  v.  Raddin       310 

Pierce   v.    Pierce n.  433 

Pierson  v.   Hooker n.  559 

Pinnel's    Case n.  240 

Plainer  v.  Patchin 541 

Plowman   v.    Riddle 614 

Poison   v.    Stewart 414 

Pond   v.  Water    Co n.  493 

Pope  v.  Allis  679 

Porter  v.  Dunn n.  649 

Pratt  v.  Trustees 36 

Presbyterian   Church   v.   Cooper     246 

Prescott  v.  Jones n.  19 

Prested  Miners  Co.  v.  Gardner. .n.  149 

Quick  v.  Wheeler 51 

Raabe  v.   Squier 128 

Rafolovitz  v.  Amer.  Tobacco  Co.       55 

Ray  v.  Thompson 602 

Rector  v.  Teed    .  ..n.  479 


XVI 


TABLE  OP  OASES. 


PAGE 

Reed  T.  Brewer n.  441 

Reed  v.  Ins.  Co 577 

Reed  v.  Pierce 760 

Reif  v.  Page n.  213 

Reynolds  v.  Robinson 569 

Reynolds  v.  Stevenson 367 

Ricketts  v.  Scothorn 181 

Riegel  v.  Ins.  Co n.  298 

Rochester  Lantern  Co.  v.  Stiles 

Co 504 

Roebling's  Sons'  Co.  v.  Lock 

Stitch  Co.. n.  652 

Roehm  v.  Horst 627 

Rogers  v.  Rogers n.  216 

Rollins  v.  Marsh n.  217 

Ross  v.  Drinkard 332 

Rovegno  v.  Defferari n.  270 

Rowley  v.  Stoddard n.  553 

Royal  Ins.  Co.  v.  Beatty 16 

Rupley  v.  Daggett 269 

Russell  v.  Cook 199 

Salisbury    v.    Howe n.  342 

San  born   v.   Cole n.  568 

Sanders  v.  Pottlitzer  Bros 84 

Santa  Clara  Co.  v.  Hayes 427 

Schemerhorn  v.  Vanderheyden . .  n.  480 

Schnell    v.    Nell 171 

School    Directors    v.    Boomhour     307 
Scottish  Amer.  Co.  v.  Davis  ...  n.  27 

Sears  v.  Grand  Lodge   295 

Sessions    v.    Johnson .  n.  562 

Shaber  v.  St.  Paul  Water  Co. . .     536 

Shanley    v.    Koehler . .  n.  239 

Shaw   v.    Railroad    Co 526 

Sheeren    v.    Moses 867 

Sheldon  v.   Davidson 336 

Shelton   v.    Ellis n.  300 

Shepard    v.    Rhodes 265 

Sherman   v.  Kitsmiller 188 

Sherwin   v.    Fletcher 250 

Sherwood  v.  Walker 285 

Shoemaker  v.  Benedict n.  554 

Shoemaker  v.  Roberts 10 

Shuey  v.  U.  S n.  68 

Siegel    Cooper   Co.   v.   Eaton   ft 

Prince  Co 743 

Silsbee  v.  Webber 351 

Sims    v.    Ferrill n.  332 

Slaughter's   Adm'r  v.   Gerson . .  n.  345 


PA68 

Small  v.  C.  R.  I.  ft  P.  R.  R ».  409 

Smith    v.    Explorers n.  149 

Smith  v.  Lewis n.  664 

Smith   v.   Mace 753 

Smith  v.  Water  Co n.  493 

Smith    v.    Whildin 212 

Smyth  v.  New  York 475 

Southard  v.  Boyd   395 

Spalding    v.    Rosa 749 

Springer  v.  Westcott 15 

Stanford   v.    McGill n.  636 

Stanton   v.    Embrey n.  410 

Stensgaard  v.   Smith 3 

Sterling  v.  Sinnickson 412 

Stevens  v.   Coon 187 

Stevens  v.  Ludlum 315 

Stewart  v.    Stone n.  739 

Stewart  v.  Wyoming  Ranch  Co.ti.  318 

Stiebel  v.  Grosberg n.  101 

Stockbridge     v.     West     Stock- 
bridge     n.  568 

Stoddard    v.    Ham n.  270 

Story  v.  Lovett 567 

Streeper  v.  Williams 584 

Strong  v.  Sheffield 196 

Sullivan  v.  Sullivan 473 

Sweigart  v.   Berk 558 

Talbert   v.   Storum .  .n.  101 

Tayloe  v.  Merchants'  Ins.  Co...       21 
Taylor  ft  Co.,  Assigned  Estate.     376 

Taylor    v.    Bemiss n.  410 

Taylor  v.  Hartnett    n.  49 

Tallman   v.   Hoey 521 

Tanner  v.  Merrill   n.  716 

Theiss  v.  Weiss  n.  78 

Thomas   Mfg.   Co.   v.   Prather .  .      480 

Thomson  v.  Thomson  260 

Thome    v.    Deas 205 

Thurston  v.  Arnold 580 

Tighe  v.   Morrison 134 

Tipton  v.  Feitner 668 

Tobias    v.    Rogers n.  557 

Todd    v.    Weber n.  480 

Tode    v.    Gross n.  420 

Tolhurst  v.   Powers 211 

Tool  Co.  v.  Norris n.  394 

Tracy  v.  Albany  Exchange. .  . .     666 

Traders'  Bank  v.  Parker n.  198 

Trist  v.  Child  .  389 


TABLE   OF    CASES. 


XV11 


PAGE 

Tronson  v.  Colby  University. .  . .     667 

Turner  v.  McCormick   n.  84 

Tyler  v.  Carlisle 434 

Ullman  v.  Meyer 137 

Union  Nat.  Bank  v.  Chapman .  .      454 
Union   Strawboard   Co.   v.   Bon- 
field     n.  423 

United  Press  v.   N.  Y.   Press.. n.  192 
United  States  v.  Behan   ».  646 

Vail   v.    Reynolds 346 

Van   Clief  v.  Van  Vetchen n.  621 

Vandegrift  v.  Cowlea  Engineer- 
ing   Co n.  664 

Vanderbilt  v.   Schreyer n.  220 

Vanuxem  v.  Burr 718 

Veerhoff    v.    Miller n.  232 

Vrooman  v.  Turner n.  480 

Vyse  v.   Wakefield n.  662 

Wainwright  v.  Water  Co n.  493 

Wakeman  v.  Wheeler  &  Wilson 

Mfg.   Co 693 

Walden  v.  Ins.  Co 309 

Walker  v.  Ebert 271 

Walker   v.   Walker n.  102 

Walter  v.  Bloede  Co 596 

Ward  v.  Savings  Bank n.  487 

Warner  v.  T.  &  P.  Ry 141 

Warnock  v.   Davis..  379 


PAGE 

Watson   v.   Gugino 583 

Watson  v.  Russell ».  26 

Webb  v.   Steele    n.  514 

Weld  v.  Weld 135 

Wellston   Coal    Co.   v.    Franklin 

Co n.  fi49 

Weyand  v.  Park   Terrace   Co.     n.  612 

Wharton  v.  Winch n.  646 

White  v.  Corlies 1 

Whitehead    v.    Burgess n.  483 

Wilcox  v.  Iowa  Wesleyan   Uni- 
versity        305 

Williams    v.    Carrington 243 

Wilmington   Transportation   Co. 

v.    O*Neil    740 

Willoughby    v.    Willoughby 563 

Wolcott  v.  Mount 682 

Wolf  v.   Marsh 639 

Wolfe   v.    Howes n.  751 

Wood   v.   Boynton    291 

Wood    v.    Moriarity 465 

Wood  Co.  v.  Smith n.  626 

Woodberry  v.  Warner 652 

Woodruff  v.   Saul 308 

Wright    v.    Farmers'    Bank 263 

Yorks  v.  Peck n.  554 

Zuck  A  Henry  v.  McClure  &  Co.     637 
Zwolanek  v.  Baker n.  54 


EXPLANATORY  NOTE 

In  the  reference  note  appended  to  the  cases,  the  following  abbreviations  are 
used:  Cyc.  (Cyclopedia  of  Law  and  Procedure)  ;  L.  R.  A.  (Lawyers'  Reports 
Annotated)  ;  W.  P.  (Pollock's  Principles  of  Contract,  3d  American  Ed.  by  Wald 
and  Williston)  ;  H.  L.  R.  (Harvard  Law  Review)  ;  C.  L.  R.  (Columbia  Law 
Review);  Mich.  L.  R.  (Michigan  Law  Review).  The  references  to  Cyc.  and 
W.  P.  are  by  page  and  note  number,  the  latter  number  being  in  parenthesis. 


PART  I. 

THE  FORMATION  OP  THE  CONTRACT. 


CHAPTER  I. 

OFFER  AND  ACCEPTANCE. 

Every  contract  springs  from  the  acceptance  of  an  offer. 
WHITE  v.  CORLIES. 

46  NEW  YORK,  467.—  1871. 

Appeal  from  judgment  of  the  General  Term  of  the  first  judicial 
district,  affirming  a  judgment  entered  upon  a  verdict  for  plaintiff. 

The  action  was  for  an  alleged  breach  of  contract.  The  plaintiff 
was  a  builder.  The  defendants  were  merchants.  In  September,  1865, 
the  defendants  furnished  the  plaintiff  with  specifications  for  fitting 
up  a  suit  of  offices  at  57  Broadway,  and  requested  him  to  make  an 
estimate  of  the  cost  of  doing  the  work.  On  September  twenty-eighth 
the  plaintiff  left  his  estimate  with  the  defendants,  and  they  were 
to  consider  upon  it,  and  inform  the  plaintiff  of  their  conclusions. 
On  the  same  day  the  defendants  made  a  change  in  their  specifications 
and  sent  a  copy  of  the  same,  so  changed,  to  the  plaintiff  for  his  as- 
sent under  his  estimate,  which  he  assented  to  by  signing  the  same 
and  returning  it  to  the  defendants.  On  the  day  following,  the  de- 
fendants' book-keeper  wrote  the  plaintiff  the  following  note: 

"  NEW  YORK,  September  29th. 

"  Upon  an  agreement  to  finish  the  fitting  up  of  offices  57  Broadway  in  two 
weeks  from  date,  you  can  begin  at  once. 

"  The  writer  will  call  again,  probably  between  five  and  six  this  p.  M. 

"  W.  H.  R., 
"  For  J.  W.  CORLIES  &  Co.,  32  Dey  street." 

No  reply  to  this  note  was  ever  made  by  the  plaintiff;  and  on  the 
next  day  the  same  was  countermanded  by  a  second  note  from  the  de- 
fendants. 

Immediately  on  receipt  of  the  note  of  September  twenty-ninth,  and 
before  the  countermand  was  forwarded,  the  plaintiff  commenced  a 


§  FORMATION    OF   CONTRACT. 

performance  by  the  purchase  of  lumber  and  beginning  work  thereon. 
And  after  receiving  the  countermand,  the  plaintiff  brought  this  ac- 
tion for  damages  for  a  breach  of  contract. 

The  court  charged  the  jury  as  follows :  "  From  the  contents  of 
this  note  which  the  plaintiff  received,  was  it  his  duty  to  go  down  to 
Dey  street  (meaning  to  give  notice  of  assent)  before  commencing  the 
work  ?  In  my  opinion  it  was  not.  He  had  a  right  to  act  upon  this 
note  and  commence  the  job,  and  that  was  a  binding  contract  between 
the  parties"  To  this  defendants  excepted. 

FOLGER,  J.  We  do  not  think  that  the  jury  found,  or  that  the  tes- 
timony shows,  that  there  was  any  agreement  between  the  parties, 
before  the  written  communication  of  the  defendants  of  September 
thirtieth  was  received  by  the  plaintiff.  This  note  did  not  make  an 
agreement.  It  was  a  proposition,  and  must  have  been  accepted  by 
the  plaintiff  before  either  party  was  bound,  in  contract,  to  the  other. 
The  only  overt  action  which  is  claimed  by  the  plaintiff  as  indicating 
on  his  part  an  acceptance  of  the  offer,  was  the  purchase  of  the  stuff 
necessary  for  the  work,  and  commencing  work,  as  we  understand 
the  testimony,  upon  that  stuff. 

We  understand  the  rule  to  be,  that  where  an  offer  is  made  by  one 
party  to  another  when  they  are  not  together,  the  acceptance  of  it 
by  that  other  must  be  manifested  by  some  appropriate  act.  It  does 
not  need  that  the  acceptance  shall  come  to  the  knowledge  of  the 
one  making  the  offer  before  he  shall  be  bound.  But  though  the  mani- 
festation need  not  be  brought  to  his  knowledge  before  he  becomes 
bound,  he  is  not  bound,  if  that  manifestation  is  not  put  in  a  proper 
way  to  be  in  the  usual  course  of  events,  in  some  reasonable  time 
communicated  to  him.  Thus  a  letter  received  by  mail  containing 
a  proposal,  may  be  answered  by  letter  by  mail,  containing  the  ac- 
ceptance. And  in  general,  as  soon  as  the  answering  letter  is  mailed, 
the  contract  is  concluded.  Though  one  party  does  not  know  of  the 
acceptance,  the  manifestation  thereof  is  put  in  the  proper  way  of 
reaching  him. 

In  the  case  in  hand,  the  plaintiff  determined  to  accept.  But  a 
mental  determination  not  indicated  by  speech,  or  put  in  course  of 
indication  by  act  to  the  other  party,  is  not  an  acceptance  which  will 
bind  the  other.  Nor  does  an  act,  which,  in  itself,  is  no  indication 
of  an  acceptance,  become  such,  because  accompanied  by  an  unevinced 
mental  determination.  Where  the  act  uninterpreted  by  concurrent 
evidence  of  the  mental  purpose  accompanying  it,  is  as  well  refer- 
able to  one  state  of  facts  as  another,  it  is  no  indication  to  the  other 
party  of  an  acceptance,  and  does  not  operate  to  hold  him  to  his  offer. 

Conceding  that  the  testimony  shows  that  the  plaintiff  did  re- 
solve to  accept  this  offer,  he  did  no  act  which  indicated  an  accept- 
ance of  it  to  the  defendants.  He,  a  carpenter  and  builder,  pur- 


OFFER   AND   ACCEPTANCE.  3 

chased  stuff  for  the  work.  But  it  was  stuff  as  fit  for  any  other  like 
work.  He  began  work  upon  the  stuff,  but  as  he  would  have  done  for 
any  other  like  work.  There  was  nothing  in  his  thought  formed  but 
not  uttered,  or  in  his  acts,  that  indicated  or  set  in  motion  an  indi- 
cation to  the  defendants  of  his  acceptance  of  their  offer,  or  which 
could  necessarily  result  therein. 

But  the  charge  of  the  learned  judge  was  fairly  to  be  understood  by 
the  jury  as  laying  down  the  rule  to  them,  that  the  plaintiff  need 
not  indicate  to  the  defendants  his  acceptance  of  their  offer;  and  that 
the  purchase  of  stuff  and  working  on  it  after  receiving  the  note, 
made  a  binding  contract  between  the  parties.  In  this  we  think  the 
learned  judge  fell  into  error. 

The  judgment  appealed  from  must  be  reversed,  and  a  new  trial 
ordered,  with  costs  to  abide  the  event  of  the  action. 

All  concur,  but  ALLEN,  J.,  not  voting. 

Judgment  reversed,  and  new  trial  ordered. 

9  Cyc.  254  (67) ;  9  Cyc.  271  (65).     W.  P.  31  (36). 


STENSGAAKD  v.  SMITH. 

43  MINNESOTA,  11,.— 1890. 

DICKINSON,  J.  This  action  is  for  the  recovery  of  damages  for 
breach  of  contract.  The  rulings  of  the  court  below,  upon  the  trial, 
were  based  upon  its  conclusion  that  no  contract  was  shown  to  have 
been  entered  into  between  these  parties.  We  are  called  upon  to 
review  the  case  upon  this  point.  The  plaintiff  was  engaged  in  busi- 
ness as  a  real-estate  broker.  On  the  llth  of  December,  1886,  he 
procured  the  defendant  to  execute  the  following  instrument,  which 
was  mostly  in  printed  form : 

"ST.  PAUL,  Dec.  11,  1886. 

"In  consideration  of  L.  T.  Stensgaard  agreeing  to  act  as  agent  for  the  sale 
of  the  property  hereinafter  mentioned,  I  have  hereby  given  to  said  L.  T. 
Stensgaard  the  exclusive  sale,  for  three  months  from  date,  of  the  following 
property,  to  wit:  (Here  follows  a  description  of  the  property,  the 
terms  of  sale,  and  some  other  provisions  not  necessary  to  be  stated.) 
I  further  agree  to  pay  said  L.  T.  Stensgaard  a  commission  of  two 
and  one-half  per  cent  on  the  first  $2000,  and  two  and  one-half  per  cent  on 
the  balance  of  the  purchase  price,  for  his  services  rendered  in  selling  of  the 
above-mentioned  property,  whether  the  title  is  accepted  or  not,  and  also  what- 
ever he  may  get  or  obtain  for  the  sale  of  said  property  above  $17,000  for  such 
property,  if  the  property  is  sold. 

"JOHN  SMITH." 

The  evidence  showed  that  the  plaintiff  immediately  took  steps  to 
effect  the  sale  of  the  land,  posted  notices  upon  it,  published  advertise- 
ments in  newspapers,  and  individually  solicited  purchasers.  About  a 
month  subsequent  to  the  execution  by  the  defendant  of  the  above  in- 


4  FORMATION   OF   CONTRACT. 

strument,  he  himself  sold  the  property.  This  constitutes  the  alleged 
breach  of  contract  for  which  a  recovery  of  damages  is  sought. 

The  court  was  justified  in  its  conclusion  that  no  contract  was  shown 
too  have  been  entered  into,  and  hence  that  no  cause  of  action  was 
established.  The  writing  signed  by  the  defendant  did  not  of  itself 
constitute  a  contract  between  these  parties.  In  terms  indicating  that 
the  instrument  was  intended  to  be  at  once  operative,  it  conferred  pres- 
ent authority  on  the  plaintiff  to  sell  the  land,  and  included  the 
promise  of  the  defendant  that,  if  the  plaintiff  should  sell  the  land,  he 
should  receive  the  stated  compensation.  This  alone  was  no  contract, 
for  there  was  no  mutuality  of  obligation,  nor  any  other  consideration 
for  the  agreement  of  the  defendant.  The  plaintiff  did  not  by  this 
instrument  obligate  himself  to  do  anything,  and  therefore  the  other 
party  was  not  bound.  Bailey  v.  Austrian,  19  Minn.  465  (535)  ;  Tar- 
box  v.  Gotzian,  20  Minn.  122  (139).  If,  acting  under  the  authority 
thus  conferred,  the  plaintiff  had,  before  its  revocation,  sold  the  land, 
such  performance  would  have  completed  a  contract,  and  the  plaintiff 
would  have  earned  the  compensation  promised  by  the  defendant  for 
such  performance.  Andreas  v.  Holcombe,  22  Minn.  339;  Ellsworth  v. 
Southern  Minn.  Ky.  Extension  Co.,  31  Minn.  543.  But  so  long  as 
this  remained  a  mere  present  authorization  to  sell,  without  contract 
obligations  having  been  fixed,  it  was  revocable  by  the  defendant.  The 
instrument  does,  it  is  true,  commence  with  the  words:  "In  consid- 
eration of  L.  T.  Stensgaard  agreeing  to  act  as  agent  for  the  sale  of 
the  property,"  etc. ;  but  no  such  agreement  on  the  part  of  the  plain- 
tiff was  shown  on  the  trial  to  have  been  actually  made,  although  it 
was  incumbent  upon  him  to  establish  the  existence  of  a  contract  as 
the  basis  of  his  action.  This  instrument  does  not  contain  an  agree- 
ment on  the  part  of  the  plaintiff,  for  he  is  no  party  to  its  execution. 
It  expresses  no  promise  or  agreement  except  that  of  the  defendant. 
It  may  be  added  that  the  language  of  the  "consideration"  clause  is  not 
such  as  naturally  expresses  the  fact  of  an  agreement  having  been 
already  made  on  the  part  of  the  plaintiff.  Of  course,  no  consider- 
ation was  necessary  to  support  the  present,  but  revocable,  authoriza- 
tion to  sell.  It  is  difficult  to  give  any  practical  effect  to  this  clause 
in  the  construction  of  the  instrument.  It  seems  probable,  in  the 
absence  of  proof  of  such  an  agreement,  that  this  clause  had  no  refer- 
ence to  any  actual  agreement  between  these  parties,  but  was  a  part 
of  the  printed  matter  which  the  plaintiff  had  prepared  for  use  in  his 
business,  with  the  intention  of  making  it  effectual  by  his  own  signa- 
ture. If  he  had  appended  to  this  instrument  his  agreement  to  accept 
the  agency,  or  even  if  he  had  signed  this  instrument,  this  clause  would 
have  had  an  obvious  meaning. 

This  instrument,  executed  only  by  the  defendant,  was  effectual,  as 
we  have  said,  as  a  present,  but  revocable,  grant  of  authority  to  sell. 


OFFER  AND  ACCEPTANCE.  5 

It  involved,  moreover,  an  offer  on  the  part  of  the  defendant  to  con- 
tract with  the  plaintiff  that  the  latter  should  have,  for  the  period  of 
three  months,  the  exclusive  right  to  sell  the  land.  This  action  is 
based  upon  the  theory  that  such  a  contract  was  entered  into;  but, 
to  constitute  such  a  contract,  it  was  necessary  that  the  plaintiff  should 
in  some  way  signify  his  acceptance  of  the  offer,  so  as  to  place  himself 
under  the  reciprocal  obligation  to  exert  himself  during  the  whole 
period  named  to  effect  a  sale.  No  express  agreement  was  shown. 
The  mere  receiving  and  retaining  this  instrument  did  not  import  an 
agreement  thus  to  act  for  the  period  named,  for  the  reason  that, 
whether  the  plaintiff  should  be  willing  to  take  upon  himself  that  obli- 
gation or  not,  he  might  accept  and  act  upon  the  revocable  authority 
to  sell  expressed  in  the  writing;  and  if  he  should  succeed  in  effecting 
a  sale  before  the  power  should  be  revoked,  he  would  earn  the  commis- 
sion specified.  In  other  words,  the  instrument  was  presently  effectual 
and  of  advantage  to  him,  whether  he  chose  to  place  himself  under 
contract  obligations  or  not.  For  the  same  reason  the  fact  that  for 
a  day  or  a  month  he  availed  himself  of  the  right  to  sell  conferred 
by  the  defendant,  by  attempting  to  make  a  sale,  does  not  justify  the 
inference,  in  an  action  where  the  burden  is  on  the  plaintiff  to  prove 
a  contract,  that  he  had  accepted  the  offer  of  the  defendant  to  conclude 
a  contract  covering  the  period  of  three  months,  so  that  he  could  not 
have  discontinued  his  efforts  without  rendering  himself  liable  in  dam- 
ages. In  brief,  it  was  in  the  power  of  the  plaintiff  either  to  convert 
the  defendant's  offer  and  authorization  into  a  complete  contract,  or  to 
act  upon  it  as  a  naked  revocable  power,  or  to  do  nothing  at  all.  He 
appears  to  have  simply  availed  himself,  for  about  a  month,  of  the 
naked  present  right  to  sell  if  he  could  do  so.  He  cannot  now  com- 
plain that  the  landowner  then  revoked  the  authority  which  was  still 
unexecuted.  It  may  be  added  that  there  was  no  attempt  at  the  trial 
to  show  that  the  plaintiff  notified  the  defendant  that  he  was  endeavor- 
ing to  sell  the  land;  and  there  is  but  little,  if  any,  ground  for  an 
inference  from  the  evidence  that  the  defendant  in  fact  knew  it. 

The  case  is  distinguishable  from  those  where,  under  a  unilateral 
promise,  there  has  been  a  performance  by  the  other  party  of  services, 
or  other  thing  to  be  done,  for  which,  by  the  terms  of  the  promise, 
compensation  was  to  be  made.  Such  was  the  case  of  Goward  v. 
Waters  (98  Mass.  596),  relied  upon  by  the  appellant  as  being  strictly 
analogous  to  this  case.  In  the  case  before  us,  compensation  was  to  be 
paid  only  in  case  of  a  sale  of  the  land  by  the  plaintiff.  He  can  re- 
cover nothing  for  what  he  did,  unless  there  was  a  complete  contract ; 
in  which  case,  of  course,  he  might  have  recovered  damages  for  its 
breach.  Order  affirmed.1 

9  Cyc.  327   (20)  ;  W.  P.  35   (40). 

i  "In  many  cases  also  in  which  it  is  possible  to  make  performance  on  one  side 


6  FORMATION    OF   CONTRACT. 

An  offer  or  its  acceptance  or  both  may  be  made  either  by  words  or 
by  conduct. 

FOGG  v.  PORTSMOUTH  ATHENAEUM. 

44  NEW  HAMPSHIRE,  115.— 1862. 

Assumpsit. 

The  case  was  submitted  to  the  decision  of  the  court  upon  the  fol- 
lowing agreed  statement  of  facts: 

The  defendants  are  a  corporation  whose  object  is  the  support  of  a 
library  and  public  reading-room,  at  which  latter  a  large  number  of 
newspapers  are  taken.  Some  are  subscribed  and  paid  for  by  the 
defendants;  others  are  placed  there  gratuitously  by  the  publishers 
and  others;  and  some  are  sent  there  apparently  for  advertising  pur- 
poses merely,  and  of  course  gratuitously. 

The  Independent  Democrat  newspaper  was  furnished  to  the  de- 
fendants, through  the  mail,  by  its  then  publishers,  from  Vol.  3,  No.  1 
(May  1,  1847).  On  the  29th  day  of  November,  1848,  a  bill  for  the 
paper,  from  Vol.  3,  No.  1  (May  1,  1847),  to  Vol.  5,  No.  1  (May 
1,  1849),  two  years,  at  $1.50  per  year,  was  presented  to  the  defendants 
by  one  T.  H.  Miller,  agent  for  the  then  publishers,  for  payment.  The 
defendants  objected  that  they  had  never  subscribed  for  the  paper,  and 
were  not  bound  to  pay  for  it.  They  at  first  refused  on  that  ground 
to  pay  for  it,  but  finally  paid  the  bill  to  said  Miller,  and  took  upon 
the  back  thereof  a  receipt  in  the  following  words  and  figures : 

"Nov.  29,  1848. 

"The  within  bill  paid  this  day,  and  the  paper  is  henceforth  to  be  dis- 
continued. 

"T.  H.  MILLEB,  for  Hood  &  Co." 

Hood  &  Co.  were  the  publishers  of  the  paper  from  May  1,  1847, 
until  February  12,  1849,  when  that  firm  was  dissolved,  and  the  paper 
was  afterward  published  by  the  present  plaintiffs.  The  change  of 
publishers  was  announced,  editorially  and  otherwise,  in  the  paper 
of  February  15,  1849,  and  the  names  of  the  new  publishers  were  con- 
spicuously inserted  in  each  subsequent  number  of  the  paper,  but  it 
did  not  appear  that  the  change  was  actually  known  to  Mr.  Hatch, 

the  consideration  for  a  promise  on  the  other  side,  it  is  not  advisable  to  do 
so,  for  the  reason  that  the  promisor  is  not  bound  until  the  performance  is  com- 
pleted, his  offer  (for  such  it  is)  being  revocable  in  the  meantime  either  by  his 
own  act  or  by  the  act  of  God.  In  particular,  when  the  contract  is  for  services 
which  are  not  to  be  paid  for  until  they  are  fully  performed,  the  contract 
should  always  be  bilateral ;  and  hence  it  will  always  be  presumed,  in  the  ab- 
sence of  strong  evidence  to  the  contrary,  that  the  parties  intended  to  make  it 
bilateral."  Langdell,  Contr.  §  86. 


OFFER   AND   ACCEPTANCE.  7 

the  secretary  and  treasurer  of  the  corporation,  who  settled  the  above- 
named  bill,  and  who  continued  in  the  office  till  January,  1850. 

The  plaintiffs  had  no  knowledge  of  the  agreement  of  the  agent  of 
Hood  &  Co.  to  discontinue  the  paper,  as  set  forth  in  the  receipt 
of  November  29,  1848,  until  notified  thereof  by  the  defendants,  after 
they  had  furnished  the  paper  to  the  defendants  for  a  year  or  more; 
the  books  of  Hood  &  Co.,  which  came  into  their  hands,  only  showing 
that  the  defendants  had  paid  for  the  paper,  in  advance,  to  May  1, 
1849. 

After  the  payment  of  the  bill  and  the  giving  of  the  receipt  above 
recited,  the  paper  continued  to  be  regularly  forwarded  by  its  publish- 
ers, through  the  mail,  to  the  defendants,  from  the  date  of  said  receipt 
until  May  1,  1849,  the  expiration  of  the  period  named  in  said  bill; 
and  was  in  like  manner  forwarded  from  May  1,  1849,  to  January  1, 
1860,  or  from  Vol.  5,  No.  1,  to  Vol.  15,  No.  35,  inclusive,  the  period 
claimed  to  be  recovered  for  in  this  suit;  and  was  during  all  that  time 
constantly  taken  from  the  post-office  by  the  parties  employed  by  the 
defendants  to  take  charge  of  their  reading-room,  build  fires,  etc.,  and 
placed  in  their  reading-room.  Payment  was  several  times  demanded 
during  the  latter  period,  of  the  defendants,  by  an  agent  or  agents  of 
the  plaintiffs;  but  the  defendants  refused  to  pay,  on  the  ground  that 
they  were  not  subscribers  for  the  paper. 

Conspicuously  printed  in  each  number  of  the  paper  sent  to  and 
received  by  the  defendants  were  the  following: 

"Terms  of  Publication:  By  mail,  express,  or  carrier,  $1.50  a  year,  in  ad- 
vance; $2  if  not  paid  within  the  year.  No  paper  discontinued  (except  at 
the  option  of  the  publishers)  unless  all  arrearages  are  paid." 

The  questions  arising  upon  the  foregoing  case  were  reserved  and 
assigned  to  the  determination  of  the  whole  court. 

NESMITH,  J.  There  is  no  pretense  upon  the  agreed  statement  of 
this  case  that  the  defendants  can  be  charged  upon  the  ground  that 
they  were  subscribers  for  the  plaintiffs'  newspaper,  or  that  they  were 
liable  in  consequence  of  the  existence  of  any  express  contract  what- 
ever. But  the  question  now  is,  have  the  defendants  so  conducted  as 
to  make  themselves  liable  to  pay  for  the  plaintiffs'  newspaper  for  the 
six  years  prior  to  the  date  of  the  plaintiffs'  writ,  under  an  implied 
contract  raised  by  the  law  and  made  applicable  to  this  case. 

If  the  seller  does  in  any  case  what  is  usual,  or  what  the  nature  of 
the  case  makes  convenient  and  proper,  to  pass  the  effectual  control 
of  the  goods  from  himself  to  the  buyer,  this  is  always  a  delivery.  In 
like  manner,  as  to  the  question  of  acceptance,  we  must  inquire  into 
the  intention  of  the  buyer,  as  evinced  by  his  declarations  and  acts,  the 
nature  of  the  goods,  and  the  circumstances  of  the  case.  If  the  buyer 
intend  to  retain  possession  of  the  goods,  and  manifests  this  intention 


8  FORMATION    OF    CONTRACT. 

by  a  suitable  act,  it  is  an  actual  acceptance  of  them ;  or  this  intention 
may  be  manifested  by  a  great  variety  of  acts  in  accordance  with  the 
varying  circumstances  of  each  case.  2  Pars,  on  Con.  325. 

Again,  the  law  will  imply  an  assumpsit,  and  the  owner  of  goods 
has  been  permitted  to  recover  in  this  form  of  action,  where  they  have 
been  actually  applied,  appropriated,  and  converted  by  the  defendant 
to  his  own  beneficial  use.  Hitchin  v.  Campbell,  2  "W.  Black,  827; 
Johnson  v.  Spiller,  1  Doug.  167;  Hill  v.  Davis,  3  N.  H.  384,  and  the 
cases  there  cited. 

Where  there  has  been  such  a  specific  appropriation  of  the  prop- 
erty in  question,  the  property  passes,  subject  to  the  vendor's  lien  for 
the  price.  Eohde  v.  Thwaites,  6  B.  &  C.  392.  In  Baines  v.  Jevons 
(7  C.  &  P.  617)  the  question  was,  whether  the  defendant  had  pur- 
chased and  accepted  a  fire  engine.  It  was  a  question  of  fact  for  the 
jury  to  determine.  Lord  Abinger  told  the  jury,  if  the  defendant  had 
treated  the  fire  engine  as  his  own,  and  dealt  with  it  as  such,  if  so, 
the  plaintiff  was  entitled  to  recover  for  its  price.  And  the  jury 
so  found.  2  Greenl.  Ev.  sec.  108. 

In  Weatherby  v.  Banham  (5  C.  &  P.  228)  the  plaintiff  was  pub- 
lisher of  a  periodical  called  the  Racing  Calendar.  It  appeared  that 
he  had  for  some  years  supplied  a  copy  of  that  work,  as  fast  as  the 
numbers  came  out,  to  Mr.  Westbrook;  Westbrook  died  in  the  year 
1820 ;  the  defendant,  Banham,  succeeded  to  Westbrook's  property,  and 
went  to  live  in  his  house,  and  there  kept  an  inn.  The  plaintiff,  not 
knowing  of  Westbrook's  death,  continued  to  send  the  numbers  of 
the  Calendar,  as  they  were  published,  by  the  stage-coach,  directed 
to  Westbrook.  The  plaintiff  proved  by  a  servant  that  they  were  re- 
ceived by  the  defendant,  and  no  evidence  was  given  that  the  defend- 
ant had  ever  offered  to  return  them.  The  action  was  brought  to 
recover  the  price  of  the  Calendar  for  the  years  1825  and  1826.  Tal- 
ford,  for  the  defendant,  objected  that  there  never  was  any  contract 
between  the  plaintiff  and  the  present  defendant,  and  that  the  plain- 
tiff did  not  know  him.  But  Lord  Tenterden  said:  "If  the  defend- 
ant received  the  books  and  used  them,  I  think  the  action  is 
maintainable.  Where  the  books  come  addressed  to  the  deceased  gen- 
tleman whose  estate  has  come  to  the  defendant,  and  he  keeps  the  books, 
I  think,  therefore,  he  is  clearly  liable  in  this  form  of  action,  being 
for  goods  sold  and  delivered." 

The  preceding  case  is  very  similar,  in  many  respects,  to  the  case 
before  us.  Agreeably  to  the  defendants'  settlement  with  Hood  &  Co., 
their  contract  to  take  their  newspaper  expired  on  the  first  of  May, 
1849.  It  does  not  appear  that  the  fact  that  the  paper  was  then  to 
stop  was  communicated  to  the  present  plaintiffs,  who  had  previously 
become  the  proprietors  and  publishers  of  the  newspaper  establish- 
ment; having  the  defendants'  name  entered  on  their  books,  and 
having  for  some  weeks  before  that  time  forwarded  numbers  of  their 


OFFER   AND   ACCEPTANCE.  9 

newspaper,  by  mail,  to  the  defendants,  they,  after  the  first  day  of 
May,  continued  so  to  do  up  to  January  1,  1860.  During  this  period 
of  time  the  defendants  were  occasionally  requested,  by  the  plaintiffs' 
agent,  to  pay  their  bill.  The  answer  was,  by  the  defendants,  we  are 
not  subscribers  to  your  newspaper.  But  the  evidence  is,  the  defend- 
ants used,  or  kept  the  plaintiffs'  books,  or  newspapers,  and  never 
offered  to  return  a  number,  as  they  reasonably  might  have  done,  if 
they  would  have  avoided  the  liability  to  pay  for  them.  Nor  did  they 
ever  decline  to  take  the  newspapers  from  the  post-office. 

If  the  defendants  would  have  avoided  the  liability  to  pay  the  plain- 
tiffs, they  might  reasonably  have  returned  the  paper  to  the  plaintiffs, 
or  given  them  notice  that  they  declined  to  take  the  paper  longer. 

We  are  of  the  opinion  that  the  defendants  have  the  right  to  avail 
themselves  of  the  statute  of  limitations.  Therefore,  the  plaintiffs  can 
recover  no  more  of  their  account  than  is  embraced  in  the  six  years 
prior  to  the  date  of  their  writ,  and  at  the  sum  of  $2  per  year,  with 
interest,  from  date  of  writ,  or  the  date  of  the  earliest  demand  of  the 
plaintiffs'  claim  upon  the  defendants.1 

9  Cyc.  259  (94);  W.  P.  11   (8). 


An  offer  is  made  when,  and  not  until,  it  is  communicated  to  the 
offeree. 

(t.)  Ignorance  of  offered  promise. 

FITCH  v.-  SNEDAKER, 

38  NEW  YORK,  248.— 1868. 

[Reported  herein  at  p.  69] 


DAWKINS  v.  SAPPINGTON. 

26  INDIANA,  199.— 1866. 
[Reported  herein  at  p.  71] 


(it.)  Ignorance  of  offered  act. 

BARTHOLOMEW  v.  JACKSON. 

20  JOHNSON   (N.  Y.),  28.— 1822. 

In  error,  on  certiorari  to  a  justice's  court.  Jackson  sued  Bartholo- 
mew before  a  justice,  for  work  and  labor,  etc.  B.  pleaded  non 
assumpsit.  It  appeared  in  evidence,  that  Jackson  owned  a  wheat 
stubble-field,  in  which  B.  had  a  stack  of  wheat,  which  he  had  prom- 

i  See  also  Realty 'Co.  v.  Pierson,  116  N.  Y.  Supplement,  547. 


10  FORMATION    OF   CONTRACT. 

ised  to  remove  in  due  season  for  preparing  the  ground  for  a  fall  crop. 
The  time  for  its  removal  having  arrived,  J.  sent  a  message  to  B., 
which,  in  his  absence,  was  delivered  to  his  family,  requesting  the 
immediate  removal  of  the  stack  of  wheat,  as  he  wished,  on  the  next 
day,  to  burn  the  stubble  on  the  field.  The  sons  of  B.  answered,  that 
they  would  remove  the  stack  by  10  o'clock  the  next  morning.  J. 
waited  until  that  hour,  and  then  set  fire  to  the  stubble,  in  a  remote 
part  of  the  field.  The  fire  spreading  rapidly,  and  threatening  to  burn 
the  stack  of  wheat,  and  J.,  finding  that  B.  and  his  sons  neglected 
to  remove  the  stack,  set  to  work  and  removed  it  himself,  so  as  to 
secure  it  for  B. ;  and  he  claimed  to  recover  damages  for  the  work  and 
labor  in  its  removal.  The  jury  gave  a  verdict  for  the  plaintiff  for 
50  cents,  on  which  the  justice  gave  judgment,  with  costs. 

PLATT,  J.  I  should  be  very  glad  to  affirm  this  judgment;  for 
though  the  plaintiff  was  not  legally  entitled  to  sue  for  damages,  yet 
to  bring  a  certiorari  on  such  a  judgment  was  most  unworthy.  The 
plaintiff  performed  the  service  without  the  privity  or  request  of  the 
defendant,  and  there  was,  in  fact,  no  promise,  express  or  implied. 
If  a  man  humanely  bestows  his  labor,  and  even  risks  his  life,  in  vol- 
untarily aiding  to  preserve  his  neighbor's  house  from  destruction  by 
fire,  the  law  considers  the  service  rendered  as  gratuitous,  and  it, 
therefore,  forms  no  ground  of  action.  The  judgment  must  be  reversed. 

Judgment  reversed. 

9  Cyc.  252   (61);  W.  P.  11   (9). 


DEEMER,  J.,  IN  SHOEMAKER  v.  ROBERTS. 

103  IOWA,  682.— 1897. 

That  one  who  receives  a  newspaper  without  objection,  and  has  the 
benefit  thereof,  is  liable  upon  an  implied  contract  to  pay  for  the  same, 
is  conceded.  But  to  establish  such  liability,  it  must  be  shown  affirma- 
tively that  defendant  received  the  paper,  or  such  a  state  of  facts  must 
be  recited  as  that  the  presumption  arises  that  it  was  received  by  the 
person  to  whom  it  was  addressed.  No  such  presumption  arises  in 
the  absence  of  proof  that  the  address  to  which  the  paper  is  sent  is  the 
address  of  him  from  whom  recovery  is  sought.  Liability  in  such 
case  is  based  upon  the  doctrine  that  when  one  accepts  and  receives 
the  beneficial  results  of  another's  labor  or  services,  which  he  has  no 
reason  to  suppose  were  gratuitous,  and  which  he  could  or  not  accept 
at  his  option,  the  law  will  imply  a  previous  request  and  a  promise 
to  pay.  Without  proof  of  the  acceptance  of  benefits,  no  such  impli- 
cation will  obtain.  In  the  case  at  bar  there  is  no  allegation  that 
Ackley  was  the  defendant's  place  of  residence,  no  statement  that  he 
accepted  or  received  the  paper,  no  claim  that  the  paper  was  sent 


OFFER   AND   ACCEPTANCE.  11 

to  the  same  address  as  appeared  upon  the  subscription  list,  and  no 
allowing  that  his  name  was  on  the  list  by  his  authority. 


(Hi.)  Ignorance  of  offered  terms. 
FONSECA  v.  CUNARD  STEAMSHIP  COMPANY. 

153  MASSACHUSETTS,  553.— 1891. 

Contract,  with  a  count  in  tort,  against  the  defendant,  as  owner  of 
the  steamship  Samaria,  for  damage  to  the  plaintiff's  trunk  and  its 
contents. 

When  the  plaintiff  engaged  .his  passage  in  London,  he  received  a 
passage  ticket  from  the  defendant's  agent  there.  This  ticket  con- 
sisted of  a  sheet  of  paper  of  large  quarto  size,  the  face  and  back  of 
which  were  covered  with  written  and  printed  matter.  Near  the  top 
of  the  face  of  the  ticket,  after  the  name  of  the  defendant  corporation 
and  its  list  of  offices  in  Great  Britain,  appeared  in  bold  type  the  fol- 
lowing: "Passengers'  Contract  Ticket."  Upon  the  side  margins 
were  various  printed  notices  to  passengers,  including  the  following: 

"All  passengers  are  requested  to  take  notice  that  the  owners  of  the  ship 
do  not  hold  themselves  responsible  for  detention  or  delay  arising  from  acci- 
dent, extraordinary  or  unavoidable  circumstances,  nor  for  loss,  detention,  or 
damage  to  luggage." 

The  body  of  the  face  of  the  ticket  contained  statements  of  the 
rights  of  the  passenger  respecting  his  person  and  his  baggage,  the 
plaintiff's  name,  age,  and  occupation,  the  bills  of  fare  for  each  day 
of  the  week,  and  the  hours  for  meals,  etc.  At  the  bottom  was  printed 
the  following: 

"Passengers'  luggage  is  carried  only  upon  the  conditions  set  forth  on  the 
back  hereof." 

Upon  the  back,  among  other  printed  matter,  was  the  following: 

"The  company  is  not  liable  for  loss  or  of  injury  to  the  passenger  or  his  lug- 
gage, or  delay  in  the  voyage,  whether  arising  from  the  act  of  God,  the  Queen's 
enemies,  perils  of  the  sea,  rivers,  or  navigation,  restraint  of  princes,  rulers, 
and  peoples,  barratry,  or  negligence  of  the  company's  servants  (whether  on 
board  the  steamer  or  not),  defect  in  the  steamer,  her  machinery,  gear,  or 
fittings,  or  from  any  other  cause  of  whatsoever  nature." 

When  the  plaintiff  received  his  ticket,  his  attention  was  not  called 
in  any  way  to  any  limitation  of  the  defendant's  liability. 

KNOWLTON,  J.  It  is  not  expressly  stated  in  the  report,  that  the 
law  of  England  was  put  in  evidence  as  a  fact  in  the  case,  but  it 
seems  to  have  been  assumed  at  the  trial,  if  not  expressly  agreed  that 
this  law  should  be  considered,  and  the  argument  before  this  court 
has  proceeded  on  the  same  assumption.  It  is  conceded  that  the  pre- 


12  FORMATION   OF   CONTRACT. 

siding  justice  correctly  found  and  ruled  as  follows:  "That  the  con- 
tract was  a  British  contract;  that,  by  the  English  law,  a  carrier  may 
by  contract  exempt  himself  from  liability,  even  for  loss  caused  by  his 
negligence;  that  in  this  case,  as  the  carrier  has  so  attempted,  and 
the  terms  are  broad  enough  to  exonerate  him,  the  question  remains 
of  assent  on  the  part  of  the  plaintiff."  That  part  of  his  ruling  which 
is  called  in  question  by  the  defendant  is  as  follows:  "This  has  been 
decided  in  Massachusetts  to  be  a  question  of  evidence,  in  which  the 
lex  fori  is  to  govern;  that,  although  it  has  been  decided  that  the  law 
conclusively  presumes  that  a  consignor  knows  and  assents  to  the  terms 
of  a  bill  of  lading  or  a  shipping  receipt  which  he  takes  without  dis- 
sent, yet  a  passenger  ticket,  even  though  it  be  called  a  'contract 
ticket/  does  not  stand  on  the  same  footing;  that  in  this  case  assent 
is  not  a  conclusion  of  law,  and  is  not  proved  as  a  matter  of  fact." 

The  principal  question  before  us  is  whether  the  plaintiff,  by  reason 
of  his  acceptance,  and  use  of  his  ticket,  shall  be  conclusively  held  to 
have  assented  to  its  terms.  It  has  often  been  decided,  that  one  who 
accepts  a  contract,  and  proceeds  to  avail  himself  of  its  provisions,  is 
bound  by  the  stipulations  and  conditions  expressed  in  it,  whether 
he  reads  them  or  not.  Bice  v.  Dwight  Manuf .  Co.,  2  Cush.  80 ;  Grace 
v.  Adams,  100  Mass.  505;  Hoadley  v.  Northern  Transportation  Co., 
115  Mass.  304;  Monitor  Ins.  Co.  v.  Buffum,  115  Mass.  343;  Germania 
Insurance  Co.  v.  Memphis  &  Charleston  Eailroad,  72  N.  Y.  90.  This 
rule  is  as  applicable  to  contracts  for  the  carriage  of  persons  or  prop- 
erty as  to  contracts  of  any  other  kind.  Grace  v.  Adams,  100  Mass. 
505;  Boston  &  Maine  Eailroad  v.  Chipman,  146  Mass.  107;  Parker 
v.  South  Eastern  Eailway,  2  C.  P.  D.  416,  428 ;  Harris  v.  Great  Wes- 
tern Eailway,  1  Q.  B.  D.  515 ;  York  Co.  v.  Central  Eailroad,  3  Wall. 
107;  Hill  v.  Syracuse,  Binghamton  &  New  York  Eailroad,  73  N.  Y. 
351.  The  cases  in  which  it  is  held  that  one  who  receives  a  ticket 
that  appears  to  be  a  mere  check  showing  the  points  between  which  he 
is  entitled  to  be  carried,  and  that  contains  conditions  on  its  back 
which  he  does  not  read,  is  not  bound  by  such  conditions,  do  not  fall 
within  this  rule.  Brown  v.  Eastern  Eailroad,  11  Cush.  97;  Malone 
v.  Boston  &  Worcester  Eailroad,  12  Gray,  388 ;  Henderson  v.  Steven- 
son, L.  E.  2  H.  L.  Sc.  470;  Quimby  v.  Vanderbilt,  17  N.  Y.  306; 
Eailway  Co.  v.  Stevens,  95  U.  S.  655.  Such  a  ticket  does  not  pur- 
port to  be  a  contract  which  expressly  states  the  rights  of  the  parties, 
but  only  a  check  to  indicate  the  route  over  which  the  passenger  is  to 
be  carried,  and  he  is  not  expected  to  examine  it  to  see  whether  it 
contains  any  unusual  stipulations.  The  precise  question  in  the  pres- 
ent case  is  whether  the  "contract  ticket"  was  of  such  a  kind  that  the 
passenger  taking  it  should  have  understood  that  it  was  a  contract 
containing  stipulations  which  would  determine  the  rights  of  the 
parties  in  reference  to  his  carriage.  If  so,  he  would  be  expected  to 


OFFER   AND   ACCEPTANCE.  13 

read  it,  and  if  he  failed  to  do  so,  he  is  bound  by  its  stipulations.  It 
covered  with  print  and  writing  the  greater  part  of  two  large  quarto 
pages,  and  bore  the  signature  of  the  defendant  company,  affixed  by 
its  agent,  with  a  blank  space  for  the  signature  of  the  passenger.  The 
fact  that  it  was  not  signed  by  the  plaintiff  is  immaterial.  Quimby  v. 
Boston  &  Maine  Railroad,  150  Mass.  365,  and  cases  there  cited.  It 
contained  elaborate  provisions  in  regard  to  the  rights  of  the  passen- 
ger on  the  voyage,  and  even  went  into  such  detail  as  to  give  the  bill 
of  fare  for  each  meal  in  the  day  for  every  day  of  the  week.  No  one 
who  could  read  could  glance  at  it  without  seeing  that  it  undertook 
expressly  to  prescribe  the  particulars  which  should  govern  the  conduct 
of  the  parties  until  the  passenger  reached  the  port  of  destination. 
In  that  particular,  it  was  entirely  unlike  the  pasteboard  tickets  which 
are  commonly  sold  to  passengers  on  railroads.  In  reference  to  this 
question,  the  same  rules  of  law  apply  to  a  contract  to  carry  a  pas- 
senger, as  to  a  contract  for  the  transportation  of  goods.  There  is  no 
reason  why  a  consignor  who  is  bound  by  the  provisions  of  a  bill  of 
lading,  which  he  accepts  without  reading,  should  not  be  equally  bound 
by  the  terms  of  a  contract  in  similar  form  to  receive  and  transport 
him  as  a  passenger.  In  Henderson  v.  Stevenson,  ubi  supra,  the  ticket 
was  for  transportation  a  short  distance,  from  Dublin  to  Whitehaven, 
and  the  passenger  was  held  not  bound  to  read  the  notice  on  the  back, 
because  it  did  not  purport  to  be  a  contract,  but  a  mere  check  given 
as  evidence  of  his  right  to  carriage.  In  later  English  cases,  it  is  said 
that  this  decision  went  to  the  extreme  limit  of  the  law,  and  it  has 
repeatedly  been  distinguished  from  cases  where  the  ticket  was  in  a 
different  form.  Parker  v.  South  Eastern  Railway,  2  C.  P.  D.  416, 
428 ;  Burke  v.  South  Eastern  Railway,  5  C.  P.  D.  1 ;  Harris  v.  Great 
"Western  Railway,  1  Q.  B.  D.  515.  The  passenger  in  the  last  mentioned 
case  had  a  coupon  ticket,  and  it  was  held  that  he  was  bound  to  know 
what  was  printed  as  a  part  of  the  ticket.  Steers  v.  Liverpool,  New 
York  &  Philadelphia  Steamship  Co.  (57  N".  Y.  1)  is  in  its  essential 
facts  almost  identical  with  the  case  at  bar,  and  it  was  held  that  the 
passenger  was  bound  by  the  conditions  printed  on  the  ticket.  In 
Quimby  v.  Boston  &  Maine  Railroad,  ubi  supra,  the  same  principle 
was  applied  to  the  case  of  a  passenger  travelling  on  a  free  pass,  and 
no  sound  distinction  can  be  made  between  that  case  and  the  case 
at  bar. 

We  are  of  opinion  that  the  ticket  delivered  to  the  plaintiff  pur- 
ported to  be  a  contract,  and  that  the  defendant  corporation  had  a 
right  to  assume  that  he  assented  to  its  provisions.  All  these  pro- 
visions are  equally  binding  on  him  as  if  he  had  read  them. 

The  contract  being  valid  in  England,  where  it  was  made,,  and  the 
plaintiff's  acceptance  of  it  under  the  circumstances  being  equivalent 
to  an  express  assent  to  it,  and  it  not  being  illegal  or  immoral,  it  will 


14  FORMATION   OF   CONTRACT. 

be  enforced  here,  notwithstanding  that  a  similar  contract  made  in 
Massachusetts  would  be  held  void  as  against  public  policy.  Green- 
wood v.  Curtis,  6  Mass.  358;  Forepaugh  v.  Delaware,  Lackawanna  & 
Western  Eailroad,  128  Perm.  St.  217,  and  cases  cited ;  In  re  Missouri 
Steamship  Co.,  42  Ch.  D.  321,  326,  327;  Liverpool  and  Great  West- 
ern Steam  Co.  v.  Phenix  Ins.  Co.,  129  U.  S.  397. 

Judgment  for  the  defendant.1 
9  Cyc.  261   (5-8)  ;  W.  P.  53  (61). 


MALONE  v.  BOSTON  &  WORCESTEE  RAILROAD. 
12  GRAY   (MASS.),  388.— 1859. 

Action  of  tort  against  the  defendants  as  common  carriers,  for  the 
loss  upon  their  railroad  of  a  trunk  and  its  contents. 

The  ticket  issued  to  plaintiff  had  printed  upon  its  face,  "Look  on 
the  back."  On  the  back  was  a  clause  limiting  the  liability  of  de- 
fendant for  baggage  to  fifty  dollars,  and  a  notice  that  other  regula- 
tions were  posted  in  the  cars.  In  the  cars  was  a  similar  notice  as 
to  liability  for  baggage.  Plaintiff  testified  that  he  never  saw  the 
notice  on  the  ticket  or  in  the  car. 

The  trial  judge  submitted  to  the  jury  the  question  whether  the 
plaintiff  ever  assented  to  the  limitation,  and  charged  that  the  receiv- 
ing of  the  ticket  raised  no  legal  presumption  that  plaintiff  had  the 
necessary  notice.  The  jury  returned  a  verdict  for  the  plaintiff. 

DEWEY,  J.  This  case  must  be  held  to  be  analogous  to  the  case 
of  Brown  v.  Eastern  Railroad  (11  Cush.  97),  and  may,  like  that,  be 
decided  without  any  adjudication  upon  the  broader  question  whether 
a  limitation  of  the  liability  of  the  railroad  company  as  to  the  amount 
and  value  of  the  baggage  of  passengers  transported  on  the  road  may 
not  be  effectually  secured  by  the  delivery  of  a  ticket  to  the  passenger 
so  printed  in  large  and  fair  type  on  the  face  of  the  ticket,  that  no 
one  could  read  the  part  of  the  ticket  indicating  the  place  to  which 
it  purports  to  entitle  him  to  be  conveyed  without  also  having  brought 
to  his  notice  the  fact  of  limitation  as  to  liability  for  his  baggage. 
The  present  case  as  to  the  ticket  only  differs  from  the  case  of  Brown 
v.  Eastern  Railroad,  in  having  printed  in  small  type  on  the  face  of 
the  ticket,  "Look  on  the  back."  But  there  is  nothing  on  the  face 
of  the  ticket  alluding  to  the  subject  of  baggage;  no  notice  to  look  on 
the  back  for  regulations  as  to  baggage.  The  delivery  of  such  a  ticket 
does  not  entitle  the  railroad  company  to  ask  for  instructions  that 
there  results  therefrom  a  legal  presumption  of  notice  of  the  restricted 
liability  as  to  the  baggage  of  the  passenger.  The  ruling  as  to  the 
placards  posted  in  the  cars  was  correct,  and  no  legal  presumption  of 

i  But  see  The  Majestic,  166  U.  S.  375. 


OFFER    AND   ACCEPTANCE.  15 

notice  arose  therefrom.     The  court  properly  submitted  the  question 
of  notice  to  the  jury  as  a  question  of  fact. 

We  have  not  particularly  considered  the  question  of  liability  of 
the  defendants  as  to  certain  small  items,  if  any,  of  the  wearing  ap- 
parel of  the  husband,  that  were  contained  in  the  lost  trunk.  The 
articles  are  stated  in  the  bill  of  exceptions  to  have  been  "nearly 
wholly  his  wife's  wearing  apparel,"  and  the  court  was  not  asked  to 
direct  the  jury  to  exclude  the  other  articles  in  assessing  damages. 
Without  expressing  any  opinion  upon  the  point  whether  these  articles, 
if  any,  of  the  husband's  would  be  embraced  in  the  baggage  which  the 
defendants  assumed  to  transport  as  common  carriers,  the  husband 
paying  no  fare  for  his  personal  transportation,  the  court  are  of  opin- 
ion that  in  the  present  aspect  of  the  case  judgment  should  be  entered 
generally  on  the  verdict. 

Exceptions  overruled. 

9  Cyc.  260-263  (7-17)  ;  W.  P.  53  (61). 


SPRINGER  v.  WESTCOTT. 
166  NEW  YORK,  117.— 1901. 

This  action  was  brought  to  recover  damages  from  the  defendant, 
an  unincorporated  baggage  express  company,  for  breach  of  its  con- 
tract to  deliver  a  trunk  and  contents  to  the  plaintiff.  The  answer 
was  in  substance  a  general  denial. 

On  Saturday,  September  14th,  1889,  the  plaintiff  delivered  her 
trunk  to  the  New  York  Central  &  Hudson  River  Railroad  Company 
at  Troy  and  caused  it  to  be  checked  from  that  place  to  the  city  of 
New  York.  The  trunk  was  then  in  good  order  and  filled  with  ladies' 
clothing,  jewelry,  etc.  The  plaintiff  took  passage  upon  the  same 
train  that  carried  her  trunk,  which  arrived  at  the  city  of  New  York 
in  the  evening  between  8  and  9  o'clock.  On  the  way,  after  dark,  at 
a  point  "nearer  New  York  than  Poughkeepsie,"  a  messenger  of  the 
defendant  came  through  the  train  soliciting  baggage.  The  plaintiff 
gave  him  her  check,  paid  him  40  cents  and  told  him  to  send  her 
trunk  to  No.  222  East  71st  street.  He  gave  her  a  paper,  with  some 
printing  on  it,  such  as  she  had  received  on  similar  occasions  before, 
but  which  she  did  not  read  and  she  never  knew  what  they  contained. 
It  was  "folded  up,"  and  she  put  it  in  her  pocket  without  trying  to 
read  it.  He  did  not  tell  her,  and  she  did  not  know,  what  its  con- 
tents were.  In  fact  it  was  a  receipt  purporting  to  limit  the  company's 
liability  for  the  trunk  and  contents  "by  reason  of  negligence  or 
otherwise"  to  an  amount  not  exceeding  $100.  The  check  was  never 
returned  to  the  plaintiff,  but,  without  any  explanation,  the  trunk  was 
delivered  by  the  defendant  at  No.  222  East  71st  street  about  noon 


16  FORMATION    OF    CONTRACT. 

on  Tuesday,  September  17th.  It  then  had  a  yellow  label  of  the 
defendant  pasted  upon  it,  but  was  covered  with  dirt,  the  lock  was 
broken,  the  straps  were  hanging  out,  some  of  the  compartments  and 
all  of  the  contents  were  gone,  except  a  hat  frame  from  which  the 
lace  had  been  stripped. 

VANN,  J.  .  .  .  The  defendant  claims  that  the  trial  court  erred  in 
refusing  to  submit  to  the  jury  the  questions  whether  the  plaintiff 
knew  that  the  writing  or  printing  on  the  paper  delivered  to  her  by 
the  messenger  contained  conditions  relating  to  the  terms  of  the  con- 
tract, and  whether  the  defendant  did  what  was  reasonably  sufficient 
to  give  the  plaintiff  notice  of  such  conditions. 

Upon  this  subject  the  trial  judge,  after  reading  the  contents  of 
the  paper  to  the  jury,  charged  as  follows:  "The  defendant  claims 
that  the  plaintiff  knew  the  contents  of  the  paper,  because  she  had  on 
previous  occasions,  while  travelling  on  said  railroad,  had  her  baggage 
sent  by  the  defendant's  agent,  and  had  received  from  him  a  receipt 
with  some  printing  on  it  and  of  the  same  kind  as  the  one  in  question. 
If  you  find  from  the  entire  evidence,  and  under  the  instructions  of 
the  court,  that  the  plaintiff  knew  the  character  of  the  paper  so  re- 
ceived by  her  from  the  defendant's  agent,  or  accepted  it  with  notice 
of  its  contents,  or  with  notice  that  it  contained  the  terms  of  a  special 
contract,  so  as  to  make  her  acquaint  herself  with  its  contents,  and 
neglected  to  do  so,  the  limitation  of  $100  applies,  and  in  that  event, 
even  though  you  may  find  the  plaintiff  is  entitled  to  your  verdict,  she 
cannot  recover  more  than  such  sum.  If,  however,  you  find  from  all 
the  circumstances  that  the  plaintiff  did  not  know  the  paper  writing 
in  question  was  proffered  as  a  contract,  and  received  it  not  knowing 
its  contents  and  satisfied  it  was  given  her  simply  to  enable  her  to 
trace  her  property,  or  a  mere  receipt,  then  the  plaintiff  is  not  bound 
by  its  limitation,  and  you  may,  if  you  find  she  is  entitled  to  recover, 
render  a  verdict  in  her  favor  for  the  value  of  the  goods  which  you 
find  were  lost." 

We  think  this  was  all  that  the  defendant  could  require,  and  that 
its  requests  for  further  instructions  upon  the  subject  were  properly 
refused.  Madan  v.  Sherard,  73  1ST.  Y.  329;  Grossman  v.  Dodd,  63 
Hun,  324,  affirmed  137  N.  Y.  599 ;  Zimrner  v.  N.  Y.  C.  &  H.  E.  R. 
Co.,  137  N".  Y.  464.  .  .  . 

6  Cyc.  405    (20). 


Communication  of  acceptance. 

EOYAL  INS.  CO.  v.  BEATTY. 

119  PENNSYLVANIA  STATE,  6.— 1888. 

Assumpsit  to  recover  upon  two  policies  of  insurance. 

At  the  close  of  the  testimony,  the  defendant  requested  the  court 


OFFER   AND   ACCEPTANCE.  17 

to  charge  the  jury  that  there  was  no  evidence  of  an  acceptance  by 
the  defendant  of  the  offer  of  the  plaintiff  to  renew  the  policies,  and 
to  direct  a  verdict  for  the  defendant.  The  court  refused  the  request, 
and  submitted  the  question  to  the  jury.  Verdict  for  plaintiff. 

GEEEN,  J.  We  find  ourselves  unable  to  discover  any  evidence  of 
a  contractual  relation  between  the  parties  to  this  litigation.  The 
contract  alleged  to  exist  was  not  founded  upon  any  writing,  nor  upon 
any  words,  nor  upon  any  act  done  by  the  defendant.  It  was.  founded 
alone  upon  silence.  While  it  must  be  conceded  that  circumstances 
may  exist  which  will  impose  a  contractual  obligation  by  mere  silence, 
yet  it  must  be  admitted  that  such  circumstances  are  exceptional  in 
their  character,  and  of  extremely  rare  occurrence.  We  have  not  been 
furnished  with  a  perfect  instance  of  the  kind  by  the  counsel  on  either 
side  of  the  present  case.  Those  cited  for  defendant  in  error  had  some 
other  element  in  them  than  mere  silence,  which  contributed  to  the 
establishment  of  the  relation. 

But  in  any  point  of  view  it  is  difficult  to  understand  how  a  legal 
liability  can  arise  out  of  the  mere  silence  of  the  party  sought  to  be 
affected,  unless  he  was  subject  to  a  duty  of  speech,  which  was 
neglected  to  the  harm  of  the  other  party.  If  there  was  no  duty  of 
speech,  there  could  be  no  harmful  omission  arising  from  mere  silence. 
Take  the  present  case  as  an  illustration.  The  alleged  contract  was 
a  contract  of  fire  insurance.  The  plaintiff  held  two  policies  against 
the  defendant,  but  they  had  expired  before  the  loss  occurred  and  had 
not  been  formally  renewed.  At  the  time  of  the  fire,  the  plaintiff 
held  no  policy  against  the  defendant.  But  he  claims  that  the  de- 
fendant agreed  to  continue  the  operation  of  the  expired  policies  by 
what  he  calls  "binding"  them.  How  does  he  prove  this?  He  calls 
a  clerk,  who  took  the  two  policies  in  question,  along  with  other  poli- 
cies of  another  person,  to  the  agent  to  have  them  renewed,  and  this 
is  the  account  he  gives  of  what  took  place :  "The  Royal  Company  had 
some  policies  to  be  renewed,  and  I  went  in  and  bound  them.  Q. 
State  what  was  said  and  done.  A.  I  went  into  the  office  of  the 
Royal  Company  and  asked  them  to  bind  the  two  policies  of  Mr. 
Beatty  expiring  to-morrow.  The  court:  Who  were  the  policies  for? 
A.  For  Mr.  Beatty.  The  court:  That  is  your  name,  is  it  not?  A. 
Yes,  sir.  These  were  the  policies  in  question.  I  renewed  the  policies 
of  Mr.  Priestly  up  to  the  1st  of  April.  There  was  nothing  more  said 
about  the  Beatty  policies  at  that  time.  The  court:  What  did  they 
say?  A.  They  did  not  say  anything,  but  I  suppose  that  they  went 
to  their  books  to  do  it.  They  commenced  to  talk  about  the  night 
privilege,  and  that  was  the  only  subject  discussed."  In  his  further 
examination  he  was  asked:  "Q.  Did  you  say  anything  about  those 
policies  (Robert  Beatty's)  at  that  time?  A.  No,  sir;  I  only  spoke 
of  the  two  policies  for  William  Beatty.  Q.  What  did  you  say  about 


18  FORMATION    OF    CONTRACT. 

them?  A.  I  went  in  and  said,  'Mr.  Skinner,  will  you  renew  the 
Beatty  policies  and  the  night  privilege  for  Mr.  Priestly?'  and  that 
ended  it.  Q.  Were  the  other  companies  bound  in  the  same  way? 
A.  Yes,  sir;  and  I  asked  the  Koyal  Company  to  bind  Mr.  Beatty." 

The  foregoing  is  the  whole  of  the  testimony  for  the  plaintiff  as  to 
what  was  actually  said  at  the  time  when  it  is  alleged  the  policies 
were  bound.  It  will  be  perceived  that  all  that  the  witness  says  is, 
that  he  asked  the  defendant's  agent  to  bind  the  two  policies,  as  he 
states  at  first,  or  to  renew  them,  as  he  says  last.  He  received  no 
answer,  nothing  was  said,  nor  was  anything  done.  How  is  it  possible 
to  make  a  contract  out  of  this  ?  It  is  not  as  if  one  declares  or  states 
a  fact  in  the  presence  of  another  and  the  other  is  silent.  If  the 
declaration  imposed  a  duty  of  speech  on  peril  of  an  inference  from 
silence,  the  fact  of  silence  might  justify  the  inference  of  an  admis- 
sion of  the  truth  of  the  declared  fact.  It  would  then  be  only  a  ques- 
tion of  hearing,  which  would  be  chiefly  if  not  entirely  for  the  jury. 
But  here  the  utterance  was  a  question  and  not  an  assertion,  and  there 
was  no  answer  to  the  question.  Instead  of  silence  being  evidence  of 
an  agreement  to  do  the  thing  requested,  it  is  evidence,  either  that 
the  question  was  not  heard,  or  that  it  was  not  intended  to  comply 
with  the  request.  Especially  is  this  the  case  when,  if  a  compliance 
was  intended,  the  request  would  have  been  followed  by  an  actual 
doing  of  the  thing  requested.  But  this  was  not  done;  how  then  can 
it  be  said  it  was  agreed  to  be  done?  There  is  literally  nothing  upon 
which  to  base  the  inference  of  an  agreement,  upon  such  a  state  of 
facts.  Hence  the  matter  is  for  the  court  and  not  for  the  jury;  for 
if  there  may  not  be  an  inference  of  the  controverted  fact,  the  jury 
must  not  be  permitted  to  make  it. 

What  has  thus  far  been  said  relates  only  to  the  effect  of  the  non- 
action  of  the  defendant,  either  in  responding  or  in  doing  the  thing 
requested.  There  remains  for  consideration  the  effect  of  the  plain- 
tiff's non-action.  When  he  asked  the  question  whether  defendant 
would  bind  or  renew  the  policies  and  obtained  no  answer,  what  was 
his  duty?  Undoubtedly  to  repeat  his  question  until  he  obtained  an 
answer.  For  his  request  was  that  the  defendant  should  make  a  con- 
tract with  him,  and  the  defendant  says  nothing.  Certainly  such 
silence  is  not  an  assent  in  any  sense.  There  should  be  something 
done,  or  else  something  said  before  it  is  possible  to  assume  that  a 
contract  was  established.  There  being  nothing  done  and  nothing 
said,  there  is  no  footing  upon  which  an  inference  of  an  agreement  can 
stand.  But  what  was  the  position  of  the  plaintiff?  He  had  asked 
the  defendant  to  make  a  contract  with  him  and  the  defendant  had 
not  agreed  to  do  so;  he  had  not  even  answered  the  question  whether 
he  would  do  so.  The  plaintiff  knew  he  had  obtained  no  answer,  but 
he  does  not  repeat  the  question;  he,  too,  is  silent  thereafter,  and  he 


OFFER   AND   ACCEPTANCE.  19 

does  not  get  the  thing  done  which  he  asks  to  be  done.  Assuredly  it 
was  his  duty  to  speak  again,  and  to  take  further  action  if  he  really 
intended  to  obtain  the  defendant's  assent.  For  what  he  wanted  was 
something  affirmative  and  positive,  and  without  it  he  has  no  status. 
But  he  desists,  and  does  and  says  nothing  further.  And  so  it  is  that 
the  whole  of  the  plaintiff's  case  is  an  unanswered  request  to  the  de- 
fendant to  make  a  contract  with  the  plaintiff,  and  no  further  attempt 
by  the  plaintiff  to  obtain  an  answer,  and  no  actual  contract  made. 
Out  of  such  facts  it  is  not  possible  to  make  a  legal  inference  of  a 
contract. 

The  other  facts  proved  and  offered  to  be  proved,  but  rejected  im- 
properly, as  we  think,  and  supposed  by  each  to  be  consistent  with  his 
theory,  tend  much  more  strongly  in  favor  of  the  defendant's  theory 
than  of  the  plaintiff's.  It  is  not  necessary  to  discuss  them,  since  the 
other  views  we  have  expressed  are  fatal  to  the  plaintiff's  claim.  Nor 
do  I  concede  that  if  defendant  heard  plaintiff's  request  and  made  no 
answer,  an  inference  of  assent  should  be  made.  For  the  hearing  of 
a  request  and  not  answering  it  is  as  consistent,  indeed,  more  con- 
sistent, with  a  dissent  than  an  assent.  If  one  is  asked  for  alms  on 
the  street,  and  hears  the  request,  but  makes  no  answer,  it  certainly 
cannot  be  inferred  that  he  intends  to  give  them.  In  the  present 
case  there  is  no  evidence  that  defendant  heard  the  plaintiff's  request, 
and  without  hearing  there  was,  of  course,  no  duty  of  speech. 

Judgment  reversed.1 

9  Cyc.  258-260  (91-98)  ;  W.  P.  10  (5). 

1  In  Prescott  v.  Jones,  69  N.  H.  305,  the  declaration  alleged,  in  substance, 
that  the  defendants,  as  insurance  agents,  had  insured  the  plaintiff's  buildings 
in  the  Manchester  Fire  Insurance  Company  until  February  1,  1897;  that  on 
January  23,  1897,  they  notified  him  by  letter  that  they  would  renew  the  policy 
and  insure  his  buildings  for  a  further  term  of  one  year  from  February  1,  1897, 
in  the  sum  of  $500,  unless  notified  to  the  contrary  by  him;  that  he,  relying  on 
the  promise  to  insure  unless  notified  to  the  contrary,  and  believing,  as  he  had 
a  right  to  believe,  that  the  buildings  would  be  insured  by  the  defendants  for 
one  year  from  February  1,  1897,  gave  no  notice  to  them  to  insure  or  not  to 
insure;  that  they  did  not  insure  the  buildings  as  they  had  agreed  and  did 
not  notify  him  of  their  intention  not  to  do  so;  that  the  buildings  were  de- 
stroyed by  fire  March  1,  1897,  without  fault  on  the  plaintiff's  part.  The 
defendants  demurred.  The  court  held  if  "the  defendants  might  and  did  make 
their  offer  in  such  a  way  as  to  dispense  with  the  communication  of  its  accep- 
tance to  them  in  a  formal  and  direct  manner,  they  did  not  and  could  not  so 
frame  it  as  to  render  the  plaintiff  liable  as  having  accepted  it  merely  because 
he  did  not  communicate  his  intention  not  to  accept  it.  And  if  the  plaintiff 
was  not  bound  by  the  offer  until  he  accepted  it,  the  defendants  could  not  be, 
because  'it  takes  two  to  make  a  bargain,'  and  as  contracts  rest  on  mutual 
promises,  both  parties  are  bound,  or  neither  is  bound.  .  .  .  All  the  plaintiff 
did  was  merely  to  determine  in  his  own  mind  that  he  would  accept  the  offer — 
for  there  was  nothing  whatever  to  indicate  it  by  way  of  speech  or  other  ap- 
propriate act.  Plainly,  this  did  not  create  any  rights  in  his  favor  as  against 


20  FORMATION    OF    CONTRACT. 

HOBBS  v.  MASSASOIT  WHIP  CO. 

158  MASSACHUSETTS,  194.— 1893. 

HOLMES,  J.  This  is  an  action  for  the  price  of  eelskins  sent  by 
the  plaintiff  to  the  defendant,  and  kept  by  the  defendant  some 
months,  until  they  were  destroyed.  It  must  be  taken  that  the  plain- 
tiff received  no  notice  that  the  defendants  declined  to  accept  the  skins. 
The  case  comes  before  us  on  exceptions  to  an  instruction  to  the  jury, 
that,  whether  there  was  any  prior  contract  or  not,  if  the  skins  are 
eent  to  the  defendant,  and  it  sees  fit,  whether  it  has  agreed  to  take 
them  or  not,  to  lie  back,  and  to  say  nothing,  having  reason  to  suppose 
that  the  man  who  has  sent  them  believes  that  it  is  taking  them,  since 
it  says  nothing  about  it,  then,  if  it  fails  to  notify,  the  jury  would  be 
warranted  in  finding  for  the  plaintiff. 

Standing  alone,  and  unexplained,  this  proposition  might  seem  to 
imply  that  one  stranger  may  impose  a  duty  upon  another,  and  make 
him  a  purchaser,  in  spite  of  himself,  by  sending  goods  to  him,  unless 
he  will  take  the  trouble,  and  be  at  the  expense,  of  notifying  the  sender 
that  he  will  not  buy.  The  case  was  argued  for  the  defendant  on  that 
interpretation.  But,  in  view  of  the  evidence,  we  do  not  understand 
that  to  have  been  the  meaning  of  the  judge,  and  we  do  not  think  that 
the  jury  can  have  understood  that  to  have  been  his  meaning.  The 
plaintiff  was  not  a  stranger  to  the  defendant,  even  if  there  was  no 
contract  between  them.  He  had  sent  eelskins  in  the  same  way  four 
or  five  times  before,  and  they  had  been  accepted  and  paid  for.  On 
the  defendant's  testimony,  it  is  fair  to  assume  that,  if  it  had  admitted 
the  eelskins  to  be  over  twenty-two  inches  in  length,  and  fit  for  its 
business,  as  the  plaintiff  testified,  and  the  jury  found  that  they  were, 
it  would  have  accepted  them;  that  this  was  understood  by  the  plain- 
tiff; and,  indeed,  that  there  was  a  standing  offer  to  him  for  such 
skins.  In  such  a  condition  of  things,  the  plaintiff  was  warranted  in 
sending  the  defendant  skins  conforming  to  the  requirements,  and 
even  if  the  offer  was  not  such  that  the  contract  was  made  as  soon  as 
skins  corresponding  to  its  terms  were  sent,  sending  them  did  impose 
on  the  defendant  a  duty  to  act  about  them;  and  silence  on  its  part, 
coupled  with  a  retention  of  the  skins  for  an  unreasonable  time,  might 

the  defendants.  From  the  very  nature  of  the  contract  this  must  be  so;  and 
it  therefore  seems  superfluous  to  add  that  the  universal  doctrine  is  that  an 
uncommunicated  mental  determination  cannot  create  a  binding  contract. 
Nor  is  there  any  estoppel  against  the  defendants,  on  the  ground  that  the 
plaintiff  relied  upon  their  letter  and  believed  they  would  insure  his  buildings 
as  therein  stated.  The  letter  was  a  representation  only  of  a  present  intention 
or  purpose  on  their  part.  'It  was  not  a  statement  of  a  fact  or  state  of  things 
actually  existing,  or  past  and  executed,  on  which  a  party  might  reasonably 
rely  as  fixed  and  certain,  and  by  which  he  might  properly  be  guided  in  his 
conduct.'  .  .  ." 


OFFER   AND  ACCEPTANCE.  21 

be  found  by  the  jury  to  warrant  the  plaintiff  in  assuming  that  they 
were  accepted,  and  thus  to  amount  to  an  acceptance.  See  Bushell 
v.  Wheeler,  15  Q.  B.  442;  Benjamin  on  Sales,  §§  162,  164;  Taylor  v. 
Dexter  Engine  Co.,  146  Mass.  613,  615.  The  proposition  stands  on 
the  general  principle  that  conduct  which  imports  acceptance  or  assent 
is  acceptance  or  assent  in  the  view  of  the  law,  whatever  may  have  been 
the  actual  state  of  mind  of  the  party, — a  principle  sometimes  losi 
sight  of  in  the  cases.  O'Donnell  v.  Clinton,  145  Mass.  461,  463 ;  Mc- 
Carthy v.  Boston  &  Lowell  Eailroad,  148  Mass.  550,  552. 

Exceptions  overruled.1 


Acceptance  is  communicated  when  it  is  made  in  a  manner  pre- 
scribed, or  indicated  by  the  offerer. 

TAYLOE  v.  MERCHANTS'  FIRE  INS.  CO. 
9  HOWARD   (U.  S.),  390.— 1850. 

NELSON,  J.  This  is  an  appeal  from  a  decree  of  the  Circuit  Court 
for  the  District  of  Maryland,  which  was  rendered  for  the  defendants. 

The  case  in  the  court  below  was  this.  William  H.  Tayloe,  of 
Richmond  County,  Virginia,  applied  to  John  Minor,  the  agent  of 
the  defendants,  residing  at  Fredericksburg  in  that  State,  for  an  in- 
surance upon  his  dwelling-house  to  the  amount  of  $8000  for  one 
year,  and,  as  he  was  about  leaving  home  for  the  State  of  Alabama, 
desired  the  agent  to  make  the  application  in  his  behalf. 

The  application  was  made  accordingly,  under  the  date  of  25th 
November,  1844,  and  an  answer  received  from  the  secretary  of  the 
company,  stating  that  the  risk  would  be  taken  at  seventy  cents  on  the 
thousand  dollars,  the  premium  amounting  to  the  sum  of  fifty-six 
dollars.  The  agent  stated  in  the  application  to  the  company  the 
reason  why  it  had  not  been  signed  by  Tayloe;  that  he  had  gone  to 
the  State  of  Alabama  on  business,  and  would  not  return  till  Febru- 

i  In  Day  v.  Caton,  119  Mass.  513,  the  court  said:  "If  a  person  saw  day 
after  day  a  laborer  at  work  in  his  field  doing  services,  which  must  of  necessity 
inure  to  his  benefit,  knowing  that  the  laborer  expected  pay  for  his  work,  when 
it  was  perfectly  easy  to  notify  him  if  his  services  were  not  wanted,  even  if  a 
request  were  not  expressly  proved,  such  a  request,  either  previous  to  or  con- 
temporaneous with  the  performance  of  the  services,  might  fairly  be  inferred. 
But  if  the  fact  was  merely  brought  to  his  attention  upon  a  single  occasion  and 
casually,  if  he  had  little  opportunity  to  notify  the  other  that  he  did  not 
desire  the  work  and  should  not  pay  for  it,  or  could  only  do  so  at  the  expense 
of  much  time  and  trouble,  the  same  inference  might  not  be  made.  The  cir- 
cumstances of  each  case  would  necessarily  determine  whether  silence  with  a 
knowledge  that  another  was  doing  valuable  work  for  his  benefit,  and  with 
the  expectation  of  payment,  indicated  that  consent  which  would  give  rise  to 
the  inference  of  a  contract.  The  question  would  be  one  for  the  jury,  and  to 
them  it  was  properly  submitted  in  the  case  before  us  by  the  presiding  judge." 


22  FORMATION   OF   CONTRACT. 

ary  following;  and  that  he  was  desired  to  communicate  to  him  at 
that  place  the  answer  of  the  company. 

On  receiving  the  answer,  the  agent  mailed  a  letter  directed  to 
Tayloe,  under  date  of  the  2d  of  December,  advising  him  of  the  terms 
of  the  insurance,  and  adding,  "Should  you  desire  to  effect  the  in- 
surance, send  me  your  check  payable  to  my  order  for  $57,  and  the 
business  is  concluded."  The  additional  dollar  was  added  for  the 
policy. 

This  letter,  in  consequence  of  a  misdirection,  did  not  reach  Tayloe 
till  the  20th  of  the  month;  who,  on  the  next  day,  mailed  a  letter 
in  answer  to  the  agent,  expressing  his  assent  to  the  terms,  and  in- 
closing his  check  for  the  premium  as  requested.  He  also  desired 
that  the  policy  should  be  deposited  in  the  bank  for  safe-keeping. 
This  letter  of  acceptance  was  received  on  the  31st  at  Fredericksburg 
by  the  agent,  who  mailed  a  letter  in  answer  the  next  day,  communi- 
cating to  Tayloe  his  refusal  to  carry  into  effect  the  insurance,  on  the 
ground  that  his  acceptance  came  too  late,  the  centre  building  of  the 
dwelling-house  in  the  meantime,  on  the  22d  of  the  month,  having  been 
consumed  by  fire. 

The  company,  on  being  advised  of  the  facts,  confirmed  the  view 
taken  of  the  case  by  their  agent,  and  refused  to  issue  the  policy  or 
pay  the  loss. 

A  bill  was  filed  in  the  court  below  by  the  insured  against  the  com- 
pany, setting  forth,  substantially,  the  above  facts,  and  praying  that 
the  defendants  might  be  decreed  to  pay  the  loss,  or  for  such  other 
relief  as  the  complainant  might  be  entitled  to. 

I.  Several  objections  have  been  taken  to  the  right  of  the  com- 
plainant to  recover,  which  it  "will  be  necessary  to  notice;  but  the 
principal  one  is,  that  the  contract  of  insurance  was  not  complete  at 
the  time  the  loss  happened,  and  therefore  that  the  risk  proposed  to 
be  assumed  had  never  attached. 

Two  positions  have  been  taken  by  the  counsel  for  the  company 
for  the  purpose  of  establishing  this  ground  of  defense. 

1.  The  want  of  notice  to  the  agent  of  the  company  of  the  accept- 
ance of  the  terms  of  the  insurance ;  and, 

2.  The  non-payment  of  the  premium. 

The  first  position  assumes  that,  where  the  company  have  made  an 
offer  through  the  mail  to  insure  upon  certain  terms,  the  agreement 
is  not  consummated  by  the  mere  acceptance  of  the  offer  by  the  party 
to  whom  it  is  addressed;  that  the  contract  is  still  open  and  incom- 
plete until  the  notice  of  acceptance  is  received ;  and  that  the  company 
are  at  liberty  to  withdraw  the  offer  at  any  time  before  the  arrival 
of  the  notice ;  and  this  even  without  communicating  notice  of  the 
withdrawal  to  the  applicant;  in  other  words,  that  the  assent  of  the 
company,  expressed  or  implied,  after  the  acceptance  of  the  terms 


OFFEK   AND   ACCEPTANCE.  23 

proposed  by  the  insured,  is  essential  to  a  consummation  of  the  con- 
tract. 

The  effect  of  this  construction  is,  to  leave  the  property  of  the  in- 
sured uncovered  until  his  acceptance  of  the  offer  has  reached  the 
company,  and  has  received  their  assent;  for,  if  the  contract  is  in- 
complete until  notice  of  the  acceptance,  till  then  the  company  may 
retract  the  offer,  as  neither  party  is  bound  until  the  negotiation  has 
resulted  in  a  complete  bargain  between  the  parties. 

In  our  apprehension,  this  view  of  the  transaction  is  not  in  ac- 
cordance with  the  usages  and  practice  of  these  companies  in  taking 
risks;  nor  with  the  understanding  of  merchants  and  other  business 
men  dealing  with  them;  nor  with  the  principles  of  law,  settled  in 
analogous  cases,  governing  contracts  entered  into  by  correspond- 
ence between  parties  residing  at  a  distance. 

On  the  contrary,  we  are  of  opinion  that  an  offer  under  the  cir- 
cumstances stated,  prescribing  the  terms  of  insurance,  is  intended, 
and  is  to  be  deemed,  a  valid  undertaking  on  the  part  of  the  com- 
pany, that  they  will  be  bound,  according  to  the  terms  tendered,  if 
an  answer  is  transmitted  in  due  course  of  mail,  accepting  them;  and 
that  it  cannot  be  withdrawn,  unless  the  withdrawal  reaches  the  party 
to  whom  it  is  addressed  before  his  letter  of  reply  announcing  the  ac- 
ceptance has  been  transmitted. 

This  view  of  the  effect  of  the  correspondence  seems  to  us  to  be 
but  carrying  out  the  intent  of  the  parties,  as  plainly  manifested  by 
their  acts  and  declarations. 

On  the  acceptance  of  the  terms  proposed,  transmitted  by  due  course 
of  mail  to  the  company,  the  minds  of  both  parties  have  met  on  the 
subject,  in  the  mode  contemplated  at  the  time  of  entering  upon  the 
negotiation,  and  the  contract  becomes  complete.  The  party  to  whom 
the  proposal  is  addressed  has  a  right  to  regard  it  as  intended  as  a 
continuing  offer  until  it  shall  have  reached  him,  and  shall  be  in  due 
time  accepted  or  rejected. 

Such  is  the  plain  import  of  the  offer.  And  besides,  upon  any 
other  view,  the  proposal  amounts  to  nothing,  as  the  acceptance  would 
be  but  the  adoption  of  the  terms  tendered,  to  be,  in  turn,  proposed 
by  the  applicant  to  the  company  for  their  approval  or  rejection.  For, 
if  the  contract  is  still  open  until  the  company  is  advised  of  an  ac- 
ceptance, it  follows,  of  course,  that  the  acceptance  may  be  repudiated 
at  any  time  before  the  notice  is  received.  Nothing  is  effectually  ac- 
complished by  an  act  of  acceptance. 

It  is  apparent,  therefore,  that  such  an  interpretation  of  the  acts  of 
the  parties  would  defeat  the  object  which  both  had  in  view  in  enter- 
ing upon  the  corresuondence. 

The  fallacy  of  the  argument,  in  our  judgment,  consists  in  the 
assumption,  that  the  contract  cannot  be  consummated  without  a 


24  FORMATION    OF    CONTRACT. 

knowledge  on  the  part  of  the  company  that  the  offer  has  been  ac- 
cepted. This  is  the  point  of  the  objection.  But  a  little  reflection 
will  show,  that  in  all  cases  of  contracts  entered  into  between  parties 
at  a  distance  by  correspondence,  it  is  impossible  that  both  should 
have  a  knowledge  of  it  the  moment  it  becomes  complete.  This  can 
only  exist  where  both  parties  are  present. 

The  position  may  be  illustrated  by  the  case  before  us.  If  the  con- 
tract became  complete,  as  we  think  it  did,  on  the  acceptance  of  the 
offer  by  the  applicant,  on  the  21st  December,  1844,  the  company,  of 
course,  could  have  no  knowledge  of  it  until  the  letter  of  acceptance 
reached  the  agent,  on  the  31st  of  the  month;  and,  on  the  other  hand, 
upon  the  hypothesis  it  was  not  complete  until  notice  of  the  acceptance, 
and  then  became  so,  the  applicant  could  have  no  knowledge  of  it  at 
the  time  it  took  effect.  In  either  aspect,  and,  indeed,  in  any  aspect 
in  which  the  case  can  be  presented,  one  of  the  parties  must  be  un- 
advised of  the  time  when  the  contract  takes  effect,  as  its  consum- 
mation must  depend  upon  the  act  of  one  of  them  in  the  absence  of 
the  other. 

The  negotiation  being  carried  on  through  the  mail,  the  offer  and 
acceptance  cannot  .occur  at  the  same  moment  of  time;  nor,  for 
the  same  reason,  can  the  meeting  of  the  minds  of  the  parties  on 
the  subject  be  known  by  each  at  the  moment  of  concurrence;  the 
acceptance  must  succeed  the  offer  after  the  lapse  of  some  interval 
of  time;  and  if  the  process  is  to  be  carried  farther  in  order  to  com- 
plete the  bargain,  and  notice  of  the  acceptance  must  be  received,  the 
only  effect  is  to  reverse  the  position  of  the  parties,  changing  the 
knowledge  of  the  completion  from  one  party  to  the  other. 

It  is  obviously  impossible,  therefore,  under  the  circumstances  stated, 
ever  to  perfect  a  contract  by  correspondence,  if  a  knowledge  of  both 
parties  at  the  moment  they  become  bound  is  an  essential  element  in 
making  out  the  obligation.  And  as  it  must  take  effect,  if  effect  is 
given  at  all  to  an  endeavor  to  enter  into  a  contract  by  correspond- 
ence, in  the  absence  of  the  knowledge  of  one  of  the  parties  at 
the  time  of  its  consummation,  it  seems  to  us  more  consistent  with  the 
acts  and  declarations  of  the  parties,  to  consider  it  complete  on  the 
transmission  of  the  acceptance  of  the  offer  in  the  way  they  them- 
selves contemplated;  instead  of  postponing  its  completion  till  notice 
of  such  acceptance  has  been  received  and  assented  to  by  the  com- 
pany. 

For  why  make  the  offer,  unless  intended  that  an  assent  to  its 
terms  should  bind  them?  And  why  require  any  further  assent  on 
their  part,  after  an  unconditional  acceptance  by  the  party  to  whom 
it  is  addressed? 

We  have  said  that  this  view  is  in  accordance  with  the  usages 
and  practice  of  these  companies,  as  well  as  with  the  general  prin- 


OFFER   AND   ACCEPTANCE.  25 

ciples  of  law  governing  contracts  entered  into  by   absent   parties. 

In  the  instructions  of  this  company  to  their  agent  at  Fredericks- 
burg,  he  is  advised  to  transmit  all  applications  for  insurance  to  the 
office  for  consideration;  and  that,  upon  the  receipt  of  an  answer,  if 
the  applicant  accepts  the  terms,  the  contract  is  considered  complete 
without  waiting  to  communicate  the  acceptance  to  the  company;  and 
the  policy  to  be  thereafter  issued  is  to  bear  date  from  the  time  of  the 
acceptance. 

The  company  desire  no  further  communication  on  the  subject, 
after  they  have  settled  upon  the  terms  of  the  risk,  and  sent  them 
for  the  inspection  of  the  applicant,  in  order  to  the  consummation 
of  the  bargain.  The  communication  of  the  acceptance  by  the  agent 
afterwards  is  to  enable  them  to  make  out  the  policy.  The  contract  is 
regarded  as  complete  on  the  acceptance  of  the  terms. 

This  appears,  also,  to  have  been  the  understanding  of  the  agent; 
for,  on  communicating  to  the  insured  the  terms  received  from  the 
company,  he  observes,  "Should  you  desire  to  effect  the  above  in- 
surance, send  me  your  check  payable  to  my  order  for  fifty-seven 
dollars,  and  the  business  is  concluded";  obviously  enough  import- 
ing, that  no  other  step  would  be  necessary  to  give  effect  to  the  in- 
surance of  the  property  upon  the  terms  stated.1 

The  cases  of  Adams  v.  Lindsell  (1  Barn.  &  Aid.,  681)  and  Mactier^s 
Adm'rs  v.  Frith  (6  Wend.  104)  are  authorities  to  show  that  the 
above  view  is  in  conformity  with  the  general  principles  of  law  govern- 
ing the  formation  of  all  contracts  entered  into  between  parties 
residing  at  a  distance  by  means  of  correspondence. 

The  unqualified  acceptance  by  the  one  of  the  terms  proposed  by 
the  other,  transmitted  by  due  course  of  mail,  is  regarded  as  closing 
the  bargain  from  the  time  of  the  transmission  of  the  acceptance. 

This  is  also  the  effect  of  the  case  of  Eliason  v.  Henshaw  (4  Wheat. 
228)  in  this  court,  though  the  point  was  not  necessarily  involved  in 
the  decision  of  the  case.  The  acceptance  there  had  not  been  accord- 
ing to  the  terms  of  the  bargain  proposed,  for  which  reason  the  plain- 
tiff failed. 

2.  The  next  position  against  the  claim  is  the  non-payment  of  the 
premium. 

One  of  the  conditions  annexed  to  the  policies  of  the  company 
is,  that  no  insurance  will  be  considered  as  made  or  binding  until 
the  premium  be  actually  paid;  and  one  of  the  instructions  to  the 
agent  was,  that  no  credit  should  be  given  for  premiums  under  any 
circumstances. 

i  "In  Tayloe  v.  Merchants  Fire  Ins.  Co.,  the  defendant's  offer  contemplated 
a  unilateral  contract,  and  this  offer  was  accepted  and  the  consideration  paid 
th«  moment  when  the  plaintiff  sent  his  check  for  the  premium." — Langdell, 
Contr.  p.  17. 


26  FORMATION   OF   CONTRACT. 

But  the  answer  to  this  objection  is,  that  the  premium,  in  judg- 
ment of  law,  was  actually  paid  at  the  time  the  contract  hecame 
complete.  The  mode  of  payment  had  not  been  prescribed  by  the 
company,  whether  in  specie,  bills  of  a  particular  bank,  or  other- 
wise; the  agent,  therefore,  was  at  liberty  to  exercise  a  discretion  in 
the  matter,  and  prescribe  the  mode  of  payment;  and,  accordingly, 
we  find  him  directing,  in  this  case,  that  it  may  be  paid  by  a  check 
payable  to  his  order  for  the  amount.  It  is  admitted  that  the  insured 
had  funds  in  the  bank  upon  which  it  was  drawn,  at  all  times  from 
the  date  of  the  check  till  it  was  received  by  the  agent,  sufficient  to 
meet  it ;  and  that  it  would  have  been  paid  on  presentment. 

It  is  not  doubted  that,  if  the  check  for  the  premium  had  been 
received  by  the  agent  from  the  hands  of  the  insured,  it  would  have 
been  sufficient;  and  in  the  view  we  have  taken  of  the  case,  the  trans- 
mission of  it  by  mail,  according  to  the  directions  given,  amounts, 
in  judgment  of  law,  to  the  same  thing.  Doubtless,  if  the  check  had 
been  lost  or  destroyed  in  the  transmission,  the  insured  would  have 
been  bound  to  make  it  good;  but  the  agent,  in  this  respect,  trusted 
to  his  responsibility,  having  full  confidence  in  his  ability  and  good 
faith  in  the  transaction. 


Decree  reversed.1 

9  Cyc.  295-296  (67-70);  W.  P.  31  (35);  39  (42).  Ashley,  Formation  of 
contract  inter  absentes,  2  C.  L.  R.  1. 

1  The  letter  of  acceptance  must  be  properly  addressed  and  bear  the  postage 
prepaid,  Blake  v.  Ins.  Co.  67  Tex.  160.  Delivery  to  a  carrier  whose  duty  it  is 
to  receive  mail  (Pearce  v.  Langfit,  101  Pa.  507)  or  depositing  in  a  street  letter 
box  (Watson  v.  Russell,  149  N.  Y.  388)  is  sufficent.  Upon  the  effect  of  the 
U.  S.  postal  regulations  as  to  the  sender's  right  to  withdraw  a  letter  from  the 
mail,  see  7  H.  L.  R.  301. 

Convenience  of  the  rule. — In  Household  Fire  Ins.  Co.  v.  Grant,  L.  R.  4  Exch. 
216,  Thesiger,  L.  J.,  says:  "There  is  no  doubt  that  the  implication  of  a  com- 
plete, final,  and  absolutely  binding  contract  being  formed,  as  soon  as  the  ac- 
ceptance of  an  offer  is  posted,  may  in  some  cases  lead  to  inconvenience  and 
hardship.  But  such  there  must  be  at  times  in  every  view  of  the  law.  It  is 
impossible  in  transactions  which  pass  between  parties  at  a  distance,  and  have 
to  be  carried  on  through  the  medium  of  correspondence,  to  adjust  conflicting 
rights  between  innocent  parties,  so  as  to  make  the  consequences  of  mistake 
on  the  part  of  a  mutual  agent  fall  equally  upon  the  shoulders  of  both.  At 
the  same  time  I  am  not  prepared  to  admit  that  the  implication  in  question 
will  lead  to  any  great  or  general  inconvenience  or  hardship.  An  offerer,  if  he 
chooses,  may  always  make  the  formation  of  the  contract  which  he  proposes 
dependent  upon  the  actual  communication  to  himself  of  the  acceptance.  If 
he  trusts  to  the  post  he  trusts  to  a  means  of  communication  which,  as  a  rule, 
does  not  fail,  and  if  no  answer  to  his  offer  is  received  by  him,  and  the  matter 
is  of  importance  to  him,  he  can  make  inquiries  of  the  person  to  whom  his  offer 
was  addressed.  On  the  other  hand,  if  the  contract  is  not  finally  concluded, 
except  in  the  event  of  the  acceptance  actually  reaching  the  offerer,  the  door 


OFFER   AND   ACCEPTANCE.  27 

BRAUER  v.  SHAW 
168  MASSACHUSETTS,  198.— 1897. 

Two  actions  by  William  W.   Brauer  and   others   against   Frank 
Shaw  and  others  for  breach  of  contracts.     The  cases  were  tried  to- 
gether, and  a  verdict  ordered  for  defendants.     Plaintiffs  except. 
HOLMES,  J.     These  are  two  actions  of  contract  on  alleged  co.,4- 

would  be  opened  to  the  perpetration  of  much  fraud,  and,  putting  aside  this 
consideration,  considerable  delay  in  commercial  transactions,  in  which  de- 
spatch is,  as  a  rule,  of  the  greatest  consequence,  would  be  occasioned;  for  the 
acceptor  would  never  be  entirely  safe  in  acting  upon  his  acceptance  until  he 
had  received  notice  that  his  letter  of  acceptance  had  reached  its  destination." 

Theory  of  the  rule. — Lord  Herschell,  in  Henthorn  v.  Fraser,  [1892]  2  Ch. 
27,  C.  A.,  says:  "I  am  not  sure  that  I  should  myself  have  regarded  the 
doctrine  that  an  acceptance  is  complete  as  soon  as  the  letter  containing 
it  is  posted  as  resting  upon  an  implied  authority  by  the  person  making  the 
offer  to  the  person  receiving  it  to  accept  by  those  means.  It  strikes  me  as 
somewhat  artificial  to  speak  of  the  person  to  whom  the  offer  is  made  as 
having  the  implied  authority  of  the  other  party  to  send  his  acceptance  by 
post.  He  needs  no  authority  to  transmit  the  acceptance  through  any  par- 
ticular channel;  he  may  select  what  means  he  pleases,  the  pos.c-ofnce  no 
less  than  any  other.  The  only  effect  of  the  supposed  authority  is  to  make 
the  acceptance  complete  so  soon  as  it  is  posted,  and  authority  will  ob- 
viously be  implied  only  when  the  tribunal  considers  that  it  is  a  case  in 
which  this  result  ought  to  be  reached.  I  should  prefer  to  state  the  rule 
thus:  Where  the  circumstances  are  such  that  it  must  have  been  within 
the  contemplation  of  the  parties  that,  according  to  the  ordinary  usages 
of  mankind,  the  post  might  be  used  as  a  means  of  communicating  the  ac- 
ceptance of  an  offer,  the  acceptance  is  complete  as  soon  as  it  is  posted." 

Implication  of  method  of  acceptance. — In  Perry  v.  Mt.  Hope  Co.,  15  R.  I.  380, 
it  was  held  that  where  an  offer  was  made  orally  in  Boston,  the  offer  to 
stand  open  until  the  next  day,  and  the  offer  was  accepted  by  telegraph  the 
next  day  from  Providence,  R.  I.,  the  contract  "was  completed  in  Rhode 
Island,"  by  the  transmission  of  the  telegram,  which  was  duly  received  by 
the  offeror. 

In  Bal  v.  Van  Staden,  Transvaal  L.  R.  1902,  p.  128,  (digested  20  South 
African  L.  J.  407)  it  is  held  that  the  doctrine  that  the  acceptance  is  com- 
plete as  soon  as  the  letter  of  acceptance  has  been  posted  is  not  applicable 
where,  at  the  time  of  posting  there  was,  owing  to  the  existence  of  a  state 
of  war,  no  regular  postal  communication  between  the  residences  of  the 
respective  parties.  Solomon,  J.,  said:  "The  chief  ground  for  the  decisions 
of  the  English  courts,  viz.  the  regularity  of  the  post,  is  cut  away  and  I 
do  not  therefore  think  that  it  can  be  held  that  the  contract  was  complete 
as  soon  as  the  letter  was  posted."  See  the  commentary  on  this  case,  17 
H.  L.  R.  342. 

In  Lucas  v.  Western  Union  Telegraph  Co.,  131  la,  669,  an  offer  was  made 
by  mail  and  the  acceptance  was  sent  by  telegraph.  The  court  said:  "The 
party  making  the  offer  may  be  entirely  satisfied  to  trust  the  mails  and  not 
be  willing  to  chance  the  use  of  the  telegraph.  ...  In  the  absence  of  any 
suggestion,  one  transmitting  an  offer  by  mail  cannot  be  bound  by  an  accept- 
ance returned  in  some  other  way  until  it  is  received  or  he  has  notice  there- 
of." 

In  Scottish   Amer.  Co.  v.   Davis,  96  Tek.  504,  an  offer  was  made  to  the 


28  FORMATION   OF   CONTRACT. 

tracts  letting  all  the  cattle-carrying  space  on  the  Warren  Line  of 
steamships  for  the  May  sailings  from  Boston  to  Liverpool,  the  first 
contract  at  the  rate  of  fifty  shillings  a  head,  the  second  and  alter- 
native one  at  fifty-two  shillings  and  six  pence.  As  we  are  all  of 
opinion  that,  for  one  reason  or  another,  the  right  to  recover  upon  the 
first  contract  is  not  made  out,  it  may  be  stated  shortly.  On  April 
15,  1892,  after  earlier  correspondence,  the  defendants  wrote,  stating 
terms,  saying  that  they  had  telegraphed  that  they  "would  probably 
accept  505.,  if  reply  promptly,"  referring  to  an  answer  asking  to 
have  the  space  kept  until  noon  the  next  day,  and  to  their  reply  that 
they  would  "try  to  keep  space  for  you,"  and  adding  that  there  were 
several  customers,  and  that  they  should  feel  "duty  bound  to  let  it  to 
the  first  man  making  the  best  bid."  The  plaintiffs'  agents  tele- 
graphed at  fifty-three  minutes  past  eight  the  next  morning,  making  a 
modified  offer.  Whether  they  had  received  the  above  letter  does 
not  appear.  The  defendants  answered,  "Referring  our  letter  yester- 
day, first  offer  for  number  named  has  preference,  three  parties  con- 
sidering. Wire  quick  if  you  want  it."  This  was  received  in  the 
New  York  telegraph  office  at  fifteen  minutes  past  ten.  At  twenty 
minutes  past  ten  the  plaintiffs'  agents  telegraphed,  "Have  closed  all 
your  May  spaces  as  per  letter,"  etc.  This  is  relied  on  as  making  the 
contract.  It  does  not  appear  whether  the  telegram  which  arrived 
only  five  minutes  before  had  been  received.  If  not,  and,  if  the  last 

offeree,  Couts.  The  acceptance  was  mailed  by  Gouts.  The  court  held  that  as 
the  offer  was  not  made  by  mail  "there  was  no  implied  authority  for  Couts  to 
accept  by  mail  except  by  actual  delivery  of  his  acceptance,"  and  that  Couts 
had  a  right  to  intercept  the  letter  and  withdraw  it  from  the  mail  as  he  did. 
Argument  that  the  acceptance  must  "be  received. — The  view  of  Professor 
Langdell,  Contr.  §  14,  sustained  by  McCulloch  v.  Ins.  Co.,  1  Pick.  278,  is 
"that  the  acceptance  of  the  original  offer,  in  the  case  of  a  bilateral  contract, 
must  be  expressed,  i.  e.,  must  be  made  by  words  or  signs ;  and  that  the 
reason  for  this  is,  that  the  acceptance  contains  a  counter-offer.  Moreover, 
the  reason  why  the  counter-offer  makes  it  necessary  that  the  acceptance 
should  be  expressed  is,  that  communication  to  the  offeree  is  of  the  essence 
of  every  offer.  The  acceptance,  therefor,  must  be  communicated  to  the 
original  offerer,  and  until  such  communication  the  contract  is  not  made. 
When  the  parties  are  together  and  contract  orally,  no  question  can  often 
arise  as  to  communication;  but  when  they  are  at  a  distance  from  each 
other  and  contract  by  letter,  such  a  question  frequently  arises.  The  prin- 
ciple, however,  is  the  same  in  both  cases.  In  contracts  inter  praesentes 
the  words  or  signs  must  be  both  heard  or  seen  and  understood;  in  con- 
tracts inter  absentes  the  letter  must  be  received  and  read."  McCulloch  v. 
Ins.  Co.,  supra,  is  probably  now  overruled  in  Massachusetts,  (see  Brauer  v. 
Shaw,  and  Bishop  v.  Eaton  infra ) ,  and  the  rule  that  the  acceptance  is 
made  by  proper  transmission  is  now  general  throughout  the  United  States. 
For  a  statement  of  the  rules  in  continental  and  other  foreign  countries  as 
to  the  formation  of  contract  by  correspondence,  see  4  Michigan  Law  Re- 
view, 466;  32  American  Law  Review,  339. 


OFFER  AND  ACCEPTANCE.  29 

telegram  was  in  answer  to  the  letter  only,  the  plaintiffs  would  en- 
counter the  question  whether  the  letter  contained  an  absolute  offer 
or  only  invited  one,  and,  if  the  former,  whether  the  offer  had  not 
been  rejected  by  the  modified  offer  in  the  first  telegram  mentioned. 
However  this  may  be,  the  parties  did  not  stop  at  the  point  which 
we  have  reached,  but  went  on  telegraphing  as  we  shall  state;  so 
that,  if  there  was  any  moment  when  a  contract  had  been  made,  the 
parties  assumed  the  contrary,  and  continued  their  bargaining.  Either 
no  contract  had  been  made  thus  far,  or  it  was  discharged  by  the 
conduct  of  the  parties.  It  was  treated  as  discharged  in  a  letter 
of  the  plaintiffs'  agents  written  later  on  the  same  day. 

We  come,  then,  to  the  later  telegrams  of  the  same  day,  which  are 
relied  on  as  making  the  second  contract.  At  half  past  eleven  the 
defendants  telegraphed,  "Subject  prompt  reply,  will  let  you  May 
space,  fifty-two  six/7  This  was  received  in  New  York  at  sixteen 
minutes  past  twelve,  and  at  twenty-eight  minutes  past  twelve  a  reply 
was  sent  accepting  the  offer.  For  some  reason  this  was  not  re- 
ceived by  the  defendants  until  twenty  minutes  past  one.  At  one  the 
defendants  telegraphed,  revoking  their  offer,  the  message  being  re- 
ceived in  New  York  at  forty-three  minutes  past  one.  The  plaintiffs 
held  the  defendants  to  their  bargain,  and  both  parties  stand  upon 
their  rights. 

There  is  no  doubt  that  the  reply  was  handed  to  the  telegraph 
company  promptly,  and,  at  least,  it  would  have  been  open  to  a 
jury  to  find  that  the  plaintiffs  had  done  all  that  was  necessary  on 
their  part  to  complete  the  contract.  If,  then,  the  offer  was  out- 
standing when  it  was  accepted,  the  contract  was  made.  But  the 
offer  was  outstanding.  At  the  time  when  the  acceptance  was  re- 
ceived, even  the  revocation  of  the  offer  had  not  been  received.  It 
seems  to  us  a  reasonable  requirement  that,  to  disable  the  plaintiffs 
from  accepting  their  offer,  the  defendants  should  bring  home  to  them 
actual  notice  that  it  had  been  revoked.  By  their  choice  and  act, 
they  brought  about  a  relation  between  themselves  and  the  plaintiffs, 
which  the  plaintiffs  could  turn  into  a  contract  by  an  act  on  their 
part,  and  authorized  the  plaintiffs  to  understand  and  to  assume  that 
that  relation  existed.  When  the  plaintiffs  acted  in  good  faith  on 
the  assumption,  the  defendants  could  not  complain.  Knowingly  to 
lead  a  person  reasonably  to  suppose  that  you  offer,  and  .to  offer,  are 
the  same  thing.  O'Donnell  v.  Clinton,  145  Mass.  461,  463;  Cornish 
v.  Abington,  4  Hurl.  &  N.  549.  The  offer  must  be  made  before 
the  acceptance,  and  it  does  not  matter  whether  it  is  made  a  longer 
or  a  shorter  time  before,  if,  by  its  express  or  implied  terms,  it  is 
outstanding  at  the  time  of  the  acceptance.  Whether  much  or  little 
time  has  intervened,  it  reaches  forward  to  the  moment  of  the  ac- 
ceptance, and  speaks  then.  It  would  be  monstrous  to  allow  an  in- 


30  FORMATION   OF   CONTRACT. 

consistent  act  of  the  offerer,  not  known  or  brought  to  the  notice 
of  the  offeree,  to  affect  the  making  of  the  contract;  for  instance,,  a 
sale  by  an  agent  elsewhere  one  minute  after  the  principal  personally 
has  offered  goods  which  are  accepted  within  five  minutes  by  the  per- 
son to  whom  he  is  speaking.  The  principle  is  the  same  when  the 
time  is  longer,  and  the  act  relied  on  a  step  looking  to,  but  not  yet 
giving  notice.  The  contrary  suggestion  by  Wilde,  J.,  in  McCulloch 
v.  Insurance  Co.  (1  Pick.  278,  279),  is  not  adopted  as  a  ground  of 
decision,  and  the  view  which  we  take  is  that  taken  by  the  supreme 
court  of  the  United  States,  and  is  now  the  settled  law  of  England. 
Tayloe  v.  Insurance  Co.,  9  How.  390,  400;  Patrick  v.  Bowman,  149 
U.  S.  411,  424;  Byrne  v.  Van  Tienhoven,  5  C.  P.  Div.  344;  Stevenson 
v.  McLean,  5  Q.  B.  Div.  346;  Henthorn  v.  Eraser,  [1892]  2  Ch. 
27;  Thomson  v.  James,  18  Ct.  of  Sess.  Gas.  (2d  Series)  1;  Langdell 
Cont.  §  180;  Drew  v.  Niran,  4  Q.  B.  Div.  661,  667;  Wheat  v.  Cross, 

31  Md.  99,  103 ;  Kempner  v.  Cohn,  47  Ark.  519,  527. 

It  is  unnecessary  to  consider  other  reasons  which  were  urged  for 
our  decision. 

Exceptions  sustained. 
9  Cyc.  297   (82)  ;  W.  P.  31   (35)  ;  33   (37)  ;  39   (42). 


Acceptance  of  guaranty. 
BISHOP  v.  EATON. 

161  MASSACHUSETTS,  496.— 1894. 

Contract,  on  a  guaranty.  Judgment  for  plaintiff.  Defendant  al- 
leged exceptions. 

Defendant  wrote  plaintiff:  "If  Harry  [defendant's  brother]  needs 
more  money,  let  him  have  it  or  assist  him  to  get  it,  and  I  will  see 
that  it  is  paid."  Plaintiff  signed  the  brother's  note  as  surety,  re- 
lying on  defendant's  letter.  Shortly  afterwards  plaintiff  wrote  de- 
fendant stating  that  he  had  signed  the  note.  He  deposited  the  letter, 
postage  prepaid,  in  the  post  office  at  Sycamore,  Illinois,  addressed 
to  defendant  at  the  latter's  home  in  Nova  Scotia.  The  letter  was 
never  received  by  defendant.  When  the  note  was  due  it  was  extended 
for  a  year,  but  whether  with  defendant's  knowledge  or  consent  was 
in  dispute.  After  it  was  again  due  defendant  said  to  plaintiff: 
"Try  to  get  Harry  to  pay  it.  If  he  don't,  I  will.  It  shall  not  cost 
you  anything."  Plaintiff  afterward  paid  the  note. 

The  principal  question  in  the  case  was  whether  the  plaintiff  was 
bound  to  notify  defendant  of  the  acceptance  of  the  offer,  and,  if 
so,  whether  the  due  mailing,  within  a  reasonable  time,  of  a  letter 
accepting  the  offer  of  guaranty  was  sufficient,  or  whether  such  letter 


OFFER   AND   ACCEPTANCE.  31 

of  notification  or  acceptance  must  actually  be  received.  A  secondary 
question  was  whether  the  extension  of  time  of  payment,  without  de- 
fendant's knowledge  or  consent,  released  him  from  the  guaranty, 
and,  if  so,  whether  there  was  a  subsequent  waiver  or  notification. 

KNOWLTON,  J.  The  first  question  in  this  case  is  whether  the  con- 
tract proved  by  the  plaintiff  is  an  original  and  independent  contract 
or  a  guaranty.  The  judge  found  that  the  plaintiff  signed  the  note 
relying  upon  the  letter,  "and  looked  to  the  defendant  solely  for  re- 
imbursement if  called  upon  to  pay  the  note."  The  promise  contained 
in  the  letter  was  in  these  words:  "If  Harry  needs  more  money,  let 
him  have  it,  or  assist  him  to  get  it,  and  I  will  see  that  it  is 
paid."  On  a  reasonable  interpretation  of  this  promise,  the  plaintiff 
was  authorized  to  adopt  the  first  alternative,  and  let  Harry  have 
the  money  in  such  a  way  that  a  liability  of  Harry  to  him  would  be 
created,  and  to  look  to  the  defendant  for  payment  if  Harry  failed 
to  pay  the  debt  at  maturity;  or  he  might  adopt  the  second  alterna- 
tive and  assist  him  to  get  money  from  some  one  else  in  such  a  way 
as  to  create  a  debt  from  Harry  to  the  person  furnishing  the  money, 
and,  if  Harry  failed  to  pay,  might  look  to  the  defendant  to  relieve 
him  from  the  liability.  The  words  fairly  imply  that  Harry  was  to  be 
primarily  liable  for  the  debt,  either  to  the  plaintiff  or  to  such  other 
person  as  should  furnish  the  money,  and  that  the  defendant  was 
to  guarantee  the  payment  of  it.  We  are  therefore  of  opinion,  that, 
if  the  plaintiff  relied  solely  upon  the  defendant,  he  was  authorized 
by  the  letter  to  rely  upon  him  only  as  a  guarantor. 

The  defendant  requested  many  rulings  in  regard  to  the  law  ap- 
plicable to  contracts  of  guaranty,  most  of  which  it  becomes  neces- 
sary to  consider.  The  language  relied  on  was  an  offer  to  guarantee, 
which  the  plaintiff  might  or  might  not  accept.  Without  acceptance 
of  it  there  was  no  contract,  because  the  offer  was  conditional  and 
there  was  no  consideration  for  the  promise.  But  this  was  not  a 
proposition  which  was  to  become  a  contract  only  upon  the  giving 
of  a  promise  for  the  promise,  and  it  was  not  necessary  that  the  plain- 
tiff should  accept  it  in  words,  or  promise  to  do  anything  before  act- 
ing upon  it.  It  was  an  offer  which  was  to  become  effective  as  a  con- 
tract upon  the  doing  of  the  act  referred  to.  It  was  an  offer  to  be 
bound  in  consideration  of  an  act  to  be  done,  and  in  such  a  case  the 
doing  of  the  act  constitutes  the  acceptance  of  the  offer  and  furnishes 
the  consideration.  Ordinarily  there  is  no  occasion  to  notify  the 
offerer  of  the  acceptance  of  such  an  offer,  for  the  doing  of  the 
act  is  a  sufficient  acceptance,  and  the  promisor  knows  that  he  is 
bound  when  he  sees  that  action  has  been  taken  on  the  faith  of  his  offer. 
But  if  the  act  is  of  such  a  kind  that  knowledge  of  it  will  not  quickly 
come  to  the  promisor,  the  promisee  is  bound  to  give  him  notice  of 
his  acceptance  within  a  reasonable  time  after  doing  that  which  con- 


32  FORMATION    OF    CONTRACT. 

stitutes  the  acceptance.  In  such  a  case  it  is  implied  in  the  offer 
that,  to  complete  the  contract,  notice  shall  be  given  with  due  dili- 
gence, so  that  the  promisor  may  know  that  a  contract  has  been  made. 
But  where  the  promise  is  in  consideration  of  an  act  to  be  done,  it 
becomes  binding  upon  the  doing  of  the  act  so  far  that  the  promisee 
cannot  be  affected  by  a  subsequent  withdrawal  of  it,  if  within  a 
reasonable  time  afterward  he  notifies  the  promisor.  In  accordance 
with  these  principles,  it  has  been  held  in  cases  like  the  present,  where 
the  guarantor  would  not  know  of  himself,  from  the  nature  of  the 
transaction,  whether  the  offer  has  been  accepted  or  not,  that  he  is 
not  bound  without  notice  of  the  acceptance,  seasonably  given  after 
the  performance  which  constitutes  the  consideration.  Babcock  v. 
Bryant,  12  Pick.  133;  Whiting  v.  Stacy,  15  Gray,  270;  Schlessinger 
v.  Dickinson,  5  Allen,  47. 

In  the  present  case  the  plaintiff  seasonably  mailed  a  letter  to  the 
defendant,  informing  him  of  what  he  had  done  in  compliance  with 
the  defendant's  request,  but  the  defendant  testified  that  he  never 
received  it,  and  there  is  no  finding  that  it  ever  reached  him.  The 
judge  ruled,  as  matter  of  law,  that  upon  the  facts  found,  the  plaintiff 
was  entitled  to  recover,  and  the  question  is  thus  presented  whether  the 
defendant  was  bound  by  the  acceptance  when  the  letter  was  properly 
mailed,  although  he  never  received  it. 

When  an  offer  of  guaranty  of  this  kind  is  made,  the  implication 
is  that  notice  of  the  act  which  constitutes  an  acceptance  of  it  shall 
be  given  in  a  reasonable  way.  What  kind  of  a  notice  is  required 
depends  upon  the  nature  of  the  transaction,  the  situation  of  the 
parties,  and  the  inferences  fairly  to  be  drawn  from  their  previous 
dealings,  if  any,  in  regard  to  the  matter.  If  they  are  so  situated 
that  communication  by  letter  is  naturally  to  be  expected,  then  the 
deposit  of  a  letter  in  the  mail  is  all  that  is  necessary.  If  that  is 
done  which  is  fairly  to  be  contemplated  from  their  relations  to  the 
subject-matter  and  from  their  course  of  dealing,  the  rights  of  the 
parties  are  fixed,  and  a  failure  actually  to  receive  the  notice  will  not 
affect  the  obligation  of  the  guarantor. 

The  plaintiff  in  the  case  now  before  us  resided  in  Illinois  and  the 
defendant  in  Nova  Scotia.  The  offer  was  made  by  letter,  and  the 
defendant  must  have  contemplated  that  information  in  regard  to 
the  plaintiff's  acceptance  or  rejection  of  it  would  be  by  letter.  It 
would  be  a  harsh  rule  which  would  subject  the  plaintiff  to  the  risk  of 
the  defendant's  failure  to  receive  the  letter  giving  notice  of  his  action 
on  the  faith  of  the  offer.  We  are  of  opinion  that  the  plaintiff,  after 
assisting  Harry  to  get  the  money,  did  all  that  he  was  required  to  do 
when  he  seasonably  sent  the  defendant  the  letter  by  mail  informing 
him  of  what  had  been  done. 

How  far  such  considerations  are  applicable  to  the  case  of  an  ordi- 


OFFER   AND   ACCEPTANCE.  33 

nary  contract  made  by  letter,  about  which  some  of  the  early  decisions 
are  conflicting,  we  need  not  now  consider.1 

The  plaintiff  was  not  called  upon  under  his  contract  to  attempt  to 
collect  the  money  from  the  maker  of  the  note,  and  it  is  no  defense 
that  he  did  not  promptly  notify  the  defendant  of  the  maker's  default, 
at  least  in  the  absence  of  evidence  that  the  defendant  was  injured 
by  the  delay.  This  rule  in  cases  like  the  present  was  established  in 
Massachusetts  in  Vinal  v.  Eichardson  (13  Allen,  521),  after  much 
consideration,  and  it  is  well  founded  in  principle  and  strongly  sup- 
ported by  authority. 

\Ve  find  one  error  in  the  rulings  which  requires  us  to  grant  a  new 
trial.  It  appears  from  the  bill  of  exceptions  that  when  the  note 
became  due  the  time  for  the  payment  of  it  was  extended  without  the 
consent  of  the  defendant.  The  defendant  is  thereby  discharged  from 
his  liability,  unless  he  subsequently  assented  to  the  extension  and 
ratified  it.  Chace  v.  Brooks,  5  Cush.  43 ;  Carkin  v.  Savory,  14  Gray, 
528.  The  court  should  therefore  have  ruled  substantially  in  ac- 
cordance with  the  defendant's  eighth  request,  instead  of  finding 
for  the  plaintiff,  as  matter  of  law,  on  the  facts  reported.  Whether 
the  judge  would  have  found  a  ratification  on  the  evidence  if  he  had 
considered  it,  we  have  no  means  of  knowing. 

Exceptions  sustained. 

20  Cyc.  1404-1410  (48-73)  ;  16  L.  R.  A.  (N.  S.)  353;  20  H.  L.  R.  485;  11 
C.  L.  R.  178;  Ames,  Cases  on  suretyship,  notes  pp.  225-237;  Rogers,  Notice 
of  acceptance  in  contracts  of  guaranty,  5  C.  L.  R.  215. 


DAVIS  SEWING  MACHINE  COMPANY  v.  EICHARDS 
AND  ANOTHER 

115  UNITED  STATES,  524.— 1885. 

This  was  an  action  brought  in  the  Supreme  Court  of  the  Dis- 
trict of  Columbia,  upon  a  guaranty  of  the  performance  by  one  John 
W.  Poler  of  a  contract  under  seal,  dated  December  17th,  1872,  be- 
tween him  and  the  plaintiff  corporation,  by  which  it  was  agreed  that 
all  sales  of  sewing  machines  which  the  corporation  should  make  to 
him  should  be  upon  certain  terms  and  conditions,  the  principal  of 
which  were  that  Poler  should  use  all  reasonable  efforts  to  introduce, 
supply,  and  sell  the  machines  of -the  corporation,  at  not  less  than 
its  regular  retail  prices,  throughout  the  District  of  Columbia  and  the 
counties  of  Prince  George  and  Montgomery  in  the  State  of  Mary- 
land, and  should  pay  all  indebtedness  by  account,  note,  indorsement 

iSee  Brauer  v.  Shaw,  168  Mass.  198,  ante,  p.  27. 


34:  FORMATION    OF    CONTRACT. 

or  otherwise,  which  should  arise  from  him  to  the  corporation  under 
the  contract,  and  should  not  engage  in  the  sale  of  sewing  machines 
of  any  other  manufacture;  and  that  the  corporation,  during  the  con- 
tinuance of  the  agency,  should  sell  its  machines  to  him  at  a  certain 
discount,  and  receive  payment  therefor  in  certain  manner;  and  that 
either  party  might  terminate  the  agency  at  pleasure. 

The  guaranty  was  upon  the  same  paper  with  the  above  contract, 
and  was  as  follows: 

"For  value  received,  we  hereby  guarantee  to  the  Davis  Sewing  Machine  Com- 
pany of  Watertown,  N.  Y.,  the  full  performance  of  the  foregoing  contract  on 
the  part  of  John  W.  Poler,  and  the  payment  by  said  John  W.  Poler  of  all  in- 
debtedness, by  account,  note,  indorsement  of  notes  (including  renewals  and 
extensions)  or  otherwise,  to  the  said  Davis  Sewing  Machine  Company,  for 
property  sold  to  said  John  W.  Poler,  under  this  contract,  to  the  amount  of 
three  thousand  ($3000)  dollars.  Dated  Washington,  D.  C.,  December  17th, 
1872. 

"A.   ROTHWELL. 
"A.    C.    RlCHABDS." 

Under  the  guaranty  were  these  words:  "I  consider  the  above  sureties  en- 
tirely responsible.  Washington,  December  19th,  1872. 

"J.  T.  STEVENS." 

At  the  trial  the  above  papers,  signed  by  the  parties,  were  given  in 
evidence  by  the  plaintiff,  and  there  was  proof  of  the  following  facts : 
On  December  17th,  1872,  at  Washington,  the  contract  was  executed 
by  Poler,  and  the  guaranty  was  signed  by  the  defendants,  and  the 
contract  and  guaranty,  after  being  so  signed,  were  delivered  by  the 
defendants  to  Poler,  and  by  Poler  to  Stevens,  the  plaintiff's  attorney, 
and  by  Stevens  afterward  forwarded,  with  his  recommendation  of  the 
sureties,  to  the  plaintiff  at  Watertown,  in  the  State  of  New  York,  and 
the  contract  there  executed  by  the  plaintiff.  The  plaintiff  afterward 
delivered  goods  to  Poler  under  the  contract,  and  he  did  not  pay  for 
them.  The  defendants  had  no  notice  of  the  plaintiff's  execution 
of  the  contract  or  acceptance  of  the  guaranty,  and  no  notice  or  knowl- 
edge that  the  plaintiff  had  furnished  any  goods  to  Poler  under  the 
contract  or  upon  the  faith  of  the  guaranty,  until  January,  1875,  when 
payment  therefor  was  demanded  by  the  plaintiff  of  the  defendants, 
and  refused.  At  the  time  of  the  signing  of  the  guaranty,  the  plain- 
tiff had  furnished  no  goods  to  Poler,  and  the  negotiations  then  pend- 
ing between  the  plaintiff  and  Poler  related  to  prospective  transac- 
tions between  them. 

The  Court  instructed  the  jury  as  follows :  "It  appearing  that,  at 
the  time  the  defendants  signed  the  guaranty  on  the  back  of  the 
contract  between  the  plaintiff  and  Poler,  the  plaintiff  bad  not  exe- 
cuted the  contract  or  assented  thereto,  and  that  the  contract  and 
guaranty  related  to  prospective  dealings  between  the  plaintiff  and 


OFFER   AND   ACCEPTANCE.  35 

Poler,  and  that  subsequently  to  the  signing  thereof  by  the  defendants 
the  attorney  for  the  plaintiff  approved  the  responsibility  of  the  guar- 
antors and  sent  the  contract  to  Watertown,  N.  Y.,  to  the  plaintiff, 
which  subsequently  signed  it,  and  no  notice  having  been  given  by  the 
plaintiff  to  the  defendants  of  the  acceptance  of  such  contract  and 
guaranty,  and  that  it  intended  to  furnish  goods  thereon  and  hold  the 
defendants  responsible,  the  plaintiff  cannot  recover,  and  the  jury 
should  find  for  the  defendants/' 

A  verdict  was  returned  for  the  defendants,  and  judgment  rendered 
thereon,  which  on  exceptions  by  the  plaintiff  was  affirmed  at  the 
general  term,  and  the  plaintiff  sued  out  this  writ  of  error,  pending 
which  one  of  the  defendants  died  and  his  executor  was  summoned  in. 

GRAY,  J.,  delivered  the  opinion  of  the  Court.  After  stating  the 
facts  in  the  language  above  reported,  he  continued : 

The  decision  of  this  case  depends  upon  the  application  of  the  rules 
of  law  stated  in  the  opinion  in  the  recent  case  of  Davis  v.  Wells,  104 
U.  S.  159,  in  which  the  earlier  decisions  of  this  Court  upon  the  sub- 
ject are  reviewed. 

Those  rules  may  be  summed  up  as  follows:  A  contract  of  guar- 
anty, like  every  other  contract,  can  only  be  made  by  the  mutual 
assent  of  the  parties.  If  the  guaranty  is  signed  by  the  guarantor 
at  the  request  of  the  other  party,  or  if  the  latter's  agreement  to  accept 
is  contemporaneous  with  the  guaranty,  or  if  the  receipt  from  him 
of  a  valuable  consideration,  however  small,  is  acknowledged  in  the 
guaranty,  the  mutual  assent  is  proved,  and  the  delivery  of  the  guar- 
anty to  him  or  for  his  use  completes  the  contract.  But  if  the 
guaranty  is  signed  by  the  guarantor  without  any  previous  request  of 
the  other  party,  and  in  his  absence,  for  no  consideration  moving 
between  them  except  future  advances  to  be  made  to  the  principal 
debtor,  the  guaranty  is  in  legal  effect  an  offer  or  proposal  on  the  part 
of  the  guarantor,  needing  an  acceptance  by  the  other  party  to  com- 
plete the  contract. 

The  case  at  bar  belongs  to  the  latter  class.  There  is  no  evidence 
of  any  request  from  the  plaintiff  corporation  to  the  guarantors,  or 
of  any  consideration  moving  from  it  and  received  or  acknowledged 
by  them  at  the  time  of  their  signing  the  guaranty.  The  general 
words  at  the  beginning  of  the  guaranty,  "value  received,"  without 
stating  from  whom,  are  quite  as  consistent  with  a  consideration  re- 
ceived by  the  guarantors  from  the  principal  debtor  only.  The  cer- 
tificate of  the  sufficiency  of  the  guarantors,  written  by  the  plaintiff's 
attorney  under  the  guaranty,  bears  date  two  days  later  than  the 
guaranty  itself.  The  plaintiff's  original  contract  with  the  principal 
debtor  was  not  executed  by  the  plaintiff  until  after  that.  The  guar- 
antors had  no  notice  that  their  sufficiency  had  been  approved,  or  that 
their  guaranty  had  been  accepted,  or  even  that  the  original  contract 


36  FORMATION   OF   CONTRACT. 

had  been  executed  or  assented  to  by  the  plaintiff,  until  long  after- 
ward, when  payment  was  demanded  of  them  for  goods  supplied  by 
the  plaintiff  to  the  principal  debtor. 

Judgment  affirmed.1 


Offer  creates  no  legal  rights  until  acceptance,  but  may  lapse  or  be 
revoked. 

(i.)  Lapse. 

a.  Lapse  by  death. 
PRATT  v.  TRUSTEES. 

93  ILLINOIS,  475.— 1879. 

Action  on  notes.     Plaintiff  had  judgment  below. 

SCHOLFIELD,  J.  Appellees  obtained  judgment  in  the  county  court 
of  Kane  County  against  Mary  L.  Pratt,  as  administratrix  of  the 
estate  of  Philemon  B.  Pratt,  deceased,  on  two  promissory  notes, 
executed  by  the  deceased  to  the  appellees  on  the  6th  of  July,  1871, 
— one  for  $300,  payable  one  year  after  date,  and  the  other  for  the  sum 
of  $327.50,  payable  two  years  after  date,  and  both  bearing  interest 
at  the  rate  of  ten  per  cent  per  annum.  Appeal  was  taken  from  that 
judgment  to  the  Circuit  Court  of  Kane  County,  where  the  cause 

i  In  Evans  v.  McCormick,  167  Pa.  St.  247,  the  court  says:  "It  is  contended 
by  counsel,  however,  that  'if  the  guaranty  is  made  at  the  request  of  the  guar- 
antee it  then  becomes  the  answer  of  the  guarantor  to  a  proposal  made  to  him, 
and  its  delivery  to  and  for  the  use  of  the  guarantee  completes  the  communi- 
cation between  them  and  constitutes  a  contract.'  As  authority  for  this 
position  Davis  v.  Wells,  104  U.  S.  159,  and  Sewing  Machine  Co.  v.  Richards, 
115  U.  S.  524,  are  cited.  These  cases  do  so  hold  although  the  decisions  turned 
on  other  points.  Looking  to  our  own  decisions,  we  find  a  different  doctrine 
held  in  Kay  v.  Allen,  9  Pa.  320;  it  was  argued  by  counsel,  'that  a  precedent 
request  by  the  creditor  to  the  party  subsequently  offering  the  guaranty  was 
equivalent  to  notice  of  acceptance.'  Mr.  Justice  Bell  delivering  the  opinion 
of  the  court  could  find  no  warrant  for  any  such  view.  In  rejecting  the  prop- 
osition he  reasons  as  follows:  'Indeed  it  is  difficult  to  imagine  how  precedent 
request  alone  can  supply  the  place  of  subsequent  notice,  since  after  request 
made  and  proffer  of  guaranty,  the  merchant  may  refuse  the  credit  or  advance 
craved,  and  without  notice  the  surety  cannot  know  whether  he  has  or  has  not. 
So  far  is  this  insisted  on,  that  it  is  said  without  notice  there  can  be  no  con- 
tract; for  like  all  other  contracts,  that  of  guaranty  requires  both  a  proposal 
and  acceptance  thereof.'  This  doctrine  was  distinctly  recognized  and  re- 
affirmed in  Gardner  v.  Lloyd  [110  Pa.  St.  278]  decided  since  the  case  in  104 
U.  S.,  Mr.  Justice  Green  quoting  the  very  language  of  Judge  Bell.  The  rea- 
soning of  the  Supreme  Court  of  this  State  is  convincing  while  for  the  doctrine 
of  the  United  States  Court  no  reason  is  offered,  and  we  feel  bound  to  follow 
the  decisions  of  our  own  courts." 


OFFER   AND  ACCEPTANCE.  37 

was  again  tried  at  its  October  term,  1876,  resulting,  as  before,  in  a 
judgment  in  favor  of  appellees  for  the  amount  of  the  notes,  principal 
and  interest.  Mary  L.  Pratt,  administratrix,  appeals  from  that 
judgment,  and  brings  the  rulings  of  the  Circuit  Court  before  us  for 
review. 

The  defense  interposed  to  the  notes  is,  that  they  were  executed 
without  any  valid  consideration.  .  .  . 

The  question  to  be  considered  is,  did  Pratt's  death  revoke  the 
promise  expressed  in  the  notes,  no  money  having  been  expended,  or 
labor  bestowed,  or  liability  of  any  kind  incurred,  prior  to  his  death, 
upon  the  faith  of  that  promise? 

The  purpose  in  giving  the  notes  was  to  enable  the  church  repre- 
sented by  appellees  to  purchase  a  bell.  The  cost  *  of  a  bell  of  a 
particular  size,  etc.,  was  estimated  by  Pratt,  and  he  gave  his  notes 
for  the  amount  01  the  estimate,  intending  that  when  the  notes  were 
paid  the  money  should  be  devoted  to  paying  for  such  a  bell;  and 
when  the  notes  matured,  at  Pratt's  suggestion  to  let  them  stand, 
because,  as  he  alleged,  bell  metal  was  getting  cheaper,  and  they 
would  thereby  be  enabled  to  procure  a  larger  bell,  no  effort  was 
made  to  collect  the  notes,  and  they  were  permitted  to  remain  just 
as  they  were;  but  there  was  no  undertaking  on  the  part  of  appellees 
nor  the  church  which  they  represent  to  procure  a  bell,  and  there  is  no 
proof  of  any  act  done,  or  liability  incurred  by  appellees,  or  any  one 
else,  in  reliance  upon  these  notes,  before  the  death  of  Pratt.  It  is 
shown  that  the  bell  has  been  procured,  and  probably  there  is  evidence 
sufficient  to  show  that  this  has  been  done  on  the  faith  of  those  notes, 
but  it  appears  with  a  reasonable  certainty  that  this  has  been  since 
Pratt's  death.  If  a  contract  therefor  was  made  in  Pratt's  life-time, 
the  record  unfortunately  does  not  show  it.  Collection  of  the  notes 
cannot  be  enforced  as  a  promise  to  make  a  gift.  Pope  v.  Dodson, 
58  111.  360;  Blanchard  v.  Williamson,  70  Id.  652.  Where  notes  are 
given  by  way  of  voluntary  subscription,  to  raise  a  fund  or  promote 
an  object,  they  are  open  to  the  defense  of  a  want  of  consideration, 
unless  money  has  been  expended,  or  liabilities  incurred,  which,  by  a 
legal  necessity,  must  cause  loss  or  injury  to  the  person  so  expend- 
ing money,  or  incurring  liability,  if  the  notes  are  not  paid.  1  Pars, 
on  Bills  and  Notes,  202 ;  1  Pars,  on  Cont.  377,  et  seq. 

And  so  it  has  been  held  that  the  payee  of  a  promissory  note  given 
to  him  in  the  expectation  of  his  performing  service,  but  without  any 
contract  binding  him  to  serve,  cannot  maintain  an  action  upon  it. 
Hulse  v.  Hulse,  17  C.  B.  711 ;  84  Eng.  Com.  Law,  709. 

In  the  absence  of  any  one  claiming  rights  as  a  bona  fide  assignee 
before  maturity,  it  is  not  perceived  that  promissory  notes,  executed 
as  these  were,  are,  in  any  material  respect,  different  from  an  ordinary 
subscription  whereby  the  subscriber  agrees  under  his  hand,  to  pay  go 


38  FORMATION   OF   CONTRACT. 

much  in  aid  of  a  church,  school,  etc.,  where  there  is  no  corresponding 
undertaking  by  the  payee. 

The  promise  stands  as  a  mere  offer,  and  may,  by  necessary  con- 
sequence, be  revoked  any  time  before  it  is  acted  upon.  It  is  the  ex- 
pending of  money,  etc.,  or  incurring  of  legal  liability,  on  the  faith  of 
the  promise,  which  gives  the  right  of  action,  and  without  this  there 
is  no  right  of  action.  McClure  v.  Wilson,  43  111.  356,  and  cases  there 
cited ;  Trustees  v.  Garvey ;  53  Id.  401 ;  S.  C.,  5  Am.  Eep.  51 ;  Baptist 
Education  Soc.  v.  Carter,  72  Id.  247. 

Being  but  an  offer,  and  susceptible  of  revocation  at  any  time  before 
being  acted  upon,  it  must  follow  that  the  death  of  the  promisor, 
before  the  offer  is  acted  upon,  is  a  revocation  of  the  offer.  This  is 
clearly  so  upon  principle.  The  subscription  or  note  is  held  to  be  a 
mere  offer  until  acted  upon,  because  until  then  there  is  no  mutuality. 
The  continuance  of  an  offer  is  in  the  nature  of  its  constant  repetition, 
which  necessarily  requires  some  one  capable  of  making  a  repetition. 
Obviously  this  can  no  more  be  done  by  a  dead  man  than  a  contract  can, 
in  the  first  instance,  be  made  by  a  dead  man. 

If  the  payees  named  in  the  notes  may  be  held  agents  of  the  promisor, 
•with  power  to  contract  for  work  to  be  done  and  money  expended 
upon  the  faith  of  the  notes,  the  case  of  Campanari  v.  Woodburn  (15 
C.  B.  400;  80  Eng.  Com.  Law,  400)  is  directly  in  point,  and  holds 
that  the  death  of  the  promisor  was  a  revocation  of  the  agency.  In 
that  case  the  plaintiff  alleged  that  it  was  agreed  between  him  and  the 
defendant's  intestate  that  he  should  endeavor  to  sell  a  certain  picture, 
and  that  if  he  succeeded  the  intestate  should  pay  him  100  pounds; 
that  he  did  so  endeavor  while  the  testator  was  alive,  and  through 
the  efforts  then  made  was  enabled  to  effect  a  sale  after  the  testator's 
death,  but  that  the  defendant  had  refused  to  pay  100  pounds.  The 
count  was  held  not  to  show  a  cause  of  action.  Jervis,  C.  J.,  said  that 
if  the  testator  had  countermanded  the  sale,  he  clearly  would  not  have 
been  liable  for  commissions,  although  the  plaintiff  might  have  re- 
covered for  services  already  rendered  and  charges  and  expenses  pre- 
viously incurred.  A.  fortiori  the  defendant  was  not  responsible  when 
the  revocation  proceeded  from  the  act  of  God. 

An  analogous  case  is  Michigan  State  Bank  v.  Leaven  worth  (2 
Williams  [Vt.],  209),  where  it  was  held  that  the  operation  of  a  letter 
of  credit  was  confined  to  the  life  of  the  writer,  and  that  no  recovery 
can  be  had  upon  it  for  goods  sold  or  advances  made  after  his  death. 

The  question  that  has  been  raised,  in  some  cases,  whether  a  party 
acting  in  good  faith  upon  the  belief  that  the  principal  is  alive,  may 
recover,  does  not  arise  here,  as  there  is  nothing  in  the  evidence  to 
authorize  the  inference  that  the  bell  here  was  purchased  under  the  be- 
lief that  Pratt  was  still  alive. 

We  are  of  the  opinion,  on  the  record  before  us,  the  judgment  below 


OFFER   AND   ACCEPTANCE.  39 

was  unauthorized.     It  must  therefore  be  reversed  and  the  cause  re- 
manded. 

Judgment  reversed.1 

9  Cyc.  293   (48-50)  ;  W.  P.  42   (44)  ;   186   (3). 


b.  Lapse  by  failure  to  accept  in  manner  prescribed. 

ELIASON  et  al  v.  HENSHAW. 

4  WHEATON   (U.  S.),  225.— 1819. 

Error  to  the  Circuit  Court  for  the  District  of  Columbia. 

WASHINGTON,  J.  This  is  an  action,  brought  by  the  defendant  in 
error,  to  recover  damages  for  the  non-performance  of  an  agreement, 
alleged  to  have  been  entered  into  by  the  plaintiffs  in  error,  for  the 
purchase  of  a  quantity  of  flour,  at  a  stipulated  price.  The  evidence 
of  this  contract,  given  in  the  court  below,  is  stated  in  a  bill  of  ex- 
ceptions, and  is  to  the  following  effect : 

A  letter  from  the  plaintiffs  to  the  defendant,  dated  the  10th  of 
February,  1813,  in  which  they  say:  "Capt.  Conn  informs  us  that 
you  have  a  quantity  of  flour  to  dispose  of.  We  are  in  the  practice 
of  purchasing  flour  at  all  times,  in  Georgetown,  and  will  be  glad  to 
serve  you,  either  in  receiving  your  flour  in  store,  when  the  markets 
are  dull,  and  disposing  of  it,  when  the  markets  will  answer  to  ad- 
vantage, or  we  will  purchase  at  market  price,  when  delivered ;  if  you 
are  disposed  to  engage  two  or  three  hundred  barrels  at  present,  we 
will  give  you  $9.50  per  barrel,  deliverable  the  first  water,  in  George- 
town, or  any  service  we  can.  If  you  should  want  an  advance,  please 
write  us  by  mail,  and  will  send  you  part  of  the  money  in  advance."  In 
a  postscript  they  add,  "  Please  write  by  return  of  wagon,  whether  you 

i  For  a  similar  case  of  revocation  by  insanity,  see  Beach  v.  First  M.  E. 
Church,  96  111.  177. 

In  Jordan  v.  Dobbins,  122  Mass.  168,  an  action  upon  a  guaranty  for  a  pro- 
posed sale  of  goods  to  a  third  person,  the  court  said:  "The  guaranty  is  care- 
fully drawn,  but  it  is  in  its  nature  nothing  more  than  a  simple  guaranty  for 
a  proposed  sale  of  goods.  The  provision,  that  it  shall  continue  until  written 
notice  is  given  by  the  guarantor  that  it  shall  not  apply  to  future  purchases, 
affects  the  mode  in  which  the  guarantor  might  exercise  his  right  to  revoke 
it,  but  it  cannot  prevent  its  revocation  by  his  death.  The  fact  that  the  instru- 
ment is  under  seal  cannot  change  its  nature  or  construction.  No  liability 
existed  under  it  against  the  guarantor  at  the  time  of  his  death,  but  the  goods 
for  which  the  plaintiffs  seek  to  recover  were  all  sold  afterward. 

"We  are  not  impressed  by  the  plaintiff's  argument  that  it  is  inequitable  to 
throw  the  loss  upon  them.  It  is  no  hardship  to  require  traders,  whose  busi- 
ness it  is  to  deal  in  goods,  to  exercise  diligence  so  far  as  to  ascertain  whether 
a  person  upon  whose  credit  they  are  selling  is  living." 


40  FORMATION   OF   CONTRACT. 

accept  our  offer."  This  letter  was  sent  from  the  house  at  which  the 
writer  then  was,  about  two  miles  from  Harper's  Ferry,  to  the  de- 
fendant, at  his  mill,  at  Mill  Creek,  distant  about  twenty  miles  from 
Harper's  Ferry,  by  a  wagoner  then  employed  by  the  defendant  to 
haul  flour  from  his  mill  to  Harper's  Ferry,  and  then  about  to  return 
home  with  his  wagon.  He  delivered  the  letter  to  the  defendant,  on 
the  14th  of  the  same  month,  to  which  an  answer,  dated  the  succeed- 
ing day,  was  written  by  the  defendant,  addressed  to  the  plaintiffs,  at 
Georgetown,  and  dispatched  by  a  mail  which  left  Mill  Creek  on  the 
19th,  being  the  first  regular  mail  from  that  place  to  Georgetown. 
In  this  letter  the  writer  says:  "Your  favor  of  the  10th  inst.  was 
handed  me  by  Mr.  Chenoweth  last  evening.  I  take  the  earliest  op- 
portunity to  answer  it  by  post.  Your  proposal  to  engage  300  barrels 
of  flour,  delivered  in  Georgetown,  by  the  first  water,  at  $9.50  per 
barrel,  I  accept;  shall  send  on  the  flour  by  the  first  boats  that  pass 
down  from  where  my  flour  is  stored  on  the  river;  as  to  any  advance, 
will  be  unnecessary — payment  on  delivery  is  all  that  is  required." 

On  the  25th  of  the  same  month,  the  plaintiffs  addressed  to  the 
defendant  an  answer  to  the  above,  dated  at  Georgetown,  in  which  they 
acknowledge  the  receipt  of  it,  and  add:  "N"ot  having  heard  from 
you  before,  had  quite  given  over  the  expectation  of  getting  your 
flour ;  more  particularly,  as  we  requested  an  answer  by  return  of  wagon 
the  next  day,  and  as  we  did  not  get  it,  had  bought  all  we  wanted." 
The  wagoner,  by  whom  the  plaintiffs'  first  letter  was  sent,  informed 
them,  when  he  received  it,  that  he  should  not  probably  return  to 
Harper's  Ferry,  and  he  did  not,  in  fact,  return  in  the  defendant's 
employ.  The  flour  was  sent  down  to  Georgetown  some  time  in  March, 
and  the  delivery  of  it  to  the  plaintiffs  was  regularly  tendered  and  re- 
fused. 

Upon  this  evidence,  the  defendants  in  the  court  below,  the  plain- 
tiffs in  error,  moved  that  court  to  instruct  the  jury,  that  if  they  be- 
lieved the  said  evidence  to  be  true,  as  stated,  the  plaintiff  in  this 
action  was  not  entitled  to  recover  the  amount  of  the  price  of  the  300 
barrels  of  flour,  at  the  rate  of  $9.50  per  barrel.  The  court  being 
divided  in  opinion,  the  instruction  prayed  for  was  not  given.  The 
question  is,  whether  the  court  below  ought  to  have  given  the  instruc- 
tion to  the  jury,  as  the  same  was  prayed  for?  If  they  ought,  the 
judgment,  which  was  in  favor  of  the  plaintiff  in  that  court,  must  be 
reversed. 

It  is  an  undeniable  principle  of  the  law  of  contracts,  that  an  offer 
of  a  bargain  by  one  person  to  another,  imposes  no  obligation  upon  the 
former  until  it  is  accepted  by  the  latter,  according  to  the  terms  in 
which  the  offer  was  made.  Any  qualification  of,  or  departure  from, 
those  terms  invalidates  the  offer,  unless  the  same  be  agreed  to  by  the 
person  who  made  it.  Until  the  terms  of  the  agreement  have  received 


OFFER   AND   ACCEPTANCE.  41 

the  assent  of  both  parties,  the  negotiation  is  open,  and  imposes  no 
obligation  upon  either. 

In  this  case,  the  plaintiffs  in  error  offered  to  purchase  from  the 
defendant  two  or  three  hundred  barrels  of  flour,  to  be  delivered  at 
Georgetown,  by  the  first  water,  and  to  pay  for  the  same  $9.50  per 
barrel.  To  the  letter  containing  this  offer,  they  required  an  answer 
by  the  return  of  the  wagon,  by  which  the  letter  was  dispatched.  This 
wagon  was  at  that  time  in  the  service  of  the  defendant,  and  em- 
ployed by  him  in  hauling  flour  from  his  mill  to  Harper's  Ferry,  near 
to  which  place  the  plaintiffs  then  were.  The  meaning  of  the  writers 
was  obvious.  They  could  easily  calculate,  by  the  usual  length  of 
time  which  was  employed  by  this  wagon  in  traveling  from  Harper's 
Ferry  to  Mill  Creek  and  back  again  with  a  load  of  flour,  about  what 
time  they  should  receive  the  desired  answer,  and  therefore  it  was  en- 
tirely unimportant  whether  it  was  sent  by  that  or  another  wagon,  or 
in  any  other  manner,  provided  it  was  sent  to  Harper's  Ferry,  and  was 
not  delayed  beyond  the  time  which  was  ordinarily  employed  by  wagons 
engaged  in  hauling  flour  from  the  defendant's  mill  to  Harper's  Ferry. 
Whatever  uncertainty  there  might  have  been  as  to  the  time  when  the 
answer  would  be  received,  there  was  none  as  to  the  place  to  which  it 
was  to  be  sent;  this  was  distinctly  indicated  by  the  mode  pointed  out 
for  the  conveyance  of  the  answer.  The  place,  therefore,  to  which  the 
answer  was  to  be  sent,  constituted  an  essential  part  of  the  plaintiff's 
offer. 

It  appears,  however,  from  the  bill  of  exceptions,  that  no  answer 
to  this  letter  was  at  any  time  sent  to  the  plaintiff's  at  Harper's  Ferry. 
Their  offer,  it  is  true,  was  accepted  by  the  terms  of  a  letter  ad- 
dressed Georgetown,  and  received  by  the  plaintiffs  at  that  place;  but 
an  acceptance  communicated  at  a  place  different  from  that  pointed 
out  by  the  plaintiffs,  and  forming  a  part  of  their  proposal,  imposed 
no  obligation  binding  upon  them,  unless  they  had  acquiesced  in  it, 
which  they  declined  doing.  It  is  no  argument,  that  an  answer  was 
received  at  Georgetown;  the  plaintiffs  in  error  had  a  right  to  dictate 
the  terms  upon  which  they  would  purchase  the  flour,  and  unless  they 
were  complied  with,  they  were  not  bound  by  them.  All  their  ar- 
rangements may  have  been  made  with  a  view  to  the  circumstance  of 
place,  and  they  were  the  only  judges  of  its  importance.  There  was, 
therefore,  no  contract  concluded  between  these  parties,  and  the  court 
ought,  therefore,  to  have  given  the  instruction  to  the  jury,  which  was 
asked  for. 

Judgment  reversed,  and  cause  remanded,  with  directions  to  award 
a  venire  facias  de  novo. 

9  Cyc.  266  (29-31)  ;  W.  P.  43  (47). 


42  FORMATION   OF   CONTRACT. 

c.  Lapse  by  expiration  of  time. 
MACLAY  v.  HAEVEY. 

90  ILLINOIS,  525.— 1878. 

SCHOLFIELD,  J.  Appellant  brought  assumpsit  against  appellee  in 
the  court  below,  on  an  alleged  contract  whereby  the  latter  employed 
the  former  to  take  charge  of  the  millinery  department  of  his  store  in 
Monmouth,  in  this  State,  for  the  season  commencing  in  April  and 
ending  in  July,  in  the  year  1876,  and  to  pay  her  therefor  $15  per 
week. 

The  judgment  was  in  favor  of  the  appellee,  and  appellant  now  assigns 
numerous  errors  as  grounds  for  its  reversal. 

In  our  opinion,  the  case  may  be  properly  disposed  of  by  the  con- 
sideration of  a  single  question.  Appellant's  right  of  recovery  is  based 
entirely  upon  an  alleged  special  contract,  and  unless  there  was  such 
a  contract  the  judgment  below  is  right,  however  erroneous  may  have 
been  the  rulings  under  which  it  was  obtained. 

After  some  preliminary  correspondence,  which  is  not  before  us, 
appellant,  who  was  then  residing  in  Peoria,  received  from  appellee 
the  following,  by  mail : 

"MONMOUTH,  ILL.,  March  9,  1876. 

"Miss  L.  Maclay,  Peoria,  III.:  I  have  been  trying  to  find  your  address  for 
some  time,  and  was  informed  last  evening  that  you  were  in  Peoria.  I  write 
to  inquire  if  you  intend  to  work  at  millinery  this  season,  and  if  you  have 
made  any  arrangements  or  not.  If  you  have  not,  can  you  take  charge  of  my 
stock  this  season?  And  if  we  can  agree,  I  would  want  you  for  a  permanent 
trimmer. 

"Please  notify  me  by  return  mail,  and  terms,  and  we  can  confer  further. 

"Yours  in  haste, 

"JOHN  HABVET." 

"Formerly  Jno.  Harvey  &  Co.,  when  you  trimmed  for  me." 

Appellant's  reply  to  this  is  not  before  us.  She  says  she  stated  her 
terms  in  it,  and  thereafter  appellee  wrote  her  the  following,  which  she 
also  received  by  mail: 

"MONMOUTH,  ILL.,  March  21,  1876. 

"Miss  L.  Maclay,  Peoria,  III.:  Your  favor  was  received  in  due  time,  and  con- 
tents noted.  You  spoke  of  wages  at  $15  per  week,  and  fare  one  way.  You 
will  want  to  go  to  Chicago,  I  presume,  and  trim  a  week  or  ten  days. 

"I  would  like  for  you  to  trim  at  H.  W.  Wetherell's  or  at  Keith  Bros.  I 
will  give  you  $15  per  week  and  pay  your  fare  from  Chicago  to  Monmouth, 
and  pay  you  the  above  wages  for  your  actual  time  here  in  the  house  at  that 
rate  per  season. 

"I  presume  that  the  wholesale  men  will  allow  you  for  your  time  in  the 
house.  You  will  confer  a  favor  by  giving  me  your  answer  by  return  mail. 

"Yours, 

"JOHN  HABVET." 


OFFER   AND   ACCEPTANCE.  43 

Appellant  says  she  received  this  in  the  afternoon,  and  replied  the 
next  day  by  postal  card  addressed  to  appellee,  at  Monmouth,  as 
follows : 

"PEOBIA,  March  23. 

"Mr.  Harvey:  Yours  was  promptly  received,  and  I  will  go  up  to  Chicago 
next  week,  and  when  my  services  are  required  you  will  let  me  know. 

"Very  respectfully, 

"L.  MACIAY." 

Appellant  did  not  place  this  in  the  post-office  herself,  but  she  says 
she  gave  it  to  a  boy  who  did  errands  about  the  house  of  her  sister,^ 
with  whom  she  was  then  staying,  directing  him  to  place  it  in  the  office. 
The  postmark  on  the  card,  which  is  shown  to  be  always  placed  on 
mail  matter  the  same  day  it  is  put  in  the  office,  shows  that  the  card 
was  not  mailed  until  the  25th  of  March. 

Appellee  receiving  no  reply  from  appellant,  on  Monday  morning, 
March  27,  went  to  Peoria  and  endeavored  to  engage  another  milliner, 
and  failing  in  this,  endeavored  to  find  appellant,  but  was  unable  to  do 
so,  and  then  returned  to  Monmouth,  when  he  received  the  appellant's 
postal  card,  which  had  come  to  the  office  there  during  his  absence. 
On  Wednesday  night  of  the  same  week  appellee  left  Monmouth  for 
Chicago,  arriving  at  the  last-named  place  on  the  following  Thursday, 
March  30.  Finding  that  the  appellant  was  neither  at  Keith  Bros, 
nor  at  Wetherell's,  he  proceeded  to  employ  another  milliner,  and  on 
the  same  day,  and  before  leaving  Chicago,  wrote  and  mailed  a  letter 
directed  to  appellant's  address  at  Peoria,  notifying  her  of  that  fact, 
but  this  letter,  in  consequence  of  appellant's  absence  from  Peoria,  she 
did  not  receive  for  some  time  afterward. 

The  millinery  season  commences  from  the  5th  to  the  10th  of  April 
and  ends  from  the  20th  of  June  to  the  4th  of  July,  as  shown  by  the 
evidence.  Appellee  had  not  laid  in  his  spring  stock  when  he  was 
corresponding  with  appellant,  and  he  started  to  New  York,  from 
Chicago,  for  that  purpose,  on  the  evening  of  the  day  on  which  he 
addressed  the  letter  to  appellant  notifying  appellant  of  his  employ- 
ment of  another  milliner,  the  evening  of  the  30th  of  March.  Appel- 
lant says  she  left  Peoria  for  Chicago  on  Friday,  which  must  have  been 
the  31st  of  March.  On  arriving  at  Chicago  she  went  to  "WetherelPs, 
and  failing  to  get  employment  there,  did  not  go  to  Keith  Bros.,  but 
went  to  another  house  in  the  same  line  of  business,  where  she  re- 
mained some  days,  and  on  the  8th  of  April  she  notified  appellee,  by 
letter,  that  she  was  sufficiently  informed  as  to  the  "new  ideas  of 
trimming"  and  was  ready  to  enter  his  service.  Appellee  replied  to 
this,  reciting  the  disappointments  he  claimed  to  have  met  with  on 
her  account,  and  again  notifying  her  that  he  did  not  require  her 
services. 

If  a  contract  was  consummated  between  the  parties,  it  was  by  the 


44  FORMATION   OF   CONTRACT. 

mailing  of  appellant's  postal  card  on  the  25th  of  March.  Appellee's 
letter  of  the  21st  cannot  be  regarded  as  the  consummation  of  a  con- 
tract, because  it  restates  the  terms  with  some  variation,  though  it  may 
be  but  slight,  and  requires  an  acceptance  upon  the  terms  thus  stated. 
This,  until  unequivocally  accepted,  was  only  a  mere  proposition  or 
offer.  Hough  v.  Brown,  19  N.  Y.  111. 

It  was  said  by  the  Lord  Chancellor  in  Dunlop  v.  Higgins  (1  H.  L. 
Cas.  387) : 

"Where  an  individual  makes  an  offer  by  post,  stipulating  for,  or  by  the 
nature  of  the  business  having  the  right  to  expect,  an  answer  by  return  of 
post,  the  offer  can  only  endure  for  a  limited  time,  and  the  making  of  it  is  ac- 
companied by  an  implied  stipulation  that  the  answer  shall  be  sent  by  return 
of  post.  If  that  implied  stipulation  is  not  satisfied,  the  person  making  the 
offer  is  released  from  it.  When  a  person  seeks  to  acquire  a  right,  he  in 
bound  to  act  with  a  degree  of  strictness,  such  as  may  not  be  required  where 
he  is  only  endeavoring  to  excuse  himself  from  a  liability." 

This  is  regarded  as  a  leading  case  on  the  question  of  acceptance  of 
contract  by  letter,  and  the  language  quoted  we  regard  as  a  clear  and 
accurate  statement  of  the  law,  as  applicable  to  the  present  case.  It 
is  clear  here  that  the  nature  of  the  business  demanded  a  prompt  an- 
swer, and  the  words,  "you  will  confer  a  favor  by  giving  me  your 
answer  by  return  mail,"  do,  in  effect,  "stipulate"  for  an  answer  by  re- 
turn mail.  Taylor  v.  Eennie,  35  Barb.  272.  The  evidence  shows 
that  there  were  two  daily  mails  between  Peoria  and  Monmouth,  one 
arriving  at  Monmouth  at  11  o'clock  A.  M.,  and  the  other  at  6  o'clock 
p.  M.,  and  it  did  not  require  more  than  one  day's  time  between  the 
points.  Appellee's  letter  to  appellant  making  the  offers,  it  will  be 
remembered,  bears  date  March  21st.  Assuming  the  date  of  the  ap- 
pellant's postal  card  (which,  she  says,  was  written  on  the  morning 
after  she  received  appellee's  letter)  to  be  correct,  she  received  appel- 
lant's letter  on  the  evening  of  the  22d.  Appellee  was,  therefore, 
entitled  to  expect  a  reply  mailed  on  the  23d,  which  he  ought  to  have 
received  on  that  day,  or  at  farthest,  by  the  morning  of  the  24th ;  but 
appellant's  reply  was  not  mailed  until  the  25th.  It  does  not  relieve 
appellant  of  fault  that  she  gave  the  postal  card  to  a  boy  on  the  23d, 
to  have  him  mail  it.  Her  duty  was  not  to  place  an  answer  in  private 
hands,  but  in  the  post-office.  The  boy  was  her  agent,  not  that  of  the 
appellee,  and  his  negligence  in  mailing  the  postal  card  was  her  neg- 
ligence. 

The  question  whether  it  would  not  have  equally  subserved  appellee's 
object  had  he  treated  the  postal  card  of  appellant  as  the  consumma- 
tion of  a  contract  is  irrelevant.  Appellant  seeks  to  recover  upon  the 
strict  letter  of  a  special  contract,  and  it  is  therefore  incumbent  upon 
her  to  prove  such  contract.  It  is  required  of  her,  as  we  have  seen, 
to  prove  an  acceptance  of  appellee's  offer  within  the  time  to  which 


OFFER   AND  ACCEPTANCE.  45 

it  was  limited — that  is  to  say,  by  the  placing  in  the  post-office  of  an 
answer  unequivocally  accepting  the  offer  in  time  for  the  return  mail, 
which  she  did  not  do.  Appellee  was  therefore  under  no  obligation 
to  regard  the  contract  as  closed.  He  might,  it  is  true,  have  done  so, 
but  he  was  not  legally  bound  in  that  respect,  nor  was  he  legally  bound 
to  notify  appellant  that  her  acceptance  had  not  been  signified  within 
the  time  to  which  his  offer  was  limited.  She  is  legally  chargeable 
with  knowledge  that  her  acceptance  was  not  in  time,  and  in  order  to 
fix  a  liability  thereby  upon  the  appellee,  it  was  incumbent  upon  her, 
before  assuming  that  appellee  waived  this  objection,  to  ascertain  that 
he  in  fact  did  so. 

Appellee  was  led  by  the  postal  card  of  appellant  to  believe  that  he 
would,  when  he  arrived  at  Chicago  on  Thursday,  find  her  either  at 
Wetherell's  or  at  Keith  Bros.  Had  he  done  so,  it  was  his  intention 
to  treat  the  contract  as  closed;  but  she  was  not  there,  and  this  inten- 
tion was  not  acted  upon,  and  so  it  is  to  be  considered  as  if  it  had 
never  existed.  Appellee,  not  finding  appellant  at  WetherelPs  or  Keith 
Bros.,  as  she  had  led  him  to  believe  he  would,  had  no  reason  to  as- 
sume that  she  was,  in  good  faith,  acting  upon  the  assumption  that 
her  postal  card  had  closed  the  contract,  and  he  cannot  therefore  be 
held  estopped  from  denying  that  it  was  not  posted  in  time.  In  view 
of  the  lateness  of  the  season  and  the  danger  to  appellee's  business 
from  delay,  of  all  which  appellant  was  aware,  it  cannot  be  said  appel- 
lee acted  with  undue  haste  in  engaging  another  milliner.  The  judg- 
ment is  affirmed. 

Judgment  affirmed.1 

DICKEY,  J.,  dissented. 

9  Cyc.  265-266   (23-24)  ;  291   (37)  ;  W.  P.  29  (31). 

i  In  Ferrier  v.  Storer,  63  Iowa,  484,  the  court  said :  "We  have  to  inquire 
whether  an  acceptance  after  the  time  limited,  or,  in  the  absence  of  an  ex- 
press limitation,  after  the  lapse  of  a  reasonable  time,  imposes  on  the  person 
making  the  offer  any  obligation.  The  theory  of  the  court  below  seems  to 
have  been  that  it  does.  But  in  our  opinion  it  does  not.  The  offer,  unless 
sooner  withdrawn,  stands  during  the  time  limited,  or,  if  there  is  no  express 
limitation,  during  a  reasonable  time.  Until  the  end  of  that  time  the  offer 
is  regarded  as  being  constantly  repeated.  Chitty  on  Cont.  (llth  ed.),  17. 
After  that  there  is  no  offer,  and  properly  considered,  nothing  to  withdraw. 
The  time  having  expired,  there  is  nothing  which  the  acceptor  can  do  to  re- 
vive the  offer,  or  produce  an  extension  of  time."  But  in  Phillips  v.  Moore, 
71  Me.  78  it  was  held:  "It  is  true  that  an  offer,  to  be  binding  upon  the  party 
making  it,  must  be  accepted  within  a  reasonable  time,  Peru  v.  Turner,  10 
Maine,  185;  but  if  the  party  to  whom  it  is  made,  makes  known  his  acceptance 
of  it  to  the  party  making  it,  within  any  period  which  he  could  fairly  have 
supposed  to  be.  reasonable,  good  faith  requires  the  maker,  if  he  intends  to 
retract  on  account  of  the  delay,  to  make  known  that  intention  promptly.  If 
he  does  not,  he  must  be  regarded  as  waiving  any  objection  to  the  acceptance 
as  being  too  late." 


46  FORMATION    OF   CONTRACT. 

MINNESOTA  OIL  CO.  v.  COLLIER  &c.  CO. 

4  DILLON   (U.  S.  C.  C.)>  431.— 1876. 

Action  for  oil  sold  by  plaintiff  to  defendant.  Defendant  sets  up 
counter-claim  for  damages  for  non-delivery  of  oil  bought  of  plaintiff. 

Defendant's  counter-claim  rests  on  these  facts.  On  July  31st, 
plaintiff  offered  defendant  by  telegraph  a  quantity  of  oil  at  fifty-eight 
cents.  The  telegram  was  sent  on  Saturday,  but  was  not  delivered  to 
defendant  until  Monday,  August  2d,  between  eight  and  nine  o'clock. 
On  Tuesday,  August  3d,  about  nine  o'clock,  defendant  deposited  a 
telegram  accepting  the  offer.  Later  in  the  day,  plaintiff  sent  defend- 
ant a  telegram  withdrawing  the  offer  of  July  31st,  but  defendant 
replied  that  sale  was  effected,  and  inquired  when  shipment  would 
follow. 

It  appeared  that  the  market  was  very  much  unsettled,  and  that  the 
price  of  oil  was  subject  to  sudden  fluctuations  during  the  month 
previous,  and  at  the  time  of  this  negotiation,  varying  from  day  to 
day,  and  ranging  between  fifty-five  and  seventy-five  cents  per  gallon. 

It  is  urged  by  the  defendant  that  the  dispatch  of  Tuesday,  August 
3,  1875,  accepting  the  offer  of  the  plaintiff  transmitted  July  31st,  and 
delivered  Monday  morning,  August  2d,  concluded  a  contract  for  the 
sale  of  the  twelve  thousand  four  hundred  and  fifty  gallons  of  oil. 

The  plaintiff,  on  the  contrary,  claims,  first,  that  the  dispatch  ac- 
cepting the  proposition  made  July  31st  was  not  received  until  after 
the  offer  had  been  withdrawn;  second,  that  the  acceptance  of  the 
offer  was  not  in  due  time,  that  the  delay  was  unreasonable,  and  there- 
fore no  contract  was  completed. 

NELSON,  J.  It  is  well  settled  by  the  authorities  in  this  country, 
and  sustained  by  the  later  English  decisions,  that  there  is  no  dif- 
ference in  the  rules  governing  the  negotiation  of  contracts  by  cor- 
respondence through  the  post-office  and  by  telegraph,  and  a  contract 
is  concluded  when  an  acceptance  of  a  proposition  is  deposited  in  the 
telegraph-office  for  transmission.  See  Am.  Law  Eeg.  Vol.  14,  No. 
7,  401,  "Contracts  by  Telegraph,"  article  by  Judge  Redfield,  and 
authorities  cited;  also  Trevor  v.  Wood,  36  N.  Y.  307. 

The  reason  for  this  rule  is  well  stated  in  Adams  v.  Lindsell  (1 
Barn.  &  Aid.  681).  The  negotiation  in  that  case  was  by  post.  The 
court  said,  "that  if  a  bargain  could  not  be  closed  by  letter  before 
the  answer  was  received,  no  contract  could  be  completed  through 
the  medium  of  the  post-office;  that  if  the  one  party  was  not  bound 
by  his  offer  when  it  was  accepted  (that  is,  at  the  time  the  letter  of 
acceptance  is  deposited  in  the  mail),  then  the  other  party  ought  not 
to  be  bound  until  after  they  had  received  a  notification  that  the 
answer  had  been  received  and  assented  to,  and  that  it  might  so  go 


OFFER    AND   ACCEPTANCE.  47 

on  ad  infinitum."  See  also  5  Pa.  St.  339;  11  N.  Y.  441;  Mactier  v. 
Frith,  6  Wend.  103;  48  N.  H.  14;  8  English  Common  Bench,  225. 
In  the  case  at  bar  the  delivery  of  the  message  at  the  telegraph-office 
signified  the  acceptance  of  the  offer.  If  any  contract  was  entered  into, 
the  meeting  of  minds  was  at  8.53  of  the  clock  on  Tuesday  morning, 
August  3d,  and  the  subsequent  dispatches  are  out  of  the  case.  1 
Parsons  on  Contracts,  482,  483. 

This  rule  is  not  strenuously  dissented  from  on  the  argument, 
and  it  is  substantially  admitted  that  the  acceptance  of  an  offer  by 
letter  or  by  telegraph  completes  the  contract,  when  such  accept- 
ance is  put  in  the  proper  and  usual  way  of  being  communicated  by 
the  agency  employed  to  carry  it;  and  that  when  an  offer  is  made  by 
telegraph,  an  acceptance  by  telegraph  takes  effect  when  the  dispatch 
containing  the  acceptance  is  deposited  for  transmission  in  the  tele- 
graph-office, and  not  when  it  is  received  by  the  other  party.  Conceding 
this,  there  remains  only  one  question  to  decide,  which  will  determine 
the  issues:  Was  the  acceptance  of  defendant  deposited  in  the  tele- 
graph-office Tuesday,  August  3d,  within  a  reasonable  time,  so  as  to 
consummate  a  contract  binding  upon  the  plaintiff? 

It  is  undoubtedly  the  rule  that  when  a  proposition  is  made  under 
the  circumstances  in  this  case,  an  acceptance  concludes  the  contract 
if  the  offer  is  still  open,  and  the  mutual  consent  necessary  to  con- 
vert the  offer  of  one  party  into  a  binding  contract  by  the  accept- 
ance of  the  other  is  established  if  such  acceptance  is  within  a  reasona- 
ble time  after  the  offer  was  received. 

The  better  opinion  is,  that  what  is,  or  is  not,  a  reasonable  time, 
must  depend  upon  the  circumstances  attending  the  negotiation,  and 
the  character  of  the  subject-matter  of  the  contract,  and  in  no  better 
way  can  the  intention  of  the  parties  be  determined.  If  the  negotia- 
tion is  in  respect  to  an  article  stable  in  price,  there  is  not  so  much 
reason  for  an  immediate  acceptance  of  the  offer,  and  the  same  rule 
would  not  apply  as  in  a  case  where  the  negotiation  related  to  an 
article  subject  to  sudden  and  great  fluctuations  in  the  market. 

The  rule  in  regard  to  the  length  of  the  time  an  offer  shall  continue, 
and  when  an  acceptance  completes  the  contract,  is  laid  down  in  Par- 
eons  on  Contracts  (Vol.  1,  p.  482).  He  says:  "It  may  be  said  that 
whether  the  offer  be  made  for  a  time  certain  or  not,  the  intention  or 
understanding  of  the  parties  is  to  govern.  If  no  definite  time  is 
stated,  then  the  inquiry  as  to  a  reasonable  time  resolves  itself  into 
an  inquiry  as  to  what  time  it  is  rational  to  suppose  the  parties  con- 
templated ;  and  the  law  will  decide  this  to  be  that  time  which,  as 
rational  men,  they  ought  to  have  understood  each  other  to  have  had  in 
mind/'  Applying  this  rule,  it  seems  clear  that  the  intention  of  the 
plaintiff,  in  making  the  offer  by  telegraph,  to  sell  an  article  which 
fluctuates  so  much  in  price,  must  have  been  upon  the  understanding 


48  FORMATION   OF   CONTRACT. 

that  the  acceptance,  if  at  all,  should  be  immediate,  and  as  soon  after 
the  receipt  of  the  offer  as  would  give  a  fair  opportunity  for  considera- 
tion. The  delay  here  was  too  long,  and  manifestly  unjust  to  the 
plaintiff,  for  it  afforded  the  defendant  an  opportunity  to  take  advan- 
tage of  a  change  in  the  market,  and  accept  or  refuse  the  offer  as 
would  best  subserve  its  interests. 

Judgment  will  be  entered  in  favor  of  the  plaintiff  for  the  amount 
claimed.     The  counter-claim  is  denied. 

Judgment  accordingly. 

9  Cyc.  291-293  (38-47)  ;  W.  P.  30  (33)  ;  39  (42). 


(ii.)     Revocation. 
a.  An  offer  may  be  revoked  at  any  time  before  acceptance. 

FISHER  v.  SELTZER. 
23  PENNSYLVANIA  STATE,  308.— 1854. 

Action  by  Fisher,  late  sheriff,  to  recover  from  Seltzer  the  difference 
between  the  amount  bid  at  a  sale  of  property  and  the  amount  realized 
at  a  second  sale,  with  costs,  etc.  The  sheriff,  before  the  sale,  had  pre- 
scribed certain  rules  or  conditions,  among  which  were  that  "no  person 
shall  retract  his  or  her  bid/'  and  that  if  a  bidder  failed  to  comply 
with  all  conditions  of  the  sale,  "he  shall  pay  all  costs  and  charges." 
At  the  sale  Seltzer  bid  seven  thousand  dollars,  under  the  belief  that 
the  property  was  to  be  sold  free  of  a  certain  mortgage  for  six  thou- 
sand dollars.  Discovering  his  error,  he  retracted  his  bid  before  it 
was  accepted,  but  the  sheriff,  denying  this  right  of  retraction,  knocked 
down  the  property  to  him.  He  refused  to  take  it.  On  a  resale  it 
brought  only  one  thousand  five  hundred  dollars.  Judgment  was  en- 
tered for  plaintiff  for  the  costs  of  the  second  sale  only.  Plaintiff 
prosecuted  a  writ  of  error. 

By  court,  LEWIS,  J.  Mutuality  is  so  essential  to  the  validity  of 
contracts  not  under  seal,  that  they  cannot  exist  without  it.  A  bid 
at  auction,  before  the  hammer  falls,  is  like  an  offer  before  acceptance. 
In  such  a  case  there  is  no  contract,  and  the  bid  may  be  withdrawn 
without  liability  or  injury  to  any  one.  The  brief  interval  between 
the  bid  and  its  acceptance  is  the  reasonable  time  which  the  law  allows 
for  inquiry,  consideration,  correction  of  mistakes,  and  retraction. 
This  privilege  is  of  vital  importance  in  sheriffs'  sales,  where  the  rule 
of  caveat  emptor  operates  with  all  its  vigor.  It  is  necessary,  in  order 
that  bidders  may  not  be  entrapped  into  liabilities  never  intended. 
Without  it,  prudent  persons  would  be  discouraged  from  attending 
these  sales.  It  is  the  policy  of  the  law  to  promote  competition,  and 


OFFER    AND   ACCEPTANCE.  49 

thus  to  produce  the  highest  and  best  price  which  can  be  obtained. 
The  interests  of  debtors  and  creditors  are  thus  promoted.  By  the 
opposite  course,  a  creditor  might  occasionally  gain  an  advantage,  but 
an  innocent  man  would  suffer  unjustly,  and  the  general  result  would  be 
disastrous.  A  bidder  at  sheriff's  sale  has  a  right  to  withdraw  his 
bid  at  any  time  before  the  property  is  struck  down  to  him,  and  the 
sheriff  has  no  authority  to  prescribe  conditions  which  deprive  him  of 
that  right.  "Where  the  bid  is  thus  withdrawn  before  acceptance,  there 
is  no  contract,  and  such  a  bidder  cannot,  in  any  sense,  be  regarded  as 
a  "purchaser."  He  is,  therefore,  not  liable  for  "the  costs  and  charges" 
of  a  second  sale.  Where  there  has  been  no  sale,  there  can  be  no  resale. 
The  judgment  ought  not  to  have  been  in  favor  of  the  plaintiff,  even 
for  "the  costs  and  charges"  of  the  second  sale;  but  as  the  defendant 
does  not  complain,  we  do  not  disturb  it. 

Judgment  affirmed.1 
9  Cye.  284-285  (5-8)  ;  W.  P.  15   (14). 


BOSTON  &  MAINE  EAILEOAD  v.  BAKTLETT 
AND  ANOTHER. 

3  GUSHING   (MASS.)   224.— 1849. 

Bill  in  equity  for  the  specific  performance  of  a  contract  in  writing. 

The  plaintiffs  alleged  that  the  defendants  on  April  1st,  1844,  being 
the  owners  of  certain  land  situated  in  Boston,  and  particularly  de- 
scribed in  the  bill,  "in  consideration  that  said  corporation  would  take 
into  consideration  the  expediency  of  buying  said  land  for  their  use 
as  a  corporation,  signed  a  certain  writing,  dated  April  1st,  1844," 
whereby  they  agreed  to  convey  to  the  plaintiffs  "the  said  lot  of  land, 

i  As  to  the  right  of  an  auctioneer  to  refuse  to  accept  a  bid  see  Taylor  v.  Hart- 
nett,  26  Misc.  (N.  Y.)  362,  where  the  court  says:  "It  is,  we  think,  well 
settled  that  he  may  refuse  a  bid  tendered  in  bad  faith  or  proffered  by  a  per- 
son who  is  insolvent  or  otherwise  disabled  from  completing  the  purchase; 
otherwise  the  whole  object  of  the  sale  might  be  defeated.  Within  the  same 
reasoning  comes  the  right,  which  we  think  he  possesses,  of  refusing  to  ac- 
cept trifling  advances  offered  by  bidders  in  the  course  of  the  sale,  especially 
where  that  kind  of  bidding  is  initiated  at  the  outset  and  the  sum  so  offered 
is  utterly  incommensurate  with  the  actual  known  value  of  the  property.  It  is 
reasonable  to  infer  that  bidding  of  that  kind  would  have  a  depressing  effect  on 
the  sale  and  tend  to  induce  a  belief  on  the  part  of  others  in  attendance  that 
the  value  of  the  property  had  been  approximately  reached.  We  see  no  reason, 
then,  why  it  is  not  within  the  legitimate  bounds  of  the  discretion  of  the 
auctioneer  to  refuse  to  accept  a  bid  which  is  little  more  than  a  nominal  ad- 
vance, and,  considering  the  surrounding  circumstances,  is,  in  his  judgment, 
likely  to  affect  the  sale  injuriously." 


50  FORMATION    OF    CONTRACT. 

for  the  sum  of  $20,000,  if  the  said  corporation  would  take  the  same 
within  thirty  days  from  that  date";  that  afterward  and  within  the 
thirty  days,  the  defendants,  at  the  request  of  the  plaintiffs,  "and  in 
consideration  that  the  said  corporation  agreed  to  keep  in  consideration 
the  expediency  of  taking  said  land,"  etc.,  extended  the  said  term  of 
thirty  days,  by  a  writing  underneath  the  written  contract  above  men- 
tioned, for  thirty  days  from  the  expiration  thereof;  that,  on  May  29th, 
1844,  while  the  extended  contract  was  in  full  force,  and  unrescinded, 
the  plaintiffs  elected  to  take  the  land  on  the  terms  specified  in  the 
contract,  and  notified  the  defendants  of  their  election,  and  offered 
to  pay  them  the  agreed  price  (producing  the  same  in  money)  for  a 
conveyance  of  the  land,  and  requested  the  defendants  to  execute  a 
conveyance  thereof,  which  the  plaintiffs  tendered  to  them  for  that  pur- 
pose; and  that  the  defendants  refused  to  execute  such  conveyance, 
or  to  perform  the  contract,  and  had  ever  since  neglected  and  refused 
to  perform  the  same. 

The  defendants  demurred  generally. 

FLETCHER,  J.  In  support  of  the  demurrer,  in  this  case,  the  only 
ground  assumed  and  insisted  on  by  the  defendants  is,  that  the  agree- 
ment on  their  part  was  without  consideration,  and  therefore  not 
obligatory.  In  the  view  taken  of  the  case  by  the  court,  no  importance 
is  attached  to  the  consideration  set  out  in  the  bill — namely,  "that  the 
plaintiffs  would  take  into  consideration  the  expediency  of  buying  the 
land."  The  argument  for  the  defendants,  that  their  agreement  was 
not  binding,  because  without  consideration,  erroneously  assumes  that 
the  writing  executed  by  the  defendants  is  to  be  considered  as  consti- 
tuting a  contract  at  the  time  it  was  made.  The  decision  of  the  court 
in  Maine  in  the  case  of  Bean  v.  Burbank,  4  Shepl.  458,  which  was  re- 
ferred to  for  the  defendants,  seems  to  rest  on  the  ground  assumed 
by  them  in  this  case. 

In  the  present  case,  though  ,the  writing  signed  by  the  defendants 
was  but  an  offer,  and  an  offer  which  might  be  revoked,  yet  while  it- 
remained  in  force  and  unrevoked,  it  was  a  continuing  offer  during 
the  time  limited  for  acceptance;  and,  during  the  whole  of  that  time, 
it  was  an  offer  every  instant,  but  as  soon  as  it  was  accepted,  it  ceased 
to  be  an  offer  merely,  and  then  ripened  into  a  contract.  The  counsel 
for  the  defendants  is  most  surely  in  the  right,  in  saying  that  the 
writing  when  made  was  without  consideration,  and  did  not  therefore 
form  a  contract.  It  was  then  but  an  offer  to  contract,  and  the  parties 
making  the  offer  most  undoubtedly  might  have  withdrawn  it  at  any 
time  before  acceptance. 

But  when  the  offer  was  accepted,  the  minds  of  the  parties  met, 
and  the  contract  was  complete.  There  was  then  the  meeting  of  the 
minds  of  the  parties,  which  constitutes  and  is  the  definition  of  a 
contract.  The  acceptance  by  the  plaintiffs  constituted  a  sufficient 


OFFER    AND   ACCEPTANCE.  51 

legal  consideration  for  the  engagement  on  the  part  of  the  defendants. 
There  was  then  nothing  wanting,  in  order  to  perfect  a  valid  contract 
on  the  part  of  the  defendants.  It  was  precisely  as  if  the  parties  had 
met  at  the  time  of  the  acceptance,  and  the  offer  had  then  been  made 
and  accepted  and  the  bargain  completed  at  once. 

A  different  doctrine,  however,  prevails  in  France  and  Scotland  and 
Holland.  It  is  there  held  that  whenever  an  offer  is  made,  granting 
to  a  party  a  certain  time  within  which  he  is  to  be  entitled  to  decide, 
whether  he  will  accept  it  or  not,  the  party  making  such  offer  is  not 
at  liberty  to  withdraw  it  before  the  lapse  of  the  appointed  time. 
There  are  certainly  very  strong  reasons  in  support  of  this  doctrine. 
Highly  respectable  authors  regard  it  as  inconsistent  with  the  plain 
principles  of  equity,  that  a  person,  who  has  been  induced  to  rely  on 
such  an  engagement,  should  have  no  remedy  in  case  of  disappointment. 
But  whether  wisely  and  equitably  or  not,  the  common  law  unyieldingly 
insists  upon  a  consideration,  or  a  paper  with  a  seal  attached. 

The  authorities,  both  English  and  American,  in  support  of  this  view 
of  the  subject,  are  very  numerous  and  decisive;  but  it  is  not  deemed 
to  be  needful  or  expedient  to  refer  particularly  to  them,  as  they  are 
collected  and  commented  on  in  several  reports  as  well  as  in  the  text- 
books. The  case  of  Cooke  v.  Oxley,  3  T.  R.  653,  in  which  a  different 
doctrine  was  held,  has  occasioned  considerable  discussion,  and  in  one 
or  two  instances  has  probably  influenced  the  decision.  That  case  has 
been  supposed  to  be  inaccurately  reported,  and  that  in  fact  there  was 
in  that  case  no  acceptance.  But  however  that  may  be,  if  the  case  has 
not  been  directly  overruled,  it  has  certainly  in  later  cases  been  entirely 
disregarded,  and  cannot  now  be  considered  as  of  any  authority. 

As  therefore  in  the  present  case  the  bill  sets  out  a  proposal  in  writ- 
ing, and  an  acceptance  and  an  offer  to  perform,  on  the  part  of  the 
plaintiffs,  within  the  time  limited,  and  while  the  offer  was  in  full 
force,  all  which  is  admitted  by  the  demurrer,  so  that  a  valid  contract 
in  writing  is  shown  to  exist,  the  demurrer  must  be  overruled. 

9  Cyc.  284  (5). 


QUICK  v.  WHEELER. 

78  NEW  YORK,  300.— 1879. 

EARL,  J.  This  action  was  brought  to  recover  the  price  of  a 
quantity  of  tie  timber  which  the  plaintiff  claimed  to  have  sold  and 
delivered  to  the  defendant.  The  plaintiff  recovered,  and  his  judg- 
ment having  been  affirmed  at  the  General  Term,  the  defendant  ap- 
pealed to  this  court. 

The  timber  is  claimed  to  have  been  delivered  under  a  written  con- 
tract with  the  defendant,  which  was  executed  August  2d,  1873.  It 


52  FORMATION    OF   CONTRACT. 

provided  first  for  the  sale  and  delivery  by  the  plaintiff  to  the  de- 
fendant of  5000  feet  of  such  timber.  That  part  of  the  contract  was 
fully  performed  by  both  parties.  It  then  provided  as  follows:  "And 
I,  said  Wheeler,  also  agree  to  pay  said  Quick  4^  cents  per  foot  for  from 
6000  to  15,000  feet  of  same  kind  and  quality  of  tie  timber  as  afore- 
said, and  delivered  at  the  place  aforesaid  during  the  winter,  to  be 
paid  on  June  1st,  1874."  The  contract  was  signed  by  both  parties, 
but  there  was  no  agreement  on  the  part  of  the  plaintiff  to  deliver  this 
last  quantity.  The  place  of  delivery  named  in  the  contract  was  "on 
the  bank  of  the  west  branch  of  the  Delaware  River  at  Ball's  Eddy," 
and  there  plantiff  delivered  the  11,355  feet  of  timber  for  which  this 
recovery  was  had.  .  .  . 

This  contract  when  made  was  not  binding,  as  it  was  based  upon 
no  consideration.  The  plaintiff  parted  with  nothing  and  there  was 
no  mutuality.  There  was  not  the  consideration  which  mutual 
promises  give  a  contract.  The  plaintiff  did  not  bind  himself  to  sell 
and  deliver  the  tie  timber.  Hence  this  contract  can  be  treated  only 
as  a  written  offer  on  the  part  of  the  defendant  to  take  and  pay  for 
the  timber  upon  the  terms  stated.  (Story  on  Sales;  §§  124,  126; 
Chitty  on  Contracts,  15;  1  Parsons  on  Contracts  [5th  ed.],  475;  Tuttle 
v.  Love,  7  J.  E.  470.)  This  written  offer  could  be  revoked  at  any 
time  before  performance  or  a "  binding  acceptance  by  the  plaintiff. 
Was  it  thus  revoked?  All  the  evidence  tending  to  show  a  revocation 
or  rescission  came  from  the  plaintiff  as  a  witness.  He  testified  that  in 
December,  1873,  after  he  had  delivered  several  thousand  feet  of  the 
timber — about  the  time  of  the  settlement  for  that  delivered  under 
the  prior  clause  in  the  contract — the  following  conversation  took  place 
between  them :  "He  told  me  that  he  did  not  want  me  to  get  out  any 
more  timber.  I  said  I  had  bought  some  timber,  and  he  had  encour- 
aged me  to  buy  timber,  and  had  advanced  money  to  make  payment, 
and  I  had  bought  it,  so  I  could  not  get  out  of  that,  and  I  could  not 
store  it."  Nothing  more  was  said.  The  plaintiff  then  went  on  with 
the  performance  of  the  contract,  and  between  that  date  and  March 
delivered  at  the  place  designated  in  the  contract  the  balance  of  the 
timber,  the  defendant  at  no  time  making  any  further  objection.  After 
the  delivery  plaintiff  had  the  timber  measured;  and  he  then  de- 
livered a  bill  of  the  measurement  at  defendant's  store,  in  his  absence, 
on  June  1st,  1874,  to  a  man  by  the  name  of  Titus,  who  promised  to 
write  to  defendant.  In  July,  plaintiff  saw  defendant  and  spoke  to 
him  about  the  timber,  and  he  said  that  as  soon  as  his  boys  came 
home  we  would  go  and  look  at  the  timber;  and  this  promise  he  re- 
peated afterward,  making  no  claim  then  that  the  contract  had  been 
rescinded,  or  that  he  was  not  liable  to  pay  for  the  timber,  if  it  was 
according  to  the  contract.  Upon  all  these  facts  it  cannot  be  said  as 
matter  of  law  that  the  parties  understood  that  the  offer  was  revoked. 


OFFER   AND  ACCEPTANCE.  53 

It  is  quite  clear  that  the  plaintiff  did  not  so  understand  it,  and  it 
is  at  least  doubtful  if  the  defendant  so  understood  it.  It  is  true 
that  he  told  the  plaintiff  not  to  get  out  any  more  timber;  but  when 
he  learned  that  the  plaintiff  had  already  got  out  a  large  quantity, 
and  that  he  was  bound  for  more,  which  he  had  purchased  to  per- 
form this  contract,  he  was  silent,  said  nothing  more.  We  may  as- 
sume that  he  knew  the  defendant  was  engaged  in  performing  the 
contract  during  the  winter;  and  after  all  the  timber  was  delivered, 
he  did  not  plant  himself  in  any  way  upon  a  revocation  of  his  offer; 
but  when  informed  that  it  had  been  delivered,  promised  to  go  and  look 
at  it.  Proof  of  the  revocation,  under  such  circumstances,  should 
have  been  unequivocal  and  satisfactory,  before  a  court  could  hold  as 
matter  of  law  that  the  revocation  was  established.  In  this  case, 
the  question  of  revocation,  upon  the  evidence,  the  conduct  of  the 
parties  and  the  circumstances,  was  one  for  the  jury;  and  there  was 
no  request  to  have  it  submitted  to  the  jury,  and  hence  there  was  no 
error  here.  .  .  . 

Without  more  it  is  sufficient  to  say  that  we  concur  in  the  satis- 
factory opinion  at  General  Term.  All  concur.  Judgment  affirmed. 

9Cyc.  284  (5)  ;  285  (8). 


LOS  ANGELES  TRACTION  CO.  v.  WILSHIRE. 

135  CALIFORNIA,  654.— 1902. 
• 

GRAY,  C.     The  action  is  based  on  a  written  instrument,  signed  by 
appellants,  and  reading  as  follows : 
"$2,000.  Los  ANGELES,  Cal.,  July  19th,  1895. 

"Thirty  days  after  the  completion  of  the  double-track  street  rail- 
way of  the  Los  Angeles  Traction  Company  to  the  intersection  of 
Seventh  and  Hoover  Streets,  for  value  received,  I  promise  to  pay 
to  the  order  of  the  Los  Angeles  Traction  Company,  the  sum  of  two 
thousand  (2,000)  dollars,  negotiable  and  payable  at  the  Citizen's 
Bank,  with  interest  at  the  rate  of  eight  per  cent  per  annum,  payable 
after  maturity.  I  further  promise  and  agree  to  pay  a  reasonable  at- 
torney's fee  if  suit  should  be  instituted  for  the  collection  of  this 
note." 

The  above  instrument  was  placed  in  the  hands  of  the  Citizen's 
Bank,  together  with  a  duly  signed  written  escrow  agreement.  .  .  . 

On  the  faith  of  the  foregoing  instruments,  and  other  instruments 
of  like  character  executed  by  other  parties,  who,  like  defendants,  were 
owners  of  property  that  would  be  made  valuable  by  the  construction 
of  the  proposed  road,  the  plaintiff  in  November,  1895,  less  than  four 
months  from  the  execution  of  said  instrument,  bid  and  paid  to  the 


54  FORMATION   OF   CONTRACT. 

city  of  Los  Angeles  $1,505  for  a  franchise  to  construct  the  road  over 
that  part  of  the  course  agreed  upon  and  within  the  city  limits.  Be- 
fore the  28th  of  April,  1896,  the  plaintiff  commenced  work  upon 
said  railway,  but  said  work  was  not  performed  with  the  intention 
of  prosecuting  the  construction  of  said  railway  continuously  and  with 
diligence  to  completion,  and  the  plaintiff  did  not  so  commence  work 
upon  said  railway  with  said  purpose  until  after  the  first  day  of 
July,  1897.  On  July  1,  1897,  defendants  served  upon  plaintiff 
a  written  notice  to  the  effect  that  they  did  not  recognize  any 
liability  on  account  of  the  foregoing  written  contracts,  for  the 
reason  that  the  road  had  not  been  completed  within  the  time 
agreed  upon.  Soon  after  the  service  of  this  notice,  the  plain- 
tiff actively  engaged  in  the  construction  of  the  road  and  completed 
it,  and  commenced  operating  the  same  to  the  intersection  of 
Seventh  and  Hoover  streets,  as  provided  for  in  said  instruments, 
before  the  expiration  of  the  year  1897.  Thereafter,  and  on 
May  17,  1898,  plaintiff  completed  its  railway  to  First  and  Virgil 
streets.  Upon  these  facts  plaintiff  had  judgment  for  two  thousand 
dollars,  besides  interest  and  attorney's  fees.  Defendants  appeal  from 
this  judgment  and  from  an  order  denying  them  a  new  trial.  .  .  . 

The  contract  at  the  date  of  its  making  was  unilateral,  a  mere  offer 
that,  if  subsequently  accepted  and  acted  upon  by  the  other  party 
to  it,  would  ripen  into  a  binding,  enforceable  obligation.  When  the  re- 
spondent purchased  and  paid  upwards  of  fifteen  hundred  dollars  for 
a  franchise,  it  had  acted  upon  the  contract;  and  it  would  be  mani- 
festly unjust  thereafter  to  permit  the  offer  that  had  been  made  to 
be  withdrawn.  The  promised  consideration  had  then  been  partly 
performed,  and  the  contract  had  taken  on  a  bilateral  character,  and 
if  appellant  thereafter  thought  he  discovered  a  ground  for  rescind- 
ing the  contract,  it  was,  as  it  always  is,  a  necessary  condition  to  the 
rescission  that  the  other  party  should  be  made  whole  as  to  what  he 
had  parted  with  on  the  strength  of  the  contract.  The  notice  of  with- 
drawal from  the  contract  was  ineffectual,  therefore,  for  several  reasons. 
In  the  first  place  it  was  based  on  a  wrong  theory ;  the  reason  given  for 
it  was  that  the  road  was  not  constructed  within  the  agreed  time,  when, 
as  was  determined  subsequently  by  the  court,  there  was  no  time  agreed 
upon.  Again,  it  came  too  late,  after  the  obligations  of  the  parties 
had  become  fixed.1  .  .  . 

W.  P.  34-35  (39-40)  ;  26  H.  L.  R.  274.  Ashley,  "Offers  calling  for  a  con- 
sideration other  than  a  counter  promise,"  23  H.  L.  R.  158. 

i  In  Zwolanek  v.  Baker  Co.,  150  Wis.  517,  plaintiff  was  in  the  employ  of  de- 
fendant under  a  continuing  contract  at  stipulated  wages.  The  defendant  fur- 
thermore offered  a  share  of  profits  to  any  employee  who  "shall  have  been  in 
the  regular  employ  of  the  company  for  4500  hours  during  100  consecutive 


OFFER  AND  ACCEPTANCE.  55 

RAFOLOVITZ  v.  AMERICAN  TOBACCO  CO. 

73  HUN,  87.— 1893. 

(NEW  YORK  SUPREME  COURT,  GENERAL  TERM.) 

PARKER,  J.  This  case  was  well  disposed  of  at  the  Special  Term, 
and  the  argument  supporting  the  disposition  made  was  so  fully  pre- 
sented as  to  render  further  consideration  of  the  question  discussed 
unnecessary.  The  appellant  now  makes  a  point  which  does  not  seem 
to  have  been  addressed  to  the  Special  Term,  and  in  order  to  meet 
it  it  will  be  necessary  to  state  briefly  the  conclusion  reached  by  that 
court.  The  pleader  attempted  to  allege  two  distinct  causes  of  ac- 

weeks  .  .  .  provided  he  does  not  quit  the  employ  of  the  company  or  is  not 
discharged  prior  to  January  1  of  any  year."  Plaintiff  had  worked  more  than 
the  required  period  but  defendant  dispensed  with  his  services  on  December 
30,  1909.  In  an  action  brought  by  plaintiff  for  a  share  of  the  profits  for  the 
year  1909,  the  court  said:  "Under  such  a  state  of  facts  the  plaintiff  is  en- 
titled to  recover.  It  is  true,  as  a  general  proposition  that  a  party  making  an 
offer  of  a  reward  may  withdraw  it  before  it  is  accepted.  But  persons  offering 
rewards  must  be  held  to  the  exercise  of  good  faith  and  cannot  arbitrarily 
withdraw  their  offers  for  the  purpose  of  defeating  payment,  when  to  do  so 
would  result  in  the  perpetration  of  a  fraud  upon  those  who  in  good  faith  at- 
tempted to  perform  the  service  for  which  the  reward  was  offered." 

Possible  hardship  considered. — Professor  Langdell,  Contr.  p.  3,  says  that  in 
unilateral  contracts  "as  the  performance  of  the  consideration  is  what  con- 
verts an  offer  into  a  binding  promise,  it  follows  that  the  promise  is  made  in 
legal  intendment  at  the  moment  when  the  performance  of  the  consideration 
is  completed.  It  also  follows  that  up  to  that  moment  the  offer  may  either 
be  revoked,  or  be  destroyed  by  the  death  of  the  offerer,  and  the  offeree  thus 
be  deprived  of  any  compensation  for  what  he  has  done.  As  this  may  cause 
great  hardship  and  practical  injustice,  ingenious  attempts  have  been  made  to 
show  that  the  offer  becomes  irrevocable  as  soon  as  the  performance  of  the 
consideration  begins;  but  such  a  view  seems  to  have  no  principle  to  rest  upon. 
Besides,  there  may  be  hardship  on  the  other  side  as  well;  for  the  offeree  may 
at  any  stage  refuse  to  proceed  further  in  performing  the  consideration,  or  he 
may  die,  and  then  the  offerer  will  confessedly  be  without  remedy.  The  true 
protection  for  both  parties  is  to  have  a  binding  contract  made  before  per- 
formance begins,  by  means  of  mutual  promises;  and  if  they  neglect  this  pre- 
caution, any  hardship  that  they  may  suffer  should  be  left  at  their  own  doors." 

And  in  Clark  v.  Russel,  3  Watts,  217,  Gibson,  C.  J.,  says:  "If  I  promise 
my  neighbour  to  compensate  him  if  he  will  do  a  specific  act  of  service  for  me, 
and  he  does  it  in  consequence,  he  may  maintain  an  action  though  he  had  not 
bound  himself  to  do  it.  The  consideration  of  such  a  promise  belongs  to  the 
class  called  executory,  the  promise  itself  \w\n«  in  its  nature  conditional.  But 
what  if  the  defendant  should  desist,  having  performed  the  act  in  part?  He 
would  forfeit  his  interest  in  the  promise:  neither  could  he  recover  a  quantum 
meruit;  and  the  parties  would  be  where  they  began.  But  the  promisor  may 


56  FORMATION    OF    CONTRACT. 

tion  founded  in  two  separate  contracts.  But  while  there  were  two 
contracts,  they  were  in  the  same  form,  and  but  one  need  be  quoted. 
As  alleged  it  reads :  "On  or  about  the  10th  day  of  April,  1892,  the 
defendant  and  Joseph  Kafolovitz  &  Son  .  .  .  entered  into  an  agree- 
ment or  contract  whereby  and  wherein  the  defendant  promised  and 
agreed,  in  consideration  that  said  Joseph  Rafolovitz  &  Son  would 
purchase  and  sell  a  certain  cigarette  manufactured  by  defendant,  that 
he,  the  defendant,  would  allow  and  pay  them  as  a  compensation 
or  commission  for  said  purchase  of  cigarettes  twenty  cents  on  every 
thousand  of  said  cigarettes  manufactured  by  defendant  and  pur- 
chased by  said  Joseph  Rafolovitz  &  Son,  between  the  10th  day  of 
April  and  the  1st  day  of  October,  1892." 

It  seems  that  Joseph  Rafolovitz  &  Son  did  thereafter  purchase 
nearly  200,000  cigarettes,  upon  which  purchase  the  defendant  paid 
the  promised  commissions.  Then  it  refused  to  sell  to  plaintiff  any 
more  cigarettes,  hence  this  action.  The  court  held  that  there  was 
no  mutuality  of  contract,  and,  therefore,  not  enforcible.  That  it 
would  have  been  otherwise  had  the  plaintiff  bound  himself  to  have 
purchased  a  given  quantity  of  cigarettes.  That  under  the  agreement, 
as  alleged,  it  was  optional  with  the  plaintiff  to  purchase  cigarettes  or 
not.  If,  after  making  it,  he  had  refused  to  take  any,  or  after  taking 
a  few  thousand,  had  declined  to  purchase  others,  the  defendant  could 
not  have  compelled  him  either  to  take  the  cigarettes  or  respond  in 
damages  for  not  doing  so.  And  as  he  made  no  promise,  there  was 
no  basis  for  a  consideration  for  the  promise  of  the  other  party  to 
the  alleged  agreement.  In  support  of  such  position  the  court  cited 
Chicago  &  Great  Eastern  Ry.  Co.  v.  Dane  (43  X.  Y.  240)  and  Kurd 
v.  Gill,  (45  id.  341). 

Appellant  insists  that  Wells  v.  Alexander  (130  N.  Y.  642)  upholds 
the  agreement  which  he  alleges,  but  we  do  not  so  understand  it. 
There  the  plaintiff  proposed  to  furnish  defendant's  steamers,  naming 
them,  with  coal,  at  a  price  named,  for  the  period  of  one  year.  The 
defendant  accepted  the  offer,  and  thereafter  plaintiff  furnished  to 
the  defendant  such  quantity  of  coal  as  was  required  for  the  use  of 
the  steamships,  until  the  defendant  sold  them.  It  was  held  that  the 
proposal  and  acceptance,  both  of  which  were  in  writing,  constituted 
a  valid  contract,  there  being  entire  mutuality,  because  one  promised 
to  take  and  pay  for  all  that  the  other  agreed  to  sell  and  deliver.  The 
principal  contention  of  the  defendant  in  that  case  was,  that  the  con- 
tract was  one  for  successive  deliveries  of  coal,  to  be  made  only  when 

have  sustained  damage  or  at  least  disappointment  by  the  other's  default.  He 
undoubtedly  may;  but  it  is  his  folly  not  to  guard  against  it  by  exacting  a  mu- 
tual engagement  instead  of  making  a  conditional  one,  which  leaves  the  party 
employed  to  earn  the  promised  reward  or  not  at  his  pleasure." 


OFFER   AND   ACCEPTANCE.  57 

the  defendant  should  give  the  plaintiff  notice  that  a  delivery  was 
required,  and  as  notice  had  not  been  given,  the  defendant  was  not  in 
default.  It  was  held  that  .while  at  the  date  of  the  agreement  the 
quantity  was  indefinite,  it  was  nevertheless  determinable  by  the  terms 
of  the  contract,  and  therefore,  within  the  maxim  Cerium  est  quod, 
cerium  reddi  potesi;  the  necessity  for  notice  was  doubted,  and  it  was 
asserted  that  if  notice  was  required,  a  covenant  on  the  part  of  the 
defendant  to  give  it  would  be  inferred,  for  otherwise  the  contract 
would  be  unreasonable,  and  place  one  of  the  parties  entirely  at  the 
mercy  of  the  other.  It  will  be  seen,  therefore,  that  the  questions 
presented  for  decision  in  the  two  cases  are  entirely  different. 

The  appellant  calls  our  attention  to  a  number  of  cases  in  which 
courts,  having  in  mind  the  peculiar  facts  of  the  cases  under  con- 
sideration, have  said  that  upon  a  demurrer  the  consideration  will  be 
implied,  and  another  line  of  cases  holding  that  a  consideration  may 
be  shown  by  extrinsic  exidence,  but  those  cases  are  not  applicable  here 
because  the  complaint  undertakes  to  state  the  consideration.  It  avers 
that  the  consideration  moving  to  defendant  was  that  Joseph  Rafolovitz 
&  Son  would  purchase  and  sell  a  certain  cigarette  manufactured  by 
defendant.  But,  as  stated,  there  was  no  promise  on  the  part  of 
Joseph  Eafolovitz  &  Son  to  purchase  cigarettes,  which  was  enforcible 
by  defendant,  and,  therefore,  it  did  not  furnish  a  consideration  for 
the  defendant's  promise.  Undoubtedly,  if  there  had  been  some  other 
consideration  for  defendant's  promise,  moving  from  Joseph  Rafolovitz 
&  Son,  defendant's  agreement  could  have  been  enforced,  notwithstand- 
ing the  absence  of  an  obligation  on  the  part  of  the  plaintiff  to  pur- 
chase cigarettes.  So  if  the  complaint  had  alleged  that  the  agreement 
pleaded  was  founded  upon  a  good  and  sufficient  consideration,  some 
of  the  cases  to  which  the  appellant  calls  our  attention  would  be  ap- 
plicable. Under  such  an  allegation  the  plaintiff  upon  trial  would  be 
permitted  to  show  by  extrinsic  evidence  the  consideration  for  defend- 
ant's promise.  (Hurd  v.  Gill,  45  N.  Y.  341).  This  was  not  done, 
presumably  because  it  was  not  the  fact.  It  must  be  assumed  that 
the  complaint  correctly  states  the  facts.  And  that  presumption  at- 
taches to  its  statement  as  to  what  constituted  the  consideration,  as 
well  as  its  allegations  in  respect  to  the  other  features  of  the  agree- 
ment. In  disposing  of  the  demurrer,  therefore,  it  could  not  be  in- 
ferred that  some  other  consideration  than  that  alleged  in  the  com- 
plaint existed  in  fact,  or  could  be  proved  on  the  trial.  The  sufficiency 
of  the  alleged  consideration  was  adequately  discussed  at  Special  Term, 
and  with  the  conclusion  reached  we  agree. 

The  judgment  should  be  affirmed,  with  costs,  but  with  leave  to 
the  plaintiff,  on  payment  of  the  costs  so  far  awarded  against  him, 
to  amend  his  complaint  within  twenty  days  after  service  of  notice 
of  the  entry  of  the  order  of  affirmance. 

9  Cyc.  329   (21)  ;  W.  P.  196   (10). 


58  FORMATION    OF   CONTRACT. 

MONTGOMERY,  C.  J.,  IN  HICKEY  v.  O'BRIEN. 

123  MICHIGAN,  611.— 1900. 

On  the  1st  of  March,  1895,  a  contract,  to  which  John  F.  Lucas 
&  Co.  were  designated  as  parties  of  the  first  part  and  Kreutzberger  & 
Crabbe  were  parties  of  the  second  part,  was  executed  by  the  parties. 
Its  material  provisions  were  as  follows:  "In  consideration  of  the 
covenants  and  conditions  hereinafter  mentioned,  first  parties  hereby 
agree  to  furnish  second  parties  with  all  the  ice  that  they  may  require 
to  carry  on  their  ice  business  in  said  city  for  the  period  of  five 
years  from  and  after  March  1st,  1895,  at  the  rate  of  seventy- 
five  ($.75)  cents  per  ton,  to  be  paid  for  monthly  from  and  after 
June  1st,  1895.  Second  parties  hereby  agree  to  purchase  from  first 
parties  all  the  ice  necessary  to  carry  on  their  ice  business  in  said  city 
for  the  period  of  five  years  from  and  after  March  1st,  1895,  and  to 
pay  first  parties  therefor  the  sum  of  seventy-five  ($.75)  cents  per 
ton,  to  be  paid  monthly  from  and  after  June  1st,  1895.  .  .  ." 

The  cases  which  deal  with  contracts  to  supply  goods  to  answer  the 
needs  of  business  are  not  in  entire  harmony.  In  Bailey  v.  Austrian, 
19  Minn.  535  (Gil.  465),  it  was  held  that  a  contract  to  supply  plain- 
tiffs with  all  the  pig  iron  wanted  by  them  until  a  certain  date  was 
nudum  pactum,  as  plaintiff  did  not  engage  to  want  any  quantity  what- 
ever. A  similar  holding  was  made  in  Iowa  in  the  case  of  Drake  v. 
Vorse,  52  Iowa,  417,  3  N.  W.  465.  In  Cooper  v.  Wheel  Co.,  94 
Mich.  272,  54  N.  W.  39,  we  had  occasion  to  consider  the  case  of 
Bailey  v.  Austrian,  but  did  not  in  terms  decide  whether  such  en- 
gagement bound  the  orderer  to  take  any  particular  quantity.  In  Na- 
tional Furnace  Co.  v.  Keystone  Mfg.  Co.,  110  111.  427,  the  case  of 
Bailey  v.  Austrian  is  considered  as  to  its  bearing  on  the  question  here 
involved.  The  court  point  out  that  in  the  Bailey  Case  stress  is  laid 
on  the  word  "want."  In  the  Illinois  case  cited,  the  plaintiff  agreed 
to  sell  to  the  defendant  all  the  iron  needed  in  its  business  during  the 
three  ensuing  years  at  $22.35  per  ton.  The  defendant  agreed  to  take 
its  year's  supply  at  that  price.  The  court  say:  ''We  do  not  regard 
the  contract  void  on  the  ground  stated.  It  is  true  that  appellee  was 
only  bound  by  the  contract  to  accept  of  appellant  the  amount  of  iron 
it  needed  for  use  in  its  business;  but  a  reasonable  construction  must 
be  placed  on  this  part  of  the  contract,  in  view  of  the  situation  of 
the  parties.  Appellee  was  engaged  in  a  large  manufacturing  business, 
necessarily  using  a  large  quantity  of  iron  in  the  transaction  of  its 
business.  It  is  not  to  be  presumed  that  appellee  would  close  its 
business,  and  need  no  iron;  but,  on  the  contrary,  the  reasonable  pre- 
siumption  would  be  that  the  business  would  be  continued,  and  appellee 
would  necessarily  need  the  quantity  of  iron  which  it  had  been  in 


OFFER   AND   ACCEPTANCE.  59 

the  habit  of  using  during  previous  years.  It  cannot  be  said  that 
appellee  was  not  bound  by  the  contract.  It  had  no  right  to  purchase 
iron  elsewhere  for  use  in  its  business.  If  it  had  done  so,  appellant 
might  have  maintained  an  action  for  a  breach  of  the  contract.  It  was 
bound  by  the  contract  to  take  of  appellant,  at  the  price  named,  its  entire 
supply  of  iron  for  the  year;  that  is,  such  a  quantity  of  iron,  in  view 
of  the  situation  and  business  of  appellee,  as  was  reasonably  required 
and  necessary  in  its  manufacturing  business."  See,  also,  Smith  v. 
Morse,  20  La.  Ann.  220 ;  Wells  v.  Alexandre  130  N.  Y.  642,  29  N.  E. 
142,  15  L.  R.  A.  218.  In  the  present  case  we  think  the  true  construc- 
tion is  that  Kreutzberger  &  Crabbe  undertook  to  take  ice  of  Lucas  &  Co. 
for  the  period  of  five  years;  that  the  quantity  which  they  agreed  to 
take  was  to  be  measured  by  the  necessities  of  their  business,  but  that 
this  presupposed  that  they  would  have  a  business  for  the  time 
agreed. 

9  Cyc.  329   (21,  24)  ;  W.  P.  196   (10)  ;  14  H.  L.  R.  150,  156;  5  Mich.  L.  R. 
681. 


THE  CHICAGO  &  GREAT  EASTERN  RAILWAY  COMPANY 

v.  DANE  AND  OTHERS. 

43  NEW  YORK,  240.— 1870. 

This  is  an  appeal  from  a  judgment  of  the  General  Term  of  the 
Supreme  Court  in  the  first  judicial  district,  affirming  a  judgment 
for  the  defendant  entered  upon  the  report  of  a  referee. 

This  action  was  brought  to  recover  damages  on  an  alleged  contract 
of  the  defendant  to  carry  and  transport  a  quantity  of  railroad  iron 
from  New  York  to  Chicago  for  the  plaintiffs.  The  only  evidence  of 
the  contract  were  the  letters  quoted  in  the  opinion  of  the  court.  The 
defendant  insisted  that  the  agreement  was  invalid  for  want  of  the 
proper  United  States  internal  revenue  stamp  affixed  at  the  time  it 
was  made.  But  the  referee  overruled  the  objection,  holding  that  it 
was  sufficient  under  §  173  of  the  revenue  act  of  June  30th,  1864,  to 
stamp  the  instrument  on  its  production  in  court.  This  point  was 
not  passed  on  in  this  court. 

GROVER,  J.  Whether  the  letter  of  the  defendants  to  plaintiff,  and 
the  answer  of  plaintiff  thereto  (leaving  the  question  of  revenue 
stamps  out  of  view),  proved  a  legal  contract  for  the  transportation 
of  iron  by  the  defendants  for  the  plaintiff  from  New  York  to  Chicago 
upon  the  terms  therein  specified,  depends  upon  the  question  whether 
the  plaintiff  became  thereby  bound  to  furnish  any  iron  to  the  de- 
fendants for  such  transportation,  as  there  was  no  pretence  of  any  con- 
sideration for  the  promise  of  the  defendants  to  transport  the  iron, 
except  the  mutual  promise  of  the  plaintiff  to  furnish  it  for  that  pur- 


60  FORMATION    OF    CONTRACT. 

pose,  and  to  pay  the  specified  price  for  the  service.  Unless,  there- 
fore, there  was  a  valid  undertaking  by  the  plaintiff  so  to  furnish  the 
iron,  the  promise  of  the  defendants  was  a  mere  nude  pact,  for  the 
breach  of  which  no  action  can  be  maintained.  The  material  part  of 
the  defendants'  letter  affecting  this  question  is  as  follows:  "We 
hereby  agree  to  receive  in  this  port  (New  York),  either  from  yard  or 
vessel,  and  transport  to  Chicago,  by  canal  and  rail  or  the  lakes,  for 
and  on  account  of  the  Chicago  &  Great  Eastern  Eailway  Company, 
not  exceeding  6000  tons  gross  (2240  pounds)  in  and  during  the 
months  of  April,  May,  June,  July  and  August,  1864,  upon  the  terms 
and  for  the  price  hereinafter  specified/'  This  letter  was  forwarded 
by  the  defendants  to  the  plaintiff  April  15th,  1864.  On  April  16th 
the  plaintiff  answered  this  letter,  the  material  part  of  which  was  as 
follows :  "  In  behalf  of  this  company  I  assent  to  your  agreement, 
and  will  be  bound  by  its  terms." 

"We  have  seen  that  the  inquiry  is,  whether  this  bound  the  plaintiff 
to  furnish  any  iron  for  transportation.  It  is  manifest  that  the  word 
"agree"  in  the  letter  of  the  defendants  was  used  as  synonymous  with 
the  word  "offer,"  and  that  the  letter  was  a  mere  proposition  to  the 
plaintiff  for  a  contract  to  transport  for  it  any  quantity  of  iron 
upon  the  terms  specified,  not  exceeding  6000  tons,  and  that  it  was 
so  understood  by  the  plaintiff.  The  plaintiff  was  at  liberty  to  accept 
this  proposition  for  any  specified  quantity  not  beyond  that  limited; 
and  had  it  done  so,  a  contract  mutually  obligatory  would  have  resulted 
therefrom,  for  the  breach  of  which  by  either  party  the  other  could 
have  maintained  an  action  for  the  recovery  of  the  damages  thereby 
sustained.  This  mutual  obligation  of  the  parties  to  perform  the  con- 
tract would  have  constituted  a  consideration  for  the  promise  of  each. 
But  the  plaintiff  did  not  so  accept.  Upon  the  receipt  of  the  de- 
fendants' offer  to  transport  not  to  exceed  6000  tons  upon  the  terms 
specified,  it  merely  accepted  such  offer,  and  agreed  to  be  bound  by  its 
terms.  This  amounted  to  nothing  more  than  the  acceptance  of  an 
option  by  the  plaintiff  for  the  transportation  of  such  quantity  of  iron 
by  the  defendants  as  it  chose;  and  had  there  been  a  consideration 
given  to  the  defendants  .for  such  option,  the  defendants  would  have 
been  bound  to  transport  for  the  plaintiff  such  iron  as  it  required 
within  the  time  and  quantity  specified,  the  plaintiff  having  its  election 
not  to  require  the  transportation  of  any.  But  there  was  no  con- 
sideration received  by  the  defendants  for  giving  any  such  option  to 
the  plaintiff.  There  being  no  consideration  for  the  promise  of  the 
defendants,  except  this  acceptance  by  the  plaintiff,  and  that  not  bind- 
ing it  to  furnish  any  iron  for  transportation  unless  it  chose,  it  fol- 
lows that  there  was  no  consideration  for  any  promise  of  the  defend- 
ants, and  that  the  breach  of  such  promise  furnishes  no  foundation 
for  an  action. 


OFFER   AND   ACCEPTANCE.  61 

The  counsel  for  the  defendants  insists  that  the  contract  may  be 
upheld  for  the  reason  that  at  the  time  the  letters  were  written  the  de- 
fendants were  engaged  in  transporting  iron  for  the  plaintiff.  But 
this  had  no  connection  with  the  letters  any  more  than  if  the  de- 
fendants were  at  the  time  employed  in  any  other  service  for  the 
plaintiff.  NOT  does  the  fact  that  the  defendants,  after  the  letters 
were  written,  transported  iron  for  the  plaintiff  at  all  aid  in  uphold- 
ing the  contract.  This  did  not  oblige  the  plaintiff  to  furnish  any 
additional  quantity,  and  consequently  constituted  no  consideration 
for  a  promise  to  transport  any  such.  The  counsel  for  the  appellant 
further  insists  that  the  letter  of  defendant  was  a  continuing  offer, 
and  that  the  request  of  the  plaintiff,  in  August,  to  receive  and  trans- 
port a  specified  quantity  of  iron  was  an  acceptance  of  such  offer,  and 
that  the  promises  then  became  mutually  obligatory,  if  not  so  before. 
This  position  cannot  be  maintained.  Upon  receipt  of  the  defend- 
ants' letter,  the  plaintiff  was  bound  to  accept  in  a  reasonable  time  and 
give  notice  thereof,  or  the  defendant  was  no  longer  bound  by  the 
offer.  The  judgment  appealed  from  must  be  affirmed  with  costs. 

All  the  judges  concurring  except  ALLEN,  J.,  who,  having  been  of 
counsel,  did  ^iot  sit. 

Judgment  affirmed.1 

9  Cyc.  258   (10)  ;  291   (38)  ;  327  (20)  ;  329   (21)  ;  W.  P.  196   (10). 

iln  Great  Northern  Ry.  Co.  v.  Witham,  L.  R.  9  C.  P.  .16,  the  defendant 
in  answering  an  advertisement  for  tenders,  wrote  to  plaintiff  as  follows:  "I, 
the  undersigned  hereby  undertake  to  supply  the  G.  N.  Ry.  Co.  for  twelve 
months  from  the  first  of  November,  1871,  to  31st  of  October,  1872,  with  such 
quantities  of  each  or  any  of  the  several  articles  named  in  the  attached  speci- 
fication, as  the  company's  storekeeper  may  order,  from  time  to  time,  at  the 
price  set  opposite  each  article  respectively,  and  agree  to  abide  by  the  conditions 
stated  on  the  other  side.  (Signed)  Samuel  Witham.  The  plaintiff's  officer 
replied  accepting  the  tender.  Plaintiff  sued  to  recover  for  the  defendant's 
failure  to  deliver  an  order  and  recovered  judgment.  Bishop  on  Contract 
(1887)  sec.  78,  commenting  on  the  case  says,  "the  parties  agreed  that  one 
of  them  should  supply  the  other  during  a  designated  period  with  certain 
stores,  as  the  latter  might  order.  He  made  an  order,  which  was  filled;  then 
made  another  which  was  declined;  and  on  suit  brought  the  defendant  rested 
his  case  on  the  lack  of  mutuality  in  the  contract,  which,  he  contended,  ren- 
dered it  void.  Plainly  it  stood,  in  law,  as  a  mere  continuing  offer  by  the 
defendant;  but  when  the  plaintiff  made  an  order,  he  thereby  accepted  the  of- 
fer to  the  extent  of  the  order,  and  it  was  too  late  for  the  other  to  recede.  So 
judgment  went  for  the  plaintiff;  Brett,  J.,  observing  that  this  case  'does  not 
decide  the  question  whether  the  defendant  might  have  absolved  himself  from 
the  further  performance  of  the  contract  by  giving  notice.' " 


62  FORMATION    OF    CONTRACT. 

b.  An  offer  under  seal  is  irrevocable. 

MCMILLAN  v.  AMES 

33  MINNESOTA,  257.— 1885. 

VANDERBURGH,  J.  On  the  day  it  bears  date  the  defendant  executed 
and  delivered  to  James  McMillan  &  Co.  the  following  covenant  or 
agreement  under  seal,  which  was  subsequently  assigned  to  the  plaintiff : 

[Here  follows  a  copy  of  the  instrument.] 

By  the  terms  of  this  instrument,  which  is  admitted  to  have  been 
sealed  by  defendant,  he  covenanted  to  convey  the  premises  upon  the 
consideration  and  condition  of  the  payment  by  the  covenantees  of  the 
sum  named,  on  or  before  the  date  fixed  in  the  writing.  Before  per- 
formance on  their  part,  the  defendant  notified  them  of  his  withdrawal 
and  rescission  of  the  promise  and  obligation  embraced  in  such  written 
instrument,  and  thereafter  refused  the  tender  of  payment  and  offer  of 
performance  by  the  .plaintiff  in  conformity  therewith,  as  alleged  in 
the  complaint,  and  within  the  time  limited.  On  the  trial,  it  appear- 
ing that  such  notice  of  rescission  had  been  given,  the  court  rejected 
plaintiff's  offer  to  introduce  the  writing  in  evidence,  and  dismissed 
the  action. 

The  only  question  presented  on  this  appeal  is  whether  defendant's 
promise  or  obligation  was  nudum  pactum  and  presumptively  invalid 
for  want  of  a  consideration,  or  whether,  being  in  the  nature  of  a  cove- 
nant, the  defendant  was  bound  thereby,  subject  to  the  performance  of 
the  conditions  by  the  covenantees. 

Apart  from  the  effect  of  the  seal  as  evidencing  a  consideration  bind- 
ing the  defendant  to  hold  open  his  proposition,  or  rather  validating  his 
promise  subject  to  the  conditions  expressed  in  the  writing,  it  is  clear 
that  such  promise,  made  for  a  consideration  thereafter  to  be  per- 
formed by  the  plaintiff  at  his  election,  would  take  effect  as  an  offer 
or  proposition  merely,  but  would  become  binding  as  a  promise  as 
soon  as  accepted  by  the  performance  of  the  consideration,  unless  pre- 
viously revoked  or  it  had  otherwise  ceased  to  exist.  Langdell  on  Cont. 
70 ;  Boston  &  M.  E.  R.  v.  Bartlett,  3  Gush.  224,  228.  In  the  case  cited 
there  was  a  proposition  to  sell  land  by  writing  not  under  seal.  The 
court  held  the  party  at  liberty  to  withdraw  his  offer  at  any  time  be- 
fore acceptance,  but  not  after,  within  the  appointed  time,  because 
until  acceptance  it  was  a  mere  offer,  without  a  consideration  or  a 
corresponding  promise  to  support  it,  and  the  court  say:  "Whether 
wisely  or  not,  the  common  law  unyieldingly  insists  upon  a  considera- 
tion, or  a  paper  with  a  seal  attached/' 

If,  however,  his  promise  is  binding  upon  the  defendant,  because 
contained  in  an  instrument  under  seal,  then  it  is  not  a  mere  offer, 


OFFER   AND   ACCEPTANCE.  63 

but  a  valid  promise  to  convey  the  land  upon  the  condition  erf  pay- 
ment. All  that  remained  was  performance  by  plaintiff  within  the 
time  specified  to  entitle  him  to  a  fulfilment  of  the  covenant  to  con- 
vey. Langdell  on  Cont.  178,  179.  As  respects  the  validity  or  obli- 
gation of  such  unilateral  contracts,  the  distinction  between  covenants 
and  simple  contracts  is  well  defined  and  established.  Anson,  Cont. 
12;  Chit.  Cont.  5;  Leake,  Cont.  146;  1  Smith,  Lead.  Cas.  (7th  ed.) 
698 ;  Wing  v.  Chase,  35  Me.  260 ;  Willard  v.  Tayloe,  8  Wall.  557. 

In  Pitman  v.  Woodbury  (3  Exch.  4,  11)  Parke,  B.,  says:  "The 
cases  establish  that  a  covenantee  in  an  ordinary  indenture,  who  is  a 
party  to  it,  may  sue  the  covenantor,  who  executed  it,  although  he  him- 
self never  did;  for  he  is  a  party,  although  he  did  not  execute,  and  it 
makes  no  difference  that  the  covenants  of  the  defendant  are  therein 
stated  to  be  in  consideration  of  those  of  the  covenantee.  Of  this 
there  is  no  doubt,  nor  that  a  covenant  binds  without  consideration/' 
Morgan  v.  Pike,  14  C.  B.  473,  484;  Leake,  Cont.  141.  The  cove- 
nantee in  such  cases  may  have  the  benefit  of  the  contract,  but  subject 
to  the  conditions  and  provisos  in  the  deed.  The  obligations  fre- 
quently take  the  form  of  bonds,  which  is  only  another  method  of  form- 
ing a  contract,  in  which  a  party  binds  himself  as  if  he  had  made  a 
contract  to  perform;  a  consideration  being  necessarily  implied  from 
the  solemnity  of  the  instrument.  The  consideration  of  a  sealed  in- 
strument may  be  inquired  into;  it  may  be  shown  not  to  have  been 
paid  (Bowen  v.  Bell,  20  John.  338),  or  to  be  different  from  that 
expressed  (Jordan  v.  White,  20  Minn.  77  [91]  ;  McCrea  v.  Purmort, 
16  Wend.  460),  or  as  to  a  mortgage  that  there  is  no  debt  to  secure 
(Wearse  v.  Peirce,  24  Pick.  141),  etc. ;  but,  except  for  fraud  or  illegal- 
ity, the  consideration  implied  from  the  seal  cannot  be  impeached  for 
the  purpose  of  invalidating  the  instrument  or  destroying  its  char- 
acter as  a  specialty. 

It  is  true  that  equity  will  not  lend  its  auxiliary  remedies  to  aid 
in  the  enforcement  of  a  contract  which  is  inequitable,  or  is  not  sup- 
ported by  a  substantial  consideration,  but  at  the  same  time  it  will 
not  on  such  grounds  interfere  to  set  it  aside.  But  no  reason  appears 
why  equity  might  not  have  decreed  specific  performance  in  this  case 
(had  the  land  not  been  sold),  because  the  substantial  and  meritor- 
ious consideration  required  by  the  court  in  such  case  would  consist  in 
that  stipulated  in  the  instrument  as  the  condition  of  a  conveyance, 
performance  of  which  by  the  plaintiff  would  ha7e  been  exacted  as  a 
prerequisite  to  relief,  so  as  to  secure  to  defendant  mutuality  in  the 
remedy,  and  all  his  rights  under  the  contract.  The  inquiry  would 
not,  in  such  case,  be  directed  to  the  constructive  consideration  evi- 
denced by  the  seal,  for  a  mere  nominal  consideration  would  have  sup- 
ported the  defendant's  offer  or  promise  upon  the  prescribed  condi- 
tions. Leake,  Cont.  17,  18;  Western  R.  Co.  v.  Babcock,  6  Met.  346; 


64  FORMATION   OF   CONTRACT. 

Yard  v.  Patton,  13  Pa.  St.  278,  285 ;  Candor's  Appeal,  27  Pa.  St.  119. 

If,  then,  defendant's  promise  was  irrevocable  within  the  time 
limited,  plaintiff  might  certainly  seek  his  remedy  for  damages,  upon 
the  facts  alleged  in  the  pleadings,  upon  showing  performance  or  tender 
thereof  on  his  part. 

There  is  a  growing  tendency  to  abrogate  the  distinction  between 
sealed  and  unsealed  instruments;  in  some  States  by  legislation,  in 
others  to  a  limited  extent  by  usage  or  judicial  recognition.  State  v. 
Young,  23  Minn.  551 ;  1  Pars.  Cont.  429.  But  the  significance  of  the 
seal  as  importing  a  consideration  is  everywhere  still  recognized,  except 
as  affected  by  legislation  on  the  subject.  It  has  certainly  never  been 
questioned  by  this  court.  In  Pennsylvania  the  courts  allow  a  party, 
as  an  equitable  defense  in  actions  upon  sealed  instruments,  to  show 
a  failure  to  receive  the  consideration  contracted  for,  where  an  actual 
valuable  consideration  was  intended  to  pass,  and  furnished  the  motive 
for  entering  into  the  contract.  Candor's  Appeal,  27  Pa.  St.  119; 
Yard  v.  Patton,  supra.  But  whatever  the  rule  as  to  equitable  de- 
fenses and  counter-claims  under  our  system  of  practice  may  properly 
be  held  to  be  in  the  case  of  sealed  instruments,  it  has  no  application, 
we  think,  to  a  case  like  this,  where  full  effect  must  be  given  to  the 
seal.  Under  the  civil  law  the  rule  is  that  a  party  making  an  offer, 
and  granting  time  to  another  in  which  to  accept  it,  is  not  at  liberty  to 
withdraw  it  within  the  appointed  time,  -  it  being  deemed  inequitable 
to  disappoint  expectations  raised  by  such  offer,  and  leave  the  party 
without  remedy.  The  common  law,  as  we  have  seen,  though  requiring 
a  consideration,  is  satisfied  with  the  evidence  thereof  signified  by  a 
seal.  Boston  &  M.  R.  E.  v.  Bartlett,  supra.  The  same  principle 
applies  to  a  release  under  seal,  which  is  conclusive  though  disclosing 
on  its  face  a  consideration  otherwise  insufficient.  Staples  v.  Welling- 
ton, 62  Me.  9 ;  Wing  v.  Chase,  35  Me.  260. 

These  considerations  are  decisive  of  the  case,  and  the  order  deny- 
ing a  new  trial  must  be  reversed. 

9  Cyc.  287-288   (20-21)  ;  W.  P.  35   (40)  ;  55   (62). 


c.  Must  the  revocation  be  communicated? 
COLEMAN  v.  APPLEGARTH. 
68  MARYLAND,  21.— 1887. 

ALVEY,  C.  J.  Coleman,  the  appellant,  filed  his  bill  against  Apple- 
garth  and  Bradley,  the  appellees,  for  a  specific  performance  of  what  is 
alleged  to  be  a  contract  made  by  Applegarth  with  Coleman  for  the 
sale  of  a  lot  of  ground  in  the  city  of  Baltimore.  The  contract  upon 


OFFER   AND   ACCEPTANCE.  65 

which  the  application  is  made,  and  which  is  sought  to  be  specifically 
enforced,  reads  thus: 

"For  and  in  consideration  of  the  sum  of  five  dollars  paid  me,  I  do  hereby 
give  to  Charles  Coleman  the  option  of  purchasing  my  lot  of  ground,  north- 
west corner,  etc.,  assigned  to  me  by  Wright  and  McDermot,  by  deed  dated, 
etc.,  subject  to  the  ground  rent  therein  mentioned,  at  and  for  the  sum  of  $645 
cash,  at  any  time  on  or  before  the  first  day  of  November,  1886." 

It  was  dated  the  3rd  of  September,  1886,  and  signed  by  Applegarth 
alone. 

The  plaintiff,  Coleman,  did  not  exercise  his  option  to  purchase 
within  the  time  specified  in  the  contract;  but  he  alleges  in  his  bill 
that  Applegarth,  after  making  the  contract  of  the  3d  of  September, 
1886,  and  before  the  expiration  of  the  time  limited  for  the  exercise  of 
the  option,  verbally  agreed  with  the  plaintiff  to  extend  the  time  for 
the  exercise  of  such  option  to  the  1st  of  December,  1886.  It  is 
further  alleged  that,  about  the  9th  of  November,  1886,  without  notice 
to  the  plaintiff,  Applegarth  sold,  and  assigned  by  deed,  the  lot  of 
ground  to  Bradley,  for  the  consideration  of  $700;  and  that  subse- 
quently, but  prior  to  the  1st  of  December,  1886,  the  plaintiff  tendered 
to  Applegarth,  in  lawful  money,  the  sum  of  $645,  and  demanded  a  deed 
of  assignment  of  the  lot  of  ground,  but  which  was  refused.  It  is  also 
charged  that  Bradley  had  notice  of  the  optional  right  of  the  plaintiff 
at  the  time  of  taking  the  deed  of  assignment  from  Applegarth,  and 
that  such  deed  was  made  in  fraud  of  the  rights  of  the  plaintiff  under 
the  contract  of  September  3,  1886.  The  relief  prayed  is,  that  the  deed 
to  Bradley  may  be  declared  void,  and  that  Applegarth  may  be  decreed 
to  convey  the  lot  of  ground  to  the  plaintiff  upon  payment  by  the 
latter  of  the  $645,  and  for  general  relief. 

The  defendants,  both  Applegarth  and  Bradley,  by  their  answers, 
deny  that  there  was  any  binding  contract,  or  optional  right  existing 
in  regard  to  the  sale  of  the  lot,  as  between  Applegarth  and  the  plaintiff, 
at  the  time  of  the  sale  and  transfer  of  the  lot  to  Bradley ;  and  the  latter 
denies  all  notice  of  the  alleged  agreement  for  the  extension  of  time 
for  the  exercise  of  the  option  by  the  plaintiff;  and  both  defendants 
rely  upon  the  statute  of  frauds  as  a  defense  to  the  relief  prayed. 

The  plaintiff  was  examined  as  a  witness  in  his  own  behalf  and  he 
also  called  and  examined  both  of  the  defendants  as  witnesses  in  sup- 
port of  the  allegation  of  his  bill.  But  without  special  reference  to  the 
proof  taken,  the  questions  that  are  decisive  of  the  case  may  be  de- 
termined upon  the  facts  as  alleged  by  the  bill  alone,  in  connection  with 
the  contract  exhibited,  as  upon  demurrer;  such  facts  being  considered 
in  reference  to  the  grounds  of  defense  interposed  by  the  defendants. 

The  contract  set  up  is  not  one  of  sale  and  purchase,  but  simply 
for  the  option  to  purchase  within  a  specified  time,  and  for  a  given 


66  FORMATION    OF   CONTRACT. 

price.  It  was  unilateral  and  binding  upon  one  party  only.  There  was 
no  mutuality  in  it,  and  it  was  binding  upon  Applegarth  only  for  the 
time  stipulated  for  the  exercise  of  the  option.  After  the  lapse  of  the 
time  given,  there  was  nothing  to  bind  him  to  accept  the  price  and 
convey  the  property;  and  the  fact  that  this  unilateral  agreement  was 
reduced  to  writing  added  nothing  to  give  it  force  or  operative  effect 
beyond  the  time  therein  limited  for  the  exercise  of  the  option  by  the 
plaintiff.  It  is  quite  true,  as  contended  by  the  plaintiff,  that,  as  a 
general  proposition,  time  is  not  deemed  by  courts  of  equity  as  being 
of  the  essence  of  contracts ;  and  that,  in  perfected  contracts,  ordinarily, 
the  fact  that  the  time  for  performance  has  passed  will  not  be  regarded 
as  a  reason  for  withholding  specific  execution.  But  while  this  is  the 
general  rule  upon  the  subject,  that  general  rule  has  well-defined  ex- 
ceptions, which  are  as  constantly  recognized  as  the  general  rule  itself. 
If  the  parties  have,  as  in  this  case,  expressly  treated  time  as  of  the 
essence  of  the  agreement,  or  if  it  necessarily  follows  from  the  nature 
and  circumstances  of  the  agreement  that  it  should  be  so  regarded, 
courts  of  equity  will  not  lend  their  aid  to  enforce  specifically  the 
agreement,  regardless  of  the  limitation  of  time.  2  Story's  Eq.  Jur. 
sec.  776.  Here,  time  was  of  the  very  essence  of  the  agreement,  the 
nominal  consideration  being  paid  to  the  owner  for  holding  the  property 
for  the  specified  time,  subject  to  the  right  of  the  plaintiff  to  exercise 
his  option  whether  he  would  buy  it  or  not.  When  the  time  limited 
expired,  the  contract  was  at  an  end,  and  the  right  of  option  gone,  if 
that  right  has  not  been  extended  by  some  valid  binding  agreement  that 
can  be  enforced.  This  would  seem  to  be  the  plain  dictate  of  rea- 
son, upon  the  terms  and  nature  of  the  contract  itself;  and  that  is  the 
plain  result  of  the  decision  of  this  court,  made  in  respect  to  an  op- 
tional contract  to  purchase,  in  the  case  of  Maughlin  v.  Perry,  35 
Md.  352,  359,  360. 

As  must  be  observed,  it  is  not  alleged  or  pretended  that  the  plain- 
tiff attempted  to  exercise  his  option,  and  to  complete  a  contract  of 
purchase,  within  the  time  limited  by  the  written  agreement  of  the 
3d  of  September,  1886.  But  it  is  alleged  and  shown  that  before  the 
expiration  of  such  time,  the  defendant  Applegarth  verbally  agreed  or 
promised  to  extend  the  time  for  the  exercise  of  the  option  by  the 
plaintiff  from  the  1st  of  November  to  the  1st  of  December,  1886; 
and  that  it  was  within  this  latter  or  extended  period  and  after  the 
property  had  been  sold  and  conveyed  to  Bradley,  that  the  plaintiff 
proffered  himself  ready  to  accept  the  property  and  pay  the  price 
therefor.  It  is  quite  clear,  however,  that  such  offer  to  accept  the 
property  came  too  late.  There  was  no  consideration  for  the  verbal 
promise  or  agreement  to  extend  the  time,  and  such  promise  was  a 
mere  nudum  pacium,  and  therefore  not  enforceable  to  say  nothing 
of  the  statute  of  frauds,  which  has  been  invoked  by  the  defendants. 


OFFER   AND   ACCEPTANCE.  67 

After  the  1st  of  November,  1886,  the  verbal  agreement  of  Applegarth 
operated  simply  as  a  mere  continuing  offer  at  the  price  previously 
fixed,  and  which  offer  only  continued  until  it  should  be  withdrawn  or 
otherwise  ended  by  some  act  of  his ;  but  he  was  entirely  at  liberty  at 
any  time,  before  acceptance,  to  withdraw  the  offer;  and  the  subse- 
quent sale  and  transfer  of  the  property  to  Bradley  had  the  effect  at 
once  of  terminating  the  offer  to  the  plaintiff.  Pomeroy  on  Specific 
Performance,  sees.  60,  61. 

The  principles  that  govern  in  cases  like  the  present  are  very  fully 
and  clearly  stated  by  the  English  court  of  appeal  in  chancery  in  the 
case  of  Dickinson  v.  Dodds,  2  Ch.  Div.  463.  That  case,  in  several 
of  its  features,  is  not  unlike  the  present.  There  the  owner  of  prop- 
erty signed  a  document  which  purported  to  be  an  agreement  to  sell 
it  at  a  fixed  price,  but  added  a  postscript,  which  he  also  signed,  in 
these  words:  "This  offer  to  be  left  over  until  Friday,  nine  o'clock, 
A.M.,"  two  days  from  the  date  of  the  agreement.  Upon  application  of 
the  party,  who  claimed  to  be  vendee  of  the  property,  for  specific  per- 
formance, it  was  held,  upon  full  and  careful  consideration  by  the 
court  of  appeal,  that  the  document  amounted  only  to  an  offer,  which 
might  be  withdrawn  at  any  time  before  acceptance,  and  that  a  sale 
to  a  third  person  which  came  to  the  knowledge  of  the  person  to  whom 
the  offer  was  made  was  an  effectual  withdrawal  of  the  offer.  In  the 
course  of  his  judgment,  after  declaring  the  written  document  to  be 
nothing  more  than  an  offer  to  sell  at  a  fixed  price,  Lord  Justice  James 
said: 

"There  was  no  consideration  given  for  the  undertaking  or  promise,  to 
whatever  extent  it  may  be  considered  binding,  to  keep  the  property  unsold 
until  nine  o'clock  on  Friday  morning;  but  apparently  Dickinson  was  of  opin- 
ion, and  probably  Dodds  was  of  the  same  opinion,  that  he  (Dodds)  was  bound 
by  that  promise,  and  could  not  in  any  way  withdraw  from  it,  or  retract  it, 
until  nine  o'clock  on  Friday  morning,  and  this  probably  explains  a  good  deal 
of  what  afterwards  took  place.  But  it  is  clear,  settled  law,  on  one  of  the 
clearest  principles  of  law,  that  this  promise  being  a  mere  nudum  pactum, 
was  not  binding,  and  that  at  any  moment  before  complete  acceptance  by  Dick- 
inson of  the  offer>  Dodds  was  as  free  as  Dickinson  himself.  That  being  the 
state  of  things,  it  is  said  that  the  only  mode  in  which  Dodds  could  assert  that 
freedom  was  by  actually  and  distinctly  saying  to  Dickinson,  'Now  I  withdraw 
my  offer.'  It  appears  to  me  that  there  is  neither  principle  or  authority  for 
the  proposition  that  there  must  be  an  express  and  actual  withdrawal  of  the 
offer,  or  what  is  called  a  retractation.  It  must,  to  constitute  a  contract,  appear 
that  the  two  minds  were  at  one,  at  the  same  moment  of  time,  that  is,  that 
there  was  an  offer  continuing  up  to  the  time  of  the  acceptance.  If  there  was 
not  such  a  continuing  offer,  then  the  acceptance  comes  to  nothing." 

And  Lord  Justice  Mellish  was  quite  as  explicit  in  stating  his  judg- 
ment, in  the  course  of  which  he  said : 


68  FORMATION    OF    CONTRACT. 

"He  was  not  in  point  of  law  bound  to  hold  the  offer  over  until  nine  o'clock 
on  Friday  morning.  He  was  not  so  bound  either  in  law  or  in  equity.  Well, 
that  being  so,  when  on  the  next  day  he  made  an  agreement  with  Allan  to  sell 
the  property  to  him,  I  am  not  aware  of  any  ground  on  which  it  can  be  said 
that  that  contract  with  Allan  was  not  as  good  and  binding  a  contract  as  ever 
was  made.  Assuming  Allan  to  have  known  (there  is  some  dispute  about  it, 
and  Allan  does  not  admit  that  he  knew  it,  but  I  will  assume  that  he  did) 
that  Dodds  made  the  offer  to  Dickinson,  and  had  given  him  until  Friday 
morning  at  nine  o'clock  to  accept  it,  still,  in  point  of  law,  that  could  not 
prevent  Allan  from  making  a  more  favorable  offer  than  Dickinson,  and  enter- 
ing at  once  into  a  binding  agreement  with  •  Dodds." 

And  further  on  he  says: 

"If  the  rule  of  law  is  that  a  mere  offer  to  sell  property,  which  can  be 
withdrawn  at  any  time,  and  which  is  made  dependent  on  the  acceptance  of 
the  person  to  whom  it  is  made,  is  a  mere  nudum  pactum,  how  is  it  possible 
that  the  person  to  whom  the  offer  has  been  made  can  by  acceptance  make  a 
binding  contract  after  he  knows  that  the  person  who  has  made  the  offer 
has  sold  the  property  to  some  one  else?  It  is  admitted  law  that  if  a  man 
who  makes  an  offer  dies,  the  offer  cannot  be  accepted  after  he  is  dead,  and  part- 
ing with  the  property  has  very  much  the  same  effect  as  the  death  of  the  owner, 
for  it  makes  the  performance  of  the  offer  impossible.  I  am  clearly  of  opinion 
that,  just  as  when  a  man  who  has  made  an  offer  dies  before  it  is  accepted  it 
is  impossible  that  it  can  then  be  accepted,  so  when  one  of  the  persons  to  whom 
the  offer  was  made  knows  that  the  property  has  been  sold  to  some  one  else, 
it  is  too  late  for  him  to  accept  the  offer;  and  on  that  ground  I  am  clearly  of 
opinion  that  there  was  no  binding  contract  for  the  sale  of  this  property  by 
Dodds  to  Dickinson." 

In  this  case,  the  plaintiff  admits  that,  at  the  time  he  proffered  to 
Applegarth  acceptance  of  the  previous  offer  to  sell  at  the  price  named, 
he  was  aware  of  the  fact  that  the  property  had  been  sold  to  Bradley. 
It  was  therefore  too  late  for  him  to  attempt  to  accept  the  offer,  and 
there  was  not,  and  could  not  be  made  by  such  proffered  acceptance, 
any  binding  contract  of  sale  of  the  property. 

It  follows  that  the  decree  of  the  court  below,  dismissing  the  bill  of 
the  plaintiff,  must  be  affirmed. 

Decree  affirmed.1 

9  Cyc.  289   (25)  ;  W.  P.  28   (29)  ;  33  (37)  ;  18  H.  L.  R.  139. 

i  In  Shuey  v.  U.  S.,  92  U.  S.  73,  the  court  said,  as  to  communication  of  revo- 
cation of  an  offered  reward:  "The  offer  of  a  reward  for  the  apprehension  of 
Surratt  was  revoked  on  November  24th,  1865 ;  and  notice  of  the  revocation  was 
published.  It  is  not  to  be  doubted  that  the  offer  was  revocable  at  any.  time 
before  it  was  accepted,  and  before  anything  had  been  done  in  reliance  upon  it. 
There  was  no  contract  until  its  terms  were  complied  with.  Like  any  other 
offer  of  a  contract,  it  might,  therefore,  be  withdrawn  before  rights  had  ac- 
crued under  it;  and  it  was  withdrawn  through  the  same  channel  in  which  it 


OFFER   AND   ACCEPTANCE.  69 

An  offer  need  not  be  made  to  an  ascertained  person,  but  no  contract 
can  arise  until  it  has  been  accepted  by  an  ascertained  person. 

(t.)  Accidental  compliance  with  terms  of  offer. 
FITCH  v.  SNEDAKER. 
38  NEW  YORK,  248.— 1868. 

WOODRUFF,  J.  On  the  14th  of  October,  1859,  the  defendant  caused 
a  notice  to  be  published,  offering  a  reward  of  two  hundred  dollars  .  .  . 
"to  any  person  or  persons  who  will  give  such  information  as  shall 
lead  to  the  apprehension  and  conviction  of  the  person  or  persons 
guilty  of  the  murder  of"  a  certain  unknown  female. 

On  the  15th  day  of  October,  before  the  plaintiffs  had  seen  or  heard 
of  the  offer  of  this  reward,  one  Fee  was  arrested  and  put  in  jail,  and 
though  not  in  terms  so  stated,  the  case  warrants  the  inference,  that, 
by  means  of  the  evidence  given  by  the  plaintiffs  on  his  trial  and  their 
efforts  to  procure  testimony,  Fee  was  convicted. 

This  action  is  brought  to  recover  the  reward  so  offered.  On  the 
trial  the  plaintiffs  proved  the  publication  of  the  notice,  and  then 
proposed  to  prove  that  they  gave  information  before  the  notice  was 
known  to  them,  which  led  to  the  arrest  of  Fee.  This  evidence  was 
excluded.  The  plaintiffs  then  offered  to  prove,  that,  with  a  view  to 
this  reward,  they  spent  time  and  money,  made  disclosures  to  the  dis- 
trict attorney,  to  the  grand  jury  and  to  the  court  on  the  trial  after 
Fee  was  in  jail,  and  that,  without  their  effort,  evidence,  and  exertion, 
no  indictment  or  conviction  could  have  been  had.  This  evidence 
was  excluded. 

The  court  thereupon  directed  a  nonsuit. 

It  is  entirely  clear  that,  in  order  to  entitle  any  person  to  the 
reward  offered  in  this  case,  he  must  give  such  information  as  shall 
lead  to  both  apprehension  and  conviction.  That  is,  both  must  hap- 
pen, and  happen  as  a  consequence  of  the  information  given.  No  per- 
son could  claim  the  reward  whose  information  caused  the  apprehen- 
sion, until  conviction  followed;  both  are  conditions  precedent.  No 

was  made.  The  same  notoriety  was  given  to  the  revocation  that  was  given  to 
the  offer;  and  the  findings  of  fact  do  not  show  that  any  information  was  given 
by  the  claimant,  or  that  he  did  anything  to  entitle  him  to  the  reward  offered, 
until  five  months  after  the  offer  had  been  withdrawn.  True,  it  is  found  that 
then,  and  at  all  times  until  the  arrest  was  actually  made,  he  was  ignorant 
of  the  withdrawal ;  but  that  is  an  immaterial  fact.  The  offer  of  the  reward 
not  having  been  made  to  him  directly,  but  by  means  of  a  published  proclama- 
tion, he  should  have  known  that  it  could  be  revoked  in  the  manner  in  which 
it  was  made." 


70  FORMATION   OF    CONTRACT. 

one  could  therefore  claim  the  reward,  who  gave  no  information  what- 
ever until  after  the  apprehension,  although  the  information  he  after- 
ward gave  was  the  evidence  upon  which  conviction  was  had,  and, 
however  clear,  that,  had  the  information  been  concealed  or  suppressed, 
there  could  have  been  no  conviction.  This  is  according  to  the  plain 
terms  of  the  offer  of  the  reward,  and  is  held  in  Jones  v.  The  Phoenix 
Bank,  8  N.  Y.  228 ;  Thatcher  v.  England,  3  Com.  Bench,  254. 

In  the  last  case  it  was  distinctly  held,  that,  under  an  offer  of 
reward,  payable  "on  recovery  of  property  stolen  and  conviction  of  the 
offender/'  a  person  who  was  active  in  arresting  the  thief  and  finding 
and  restoring  part  of  the  stolen  property,  giving  information  to  the 
magistrates,  tracing  to  London  other  of  the  property  and  producing 
pawnbrokers  with  whom  the  prisoner  had  pledged  it,  and  who  in- 
curred much  trouble  and  expense  in  bringing  together  witnesses  for 
the  prosecution,  was  not  entitled  to  the  reward,  as  it  appeared  that 
another  person  gave  the  first  information  as  to  the  party  committing 
the  robbery. 

In  the  present  case,  the  plaintiff,  after  the  advertisement  of  the 
defendant's  offer  of  a  reward  came  to  his  knowledge,  did  nothing  to- 
ward procuring  the  arrest,  nor  which  led  thereto,  for  at  that  time 
Fee  had  already  been  arrested. 

The  cases  above  referred  to,  therefore,  established  that,  if  no  in- 
formation came  from  the  plaintiffs  which  led  to  the  arrest  of  Fee,  the 
plaintiffs  are  not  entitled  to  recover,  however  much  the  information 
they  subsequently  gave,  and  the  efforts  they  made  to  procure  evidence, 
may  have  contributed  to  or  even  have  caused  his  conviction,  and, 
therefore,  evidence  that  it  was  their  efforts  and  information  which  led 
to  his  conviction  was  wholly  immaterial,  if  they  did  not  prove  that 
they  had  given  information  which  led  to  his  apprehension,  and  was 
properly  rejected. 

The  question  in  this  case  is  simple.  A  murderer  having  been 
arrested  and  imprisoned  in  consequence  of  information  given  by  the 
plaintiff  before  he  is  aware  that  a  reward  is  offered  for  such  appre- 
hension, is  he  entitled  to  claim  the  reward  in  case  conviction  follows? 

The  ruling  on  the  trial,  excluding  all  evidence  of  information  given 
by  the  plaintiffs  before  they  heard  of  this  reward,  necessarily  answers 
this  question  in  the  negative. 

The  case  of  Williams  v.  Carwardine  (4  Barn.  &  Adol.  621),  and 
same  case  at  the  assizes  (5  Carr.  &  Payne,  566),  holds  that  a  person 
who  gives  information  according  to  the  terms  of  an  offered  reward  is 
entitled  to  the  money,  although  it  distinctly  appeared  that  the  in- 
former had  suppressed  the  information  for  five  months,  and  was  led 
to  inform,  not  by  the  promised  reward,  but  by  other  motives.  The 
court  said  the  plaintiff  had  proved  performance  of  the  condition 
upon  which  the  money  was  payable  and  that  established  her  title. 


y 

OFFER    AND   ACCEPTANCE.  71 

That  the  court  would  not  look  into  her  motives.  It  does  not  appear 
by  the  reports  of  this  case  whether  or  not  the  plaintiff  had  ever 
seen  the  notice  or  handbill  posted  by  the  defendant,  offering  the  re- 
ward; it  does  not,  therefore,  reach  the  precise  point  involved  in  the 
present  appeal. 

I  perceive,  however,  no  reason  for  applying  to  an  offer  of  reward 
for  the  apprehension  of  a  criminal  any  other  rules  than  are  applicable 
to  any  other  offer  by  one,  accepted  or  acted  upon  by  another,  and  so 
relied  upon  as  constituting  a  contract. 

The  form  of  action  in  all  such  cases  is  assumpsit.  The  defend- 
ant is  proceeded  against  as  upon  his  contract  to  pay,  and  the  first 
question  is,  was  there  a  contract  between  the  parties? 

To  the  existence  of  a  contract  there  must  be  mutual  assent,  or  in 
another  form  offer  and  consent  to  the  offer.  The  motive  inducing  con- 
sent may  be  immaterial,  but  the  consent  is  vital.  Without  that  there 
is  no  contract.  How  then  can  there  be  consent  or  assent  to  that  of 
which  the  party  has  never  heard  ?  On  the  15th  day  of  October,  1859, 
the  murderer,  Fee,  had,  in  consequence  of  information  given  by  the 
plaintiffs,  been  apprehended  and  lodged  in  jail.  But  the  plaintiffs 
did  not,  in  giving  that  information,  manifest  any  assent  to  the 
defendant's  offer,  nor  act  in  any  sense  in  reliance  thereon,  they  did  not 
know  of  its  existence.  The  information  was  voluntary,  and  in  every 
sense  (material  to  this  case)  gratuitous.  The  offer  could  only  operate 
upon  the  plaintiffs  after  they  heard  of  it.  It  was  prospective  to  those 
who  will,  in  the  future,  give  information,  etc. 

An  offer  cannot  become  a  contract  unless  acted  upon  or  assented 
to. 

Such  is  the  elementary  rule  in  defining  what  is  essential  to  a  con- 
tract. Chitty  on  Con.  (5th  Am.  ed.),  Perkins'  notes,  p.  10,  9,  and 
2,  and  cases  cited.  Nothing  was  here  done  to  procure  or  lead  to 
Fee's  apprehension  in  view  of  this  reward.  Indeed,  if  we  were  at 
liberty  to  look  at  the  evidence  on  the  first  trial,  it  would  appear  that 
Fee  was  arrested  before  the  defendant  offered  the  reward. 

I  think  the  evidence  was  properly  excluded  and  the  nonsuit  neces- 
sarily followed. 

The  judgment  should  be  affirmed. 

Judgment  affirmed. 
9  Cyc.  254   (64)  ;  W.  P.  13   (12). 


DAWKINS  v.  SAPPINGTON. 
26  INDIANA,  199.— 1866. 

FBAZER,  J.     The  appellant   was  the  plaintiff  below.     The  com- 
plaint was  in  two  paragraphs.     1.     That  a  horse  of  the  defendant 


72  FORMATION   OF    CONTRACT. 

had  been  stolen,  whereupon  he  published  a  handbill,  offering  a  reward 
of  $50  for  the  recovery  of  the  stolen  property,  and  that  thereupon  the 
plaintiff  rescued  the  horse  from  the  thief  and  restored  him  to  the  de- 
fendant, who  refused  to  pay  the  reward.  2.  That  the  horse  of  the 
defendant  was  stolen,  whereupon  the  plaintiff  recovered  and  returned 
him  to  the  defendant,  who,  in  consideration  thereof,  promised  to  pay 
$50  to  the  plaintiff,  which  he  has  failed  and  refused  to  do. 

To  the  second  paragraph  a  demurrer  was  sustained.  To  the  first 
an  answer  was  filed,  the  second  paragraph  of  which  alleged  that  the 
plaintiff,  when  he  rescued  the  horse  and  returned  him  to  the  de- 
fendant, had  no  knowledge  of  the  offering  of  the  reward.  The  third 
paragraph  averred  that  the  handbill  offering  the  reward  was  not 
published  until  after  the  rescue  of  the  horse  and  his  delivery  to  the 
defendant.  The  plaintiff  unsuccessfully  demurred  to  each  of  these 
paragraphs,  and  refusing  to  reply  the  defendant  had  judgment. 

1.  Was  the  second  paragraph  of  the  complaint  sufficient  ?     The  con- 
sideration alleged  to  support  the  promise  was  a  voluntary  service 
rendered  for  the  defendant  without  request,  and  it  is  not  shown  to 
have  been  of  any  value.     A  request  should  have  been  alleged.     This 
was  necessary  at  common  law,  even  in  common  count  for  work  and 
labor  (Chitty's  PI.  338),  though  it  was  not  always  necessary  to  prove 
an  express  request,  as  it  would  sometimes  be  implied  from  the  cir- 
cumstances exhibited  by  the  evidence. 

2.  It  is  entirely  unnecessary,  as  to  the  third  paragraph   of  the 
answer,  to  say  more  than  that,  though  it  was  highly  improbable  in 
fact,  it  was  sufficient  in  law. 

3.  The  second  paragraph  of  the  answer  shows  a  performance  of 
the  service  without  the  knowledge  that  the  reward  had  been  offered. 
The  offer,  therefore,  did  not  induce  the  plaintiff  to  act.     The  liability 
to  pay  a  reward  offered  seems  to  rest,  in  some  cases,  upon  an  anoma- 
lous  doctrine,   constituting   an   exception  to  the   general   rule.     In 
Williams  v.  Carwardine  (4  Barn.  &  Adolph.  621)  there  was  a  special 
finding,  with  a  general  verdict  for  the  plaintiff,  that  the  informa- 
tion for  which  the  reward  was  offered  was  not  induced  to  be  given 
by  the  offer,  yet  it  was  held  by  all  the  judges  of  the  King's  Bench  then 
present,  Denman,  C.  J.,  and  Littledale,  Parke,  and  Patteson,  JJ.,  that 
the  plaintiff  was  entitled  to  judgment.     It  was  put  upon  the  ground 
that  the  offer  was  a  general  promise  to  any  person  who  would  give 
the  information  sought;  that  the  plaintiff,  having  given  the  informa- 
tion, was  within  the  terms'  of  the  offer,  and  that  the  court  could  not  go 
into  the  plaintiff's  motives.     This  decision  has  not,  we  believe,  been 
seriously  questioned,  and  its  reasoning  is  conclusive  against  the  suffi- 
ciency of  the  defense  under  examination.     There  are  some  considera- 
tions of  morality  and  public  policy  which  strongly  tend  to  support 
the  judgment  in  the  case  cited.     If  the  offer  was  made  in  good  faith, 


OFFER   AND   ACCEPTANCE.  73 

why  should  the  defendant  inquire  whether  the  plaintiff  knew  that  it 
had  been  made?  Would  the  benefit  to  him  be  diminished  by  the  dis- 
covery that  the  plaintiff,  instead  of  acting  from  mercenary  motives, 
had  been  impelled  solely  by  a  desire  to  prevent  the  larceny  from  be- 
ing profitable  to  the  person  who  had  committed  it?  Is  it  not  well 
that  any  one  who  has  an  opportunity  to  prevent  the  success  of  a 
crime,  may  know  that  by  doing  so  he  not  only  performs  a  virtuous 
service,  but  also  entitles  himself  to  whatever  reward  has  been  offered 
therefor  to  the  public  ? 

The  judgment  is  reversed,  with  costs,  and  the  cause  remanded,  with 
directions  to  the  court  below  to  sutain  the  demurrer  to  the  second 
paragraph  of  the  answer.1 

9  Cyc.  254  (65)  ;  W.  P.  13   (12) ;  15  H.  L.  R.  484;  12  C.  L.  R.  643. 


(it.)  Offer  distinguished  from  invitation  to  treat. 

MOULTON  v.  KEESHAW. 

59  WISCONSIN,  316.— 1884. 

Action  for  damages  for  non-performance  of  a  contract  alleged  to 
be  contained  in  the  following  correspondence : 

"MILWAUKEE,  September  19,  1882. 
"J.  H.  MOULTON,  ESQ.,  La  Crosse,  Wis. 

"Dear  Sir:  In  consequence  of  a  rupture  in  the  salt  trade,  we  are  author- 
ized to  offer  Michigan  fine  salt,  in  full  car-load  lots  of  eighty  to  ninety-five 
bbls.,  delivered  at  your  city,  at  85  cents  per  bbl.,  to  be  shipped  per  C.  &  N.  W. 
R.  R.  Co.  only.  At  this  price  it  is  a  bargain,  as  the  price  in  general  remains 
unchanged.  Shall  be  pleased  to  receive  your  order. 

"Yours  truly, 

"C.  J.  KEBSHAW  &  SON." 

i  In  Hewitt  v.  Anderson  (56  Cal.  476)  the  court  says:  "The  plaintiff,  on 
the  trial,  testified  that  he  did  do  the  acts  upon  which  he  bases  his  claim  to 
the  reward  with  a  view  to  obtaining  it.  On  the  other  hand,  there  was  evi- 
dence introduced  by  the  defendants  which  tended  to  prove  that  the  plaintiff 
had  stated,  under  oath,  that  he  had  not  expected  any  reward.  In  view  of 
that  conflict,  we  would  not  disturb  a  finding  either  way.  And  we  are  satis- 
fied that  under  that  finding  the  plaintiff  cannot  recover  in  this  action.  If  he 
did  not  do  the  acts  upon  which  he  now  bases  his  right  to  recover,  with  the 
intention  of  claiming  the  reward  in  the  event  of  his  accomplishing  what  would 
entitle  him  to  it,  he  cannot  recover  it.  If  he  had  not  known  that  a  reward 
had  been  offered,  he  might,  upon  the  authority  of  some  cases,  recover.  But 
we  are  not  aware  of  any  case  in  which  it  has  been  held  that  a  party,  after 
disclaiming  any  intention  to  claim  a  reward,  could  recover  it." 


74  FORMATION    OF    CONTRACT. 

"LA  CBOSSE,  September  20,  1882. 

"To  C.  J.  Kershaw  d  Son,  Milwaukee,  Wis.:  Your  letter  of  yesterday  re- 
ceived and  noted.  You  may  ship  me  two  thousand  (2000)  barrels  Michigan 
fine  salt,  as  offered  in  your  letter.  Answer. 

"J.  H.  MOULTON." 

TAYLOR,  J.  The  only  question  presented  is  whether  the  appellant's 
letter,  and  the  telegram  sent  by  respondent  in  reply  thereto,  constitute 
a  contract  for  the  sale  of  2000  barrels  of  Michigan  fine  salt  by  the  ap- 
pellants to  the  respondent,  at  the  price  named  in  such  letter. 

We  are  very  clear  that  no  contract  was  perfected  by  the  order  tele- 
graphed by  the  respondent  in  answer  to  appellant's  letter.  The 
learned  counsel  for  the  respondent  clearly  appreciated  the  necessity 
of  putting  a  construction  upon  the  letter  which  is  not  apparent  on  its 
face,  and  in  their  complaint  have  interpreted  the  letter  to  mean  that 
the  appellants,  by  said  letter,  made  an  express  offer  to  sell  the  respond- 
ent, on  the  terms  stated,  such  reasonable  amount  of  salt  as  he  might 
order,  and  as  the  appellants  might  reasonably  expect  him  to  order,  in 
response  thereto.  If  in  order  to  entitle  the  plaintiff  to  recover  in  this 
action  it  is  necessary  to  prove  these  allegations,  then  it  seems  clear  to 
us  that  the  writings  between  the  parties  do  not  show  the  contract.  It 
is  not  insisted  by  the  learned  counsel  for  the  respondent  that  any  re- 
covery can  be  had  unless  a  proper  construction  of  the  letter  and  tele- 
gram constitute  a  binding  contract  between  the  parties.  The  alleged 
contract  being  for  the  sale  and  delivery  of  personal  property  of  a 
value  exceeding  $50,  is  void  by  the  statute  of  frauds,  unless  in  writ- 
ing. §  2308  R.  S.  1878. 

The  counsel  for  the  respondent  claims  that  the  letter  of  the  ap- 
pellants is  an  offer  to  sell  to  the  respondent,  on  the  terms  mentioned, 
any  reasonable  quantity  of  Michigan  fine  salt  that  he  might  see  fit  to 
order,  not  less  than  one  car-load.  On  the  other  hand,  the  counsel  for 
the  appellants  claim  that  the  letter  is  not  an  offer  to  sell  any  specific 
quantity  of  salt,  but  simply  a  letter  such  as  a  business  man  would 
send  out  to  customers  or  those  with  whom  he  desired  to  trade,  solicit- 
ing their  patronage.  To  give  the  letter  of  the  appellants  the  con- 
struction claimed  for  it  by  the  learned  counsel  for  the  respondent, 
would  introduce  such  an  element  of  uncertainty  into  the  contract 
as  would  necessarily  render  its  enforcement  a  matter  of  difficulty,  and 
in  every  case  the  jury  trying  the  case  would  be  called  upon  to  deter- 
mine whether  the  quantity  ordered  was  such  as  the  appellants  might 
reasonably  expect  from  the  party.  This  question  would  necessarily 
involve  an  inquiry  into  the  nature  and  extent  of  the  business  of  the 
person  to  whom  the  letter  was  addressed,  as  well  as  to  the  extent 
of  the  business  of  the  appellants.  So  that  it  would  be  a  question  of 
fact  for  the  jury  in  each  case  to  determine  whether  there  was  a  bind- 


OFFER  AND  ACCEPTANCE.  75 

ing  contract  between  the  parties.  And  this  question  would  not  in 
any  way  depend  upon  the  language  used  in  the  written  contract,  but 
upon  the  proofs  to  be  made  outside  of  the  writings.  As  the  only 
communications  between  the  parties  upon  which  a  contract  can  be 
predicated  are  the  letter  and  the  reply  of  the  respondent,  we  must 
look  to  them  and  nothing  else,  in  order  to  determine  whether  there 
was  a  contract  in  fact.  We  are  not  at  liberty  to  help  out  the  written 
contract,  if  there  be  one,  by  adding  by  parol  evidence  additional  facts 
to  help  out  the  writing,  so  as  to  make  out  a  contract  not  expressed 
therein.  If  the  letter  of  the  appellants  is  an  offer  to  sell  salt  to  the 
respondent  on  the  terms  stated,  then  it  must  be  held  to  be  an  offer 
to  sell  any  quantity,  at  the  option  of  the  respondent,  not  less  than  one 
car-load.  The  difficulty  and  injustice  of  construing  the  letter  into 
such  an  offer  is  so  apparent  that  the  learned  counsel  for  the  respond- 
ent do  not  insist  upon  it,  and  consequently  insist  that  it  ought  to  be 
construed  as  an  offer  to  sell  such  a  quantity  as  the  appellants,  from 
their  knowledge  of  the  business  of  the  respondent,  might  reasonably 
expect  him  to  order. 

Kather  than  introduce  such  an  element  of  uncertainty  into  the  con- 
tract, we  deem  it  much  more  reasonable  to  construe  the  letter  as  a 
simple  notice  to  those  dealing  in  salt  that  the  appellants  were  in  a 
condition  to  supply  that  article  for  the  price  named,  and  requesting 
the  person  to  whom  it  was  addressed  to  deal  with  them.  This  case  is 
one  where  it  is  eminently  proper  to  heed  the  injunction  of  Justice 
Foster  in  the  opinion  in  Lyman  v.  Robinson  (14  Allen,  254)  :  "That 
care  should  always  be  taken  not  to  construe  as  an  agreement,  letters 
which  the  parties  intended  only  as  preliminary  negotiations." 

We  do  not  wish  to  be  understood  as  holding  that  a  party  may  not 
be  bound  by  an  offer  to  sell  personal  preperty,  where  the  amount  or 
quantity  is  left  to  be  fixed  by  the  person  to  whom  the  offer  is  made, 
when  the  offer  is  accepted  and  the  amount  or  quantity  fixed  before  the 
offer  is  withdrawn.  We  simply  hold  that  the  letter  of  the  appellants 
in  this  case  was  not  such  an  offer.  If  the  letter  had  said  to  the  re- 
spondent, we  will  sell  you  all  the  Michigan  fine  salt  you  will  order, 
at  the  price  and  on  the  terms  named,  then  it  is  undoubtedly  the  law 
that  the  appellants  would  have  been  bound  to  deliver  any  reasonable 
amount  the  respondent  might  have  ordered, — possibly  any  amount, — 
or  make  good  their  default  in  damages.  The  case  cited  by  the  coun- 
sel, decided  by  the  California  Supreme  Court  (Keller  v.  Ybarru,  3  Cal. 
147),  was  an  offer  of  this  kind  with  an  additional  limitation.  The 
defendant  in  that  case  had  a  crop  of  growing  grapes,  and  he  offered 
to  pick  from  the  vines  and  deliver  to  the  plaintiff,  at  defendant's  vine- 
yard, so  many  grapes  then  growing  in  said  vineyard  as  the  plaintiff 
should  wish  to  take  during  the  present  year,  at  ten  cents  per  pound 
on  delivery.  The  plaintiff,  within  the  time  and  before  the  offer  was 


76  FORMATION   OF   CONTRACT. 

withdrawn,  notified  the  defendant  that  he  wished  to  take  1900  pounds 
of  his  grapes  on  the  terms  stated.  The  court  held  there  was  a  con- 
tract to  deliver  the  1900  pounds.  In  this  case,  the  fixing  of  the 
quantity  was  left  to  the  person  to  whom  the  offer  was  made,  but  the 
amount  which  the  defendant  offered,  beyond  which  he  could  not  be 
bound,  was  also  fixed  by  the  amount  of  grapes  he  might  have  in  his 
vineyard  in  that  year.  The  case  is  quite  different  in  its  facts  from 
the  case  at  bar. 

The  cases  cited  by  the  learned  counsel  for  the  appellants  (Beaupre 
v.  P.  &  A.  Tel.  Co.,  21  Minn.  155,  and  Kinghorne  v.  Montreal  Tel. 
Co.,  IF.  C.  18  Q.  B.  60)  are  nearer  in  their  main  facts  to  the  case  at 
bar,  and  in  both  it  was  held  there  was  no  contract.  We,  however, 
place  our  opinion  upon  the  language  of  the  letter  of  the  appellants, 
and  hold  that  it  cannot  be  fairly  construed  into  an  offer  to  sell  to  the 
respondent  any  quantity  of  salt  he  might  order,  nor  any  reasonable 
amount  he  might  see  fit  to  order.  The  language  is  not  such  as  a 
business  man  would  use  in  making  an  offer  to  sell  to  an  individual 
a  definite  amount  of  property.  The  word  "sell"  is  not  used.  They 
say,  "We  are  authorized  to  offer  Michigan  fine  salt/'  etc.,  and  volun- 
teer an  opinion  that  at  the  terms  stated  it  is  a  bargain.  They  do  not 
say,  we  offer  to  sell  to  you.  They  use  the  general  language  proper  to 
be  addressed  generally  to  those  who  were  interested  in  the  salt  trade. 
It  is  clearly  in  the  nature  of  an  advertisement,  or  business  circular,  to 
attract  the  attention  of  those  interested  in  that  business  to  the  fact 
that  good  bargains  in  salt  could  be  had  by  applying  to  them,  and  not 
as  an  offer  by  which  they  are  to  be  bound,  if  accepted,  for  any  amount 
the  persons  to  whom  it  was  addressed  might  see  fit  to  order.  We 
think  the  complaint  fails  to  show  any  contract  between  the  parties,  and 
the  demurrer  should  have  been  sustained. 

By  the  Court.  The  order  of  the  Circuit  Court  is  reversed  and  the 
cause  remanded  for  further  proceedings  according  to  law.1 

9  Cyc.  278-280  (83-92)  ;  W.  P.  19  (18). 

i  In  Beaupre"  v.  Telegraph  Co.,  21  Minn.  155,  the  court  said:  "The  plain- 
tiffs had  written  to  Ryan,  enquiring  if  he  had  any  more  pork  of  certain 
kinds,  and  requesting  him  to  'telegraph  price  on  receipt  of  this.'  Ryan  ac- 
cordingly telegraphed  as  follows:  'Letter  received.  No  light  mess  here. 
Extra  mess  twenty-eight  seventy-five  (28.75).'  Upon  receipt  of  this  dispatch, 
the  plaintiffs  sent  this  message,  which  the  defendant  neglected  to  deliver  in 
due  season:  'Dispatch  received.  Will  take  two  hundred  extra  mess,  price 
named.'  Ryan's  dispatch  did  not  purport  to  be  an  offer  to  sell  any  quantity 
of  pork  whatever,  nor  was  the  plaintiff's  message  an  acceptance  of  any  offer. 
The  seasonable  delivery  of  the  plaintiffs'  message  to  Ryan  would  not  have 
effected  any  contract  binding  him  to  deliver  to  the  plaintiffs  two  hundred 
barrels,  at  the  price  named.  Ryan's  dispatch  was  rather  (as  it  seems  to  be 
admitted  by  the  plaintiffs  in  their  printed  argument)  a  quotation  of  the  mar- 


OFFER    AND   ACCEPTANCE.  77 


The  offer  must  be  intended  to  create,  and  capable  of  creating,  legal 
relations. 

KELLER  v.  HOLDERMAN. 

11  MICHIGAN,  248.— 1863. 

Action  on  a  three-hundred-dollar  check  which  had  been  drawn  by 
defendant  in  favor  of  plaintiff,  on  a  bank  which  had  refused  to  honor 
it.  The  facts  concerning  the  check  were,  that  it  was  given  for  a 
fifteen-dollar  watch,  which  defendant  kept  until  the  day  of  trial, 
when  he  offered  to  return  it,  but  plaintiff  refused  to  receive  it;  that 
the  whole  transaction  was  a  ffolic  and  banter,  the  plaintiff  not  ex- 
pecting to  sell  nor  the  defendant  intending  to  buy  the  watch  at  the 
sum  for  which  the  check  was  drawn;  and  that  the  defendant  when 
he  drew  the  check  had  no  money  in  the  banker's  hands,  and  had  in- 
tended to  insert  a  condition  in  the  check  that  would  prevent  his  being 
liable  upon  it,  but  had  failed  to  do  so.  Judgment  was  rendered 
against  him  for  the  amount  of  the  check,  whereupon  he  appealed. 

MARTIN,  C.  J.  When  the  court  below  found  as  a  fact  that  "the 
whole  transaction  between  parties  was  a  frolic  and  a  banter,  the  plain- 
tiff not  expecting  to  sell  nor  the  defendant  intending  to  buy  the  watch 
at  the  sum  for  which  the  check  was  drawn,"  the  conclusion  should  have 
been  that  no  contract  was  ever  made  by  the  parties,  and  the  finding 
should  have  been  that  no  cause  of  action  existed  upon  the  check  to 
the  plaintiff. 

ket  price  of  pork,  or  perhaps,  a  statement  of  the  price  at  which  he  held  his 
own  pork;  and  the  plaintiffs'  message  was  an  offer  to  take  two  hundred  bar- 
rels at  the  price  named — a  mere  order  for  goods,  which  Ryan  might  accept  or 
reject  at  his  pleasure,  and  until  his  acceptance  no  contract  would  exist  between 
the  parties." 

In  Baston  v.  Toronto  Vinegar  Co.,  4  Ont.  L.  R.  20,  the  plaintiff,  who  had 
had  previous  dealings  with  the  defendants,  wrote  to  them  on  May  5th  asking 
them  if  they  were  going  to  buy  cucumbers  that  year,  and  what  they  were  going 
to  pay  for  them;  adding,  "please  let  me  know  as  I  want  to  make  a  contract 
with  someone  for  them,  as  I  want  to  put  in  quite  a  few  this  year."  The  de- 
fendants replied,  "We  are  pleased  to  learn  that  you  are  going  to  do  a  lot  of 
growing  this  year,  and  will  be  pleased  to  take  all  you  grow  at  same  price  as 
last  year.  We  will  see  you  later  on  and  make  final  arrangements."  Nothing 
further  occurred  until  the  following  August,  when  the  plaintiff  sent  several 
loads  of  cucumbers  to  the  defendants,  who  accepted  them  and  paid  for  them, 
nothing  being  said  at  the  time  of  any  contract  between  the  parties.  Held, 
that  the  defendants'  letter  was  not  an  offer  open  to  acceptance  by  the  plaintiff, 
or  by  the  delivery  of  cucumbers  to  them  by  the  plaintiff,  but  a  statement  of 
their  readiness  to  enter  into  an  agreement  with  the  plaintiff  upon  terms  to  be 
arranged.  ( Syllabus. ) 


78  FORMATION    OF   CONTRACT. 

The  judgment  is  reversed,  with  costs  of  this  court  and  of  the  court 
below. 

The  other  Justices  concurred.1 
9  Cyc.  276   (74-75);  W.  P.  3   (1). 


McCLURG  v.  TERRY. 

21  NEW  JERSEY  EQUITY,  225.— 1870. 

THE  CHANCELLOR:  The  complainant  seeks  to  have  the  ceremony 
of  marriage  performed  between  herself  and  the  defendant  in  Novem- 
ber, 1869,  declared  to  be  a  nullity.  The  ground  on  which  she  asks 
this  decree  is,  that  although  the  ceremony  was  actually  performed,  and 
by  a  justice  of  the  peace  of  the  county,  it  was  only  in  jest,  and  not 
intended  to  be  a  contract  of  marriage,  and  that  it  was  so  understood 
at  the  time  by  both  parties,  and  the  other  persons  present ;  and  that 
both  parties  have  ever  since  so  considered  and  treated  it,  and  have 
never  lived  together,  or  acted  towards  each  other  as  man  and  wife. 
The  bill  and  answer  both  state  these  as  the  facts  of  the  case,  and  that 
neither  party  intended  it  as  a  marriage,  or  was  willing  to  take  the 
other  as  husband  or  wife.  These  statements  are  corroborated  by  the 
witnesses  present.  The  complainant  is  an  infant  of  nineteen  years, 
and  had  returned  late  in  the  evening  to  Jersey  City,  from  an  excur- 
sion with  the  defendant  and  a  number  of  young  friends,  among  whom 
was  a  justice  of  the  peace,  and  all  being  in  good  spirits,  excited  by  the 
excursion,  she  in  jest  challenged  the  defendant  to  be  married  to  her 
on  the  spot;  he  in  the  same  spirit  accepted  the  challenge,  and  the 
justice  at  their  request  performed  the  ceremony,  they  making  the 
proper  responses.  The  ceremony  was  in  the  usual  and  proper  form, 
the  justice  doubting  whether  it  was  in  earnest  or  in  jest.  The  de- 
fendant escorted  the  complainant  to  her  home,  and  left  her  there  as 
usual  on  occasions  of  such  excursions;  both  acted  and  treated  the 
matter  as  if  no  ceremony  had  taken  place.  After  some  time  the 

i  "The  making  of  the  offer  to  sell  20,000  barrels  of  flour  at  four  dollars  a 
barrel,  at  the  same  time  when  he  actually  bought  400  barrels,  in  good  business 
earnest,  at  four  dollars  and  forty-five  cents  a  barrel,  and  the  signing  of  a 
memorandum  in  writing  of  such  a  sale,  was  never  regarded  or  intended  by 
either  party,  as  more  than  a  mere  bluff  or  banter  without  any  serious  in- 
tention that  it  should  be  performed  as  a  real,  bona  fide  contract.  It  was 
perfectly  evident  and  was  abundantly  proved,  that  the  defendant,  who  was  a 
small  retail  dealer  with  limited  means,  was  utterly  unable  to  carry  out  such 
a  contract,  even  if  the  flour  could  have  been  obtained  in  sufficient  quantity,  and 
was  also  unable,  without  a  large  advance  in  the  price,  to  make  deliveries  at 
the  rate  of  400  barrels  daily  for  fifty  consecutive  days." — Theiss  v.  Weiss,  166 
Pa.  St.  9. 


OFFER   AND   ACCEPTANCE.  79 

friends  of  the  complainant  having  heard  of  the  ceremony,  and  that  it 
had  been  formally  and  properly  performed  before  the  proper  magis- 
trate, raised  the  question  and  entertained  doubts  whether  it  was  not  a 
legal  marriage;  and  the  justice  meditated  returning  a  certificate  of 
the  marriage  to  be  recorded  before  the  proper  officer.  The  bill  seeks 
to  have  the  marriage  declared  a  nullity,  and  to  restrain  the  justice 
from  certifying  it  for  record. 

Mere  words  without  any  intention  corresponding  to  them,  will  not 
make  a  marriage  or  any  other  civil  contract.  But  the  words  are  the 
evidence  of  such  intention,  and  if  once  exchanged,  it  must  be  clearly 
shown  that  both  parties  intended  and  understood  that  they  were  not 
to  have  effect.  In  this  case  the  evidence  is  clear  that  no  marriage 
was  intended  by  either  party;  that  it  was  a  mere  jest  got  up  in  the 
exuberance  of  spirits  to  amuse  the  company  and  themselves.  If  this 
is  so,  there  was  no  marriage.  On  this  part  of  the  case  I  have  no 
difficulty. 

I  am  satisfied  that  this  court  has  the  power,  and  that  this  is  a 
proper  case  to  declare  this  marriage  a  nullity. 


Acceptance  must  be  absolute  and  identical  with  the  terms  of  the  offer. 

MINNEAPOLIS  AND  ST.  LOUIS  RAILWAY  v. 

COLUMBUS  ROLLING  MILL. 

119  UNITED  STATES,  149.— 1886. 

MR.  JUSTICE  GRAY.  The  rules  of  law  which  govern  this  case  are 
well  settled.  As  no  contract  is  complete  without  the  mutual  assent 
of  the  parties,  an  offer  to  sell  imposes  no  obligation  until  it  is  ac- 
cepted according  to  its  terms.  So  long  as  the  offer  has  been  neither 
accepted  nor  rejected,  the  negotiation  remains  open,  and  imposes  no 
obligation  upon  either  party;  the  one  may  decline  to  accept,  or  the 
other  may  withdraw  his  offer;  and  either  rejection  or  withdrawal 
leaves  the  matter  as  if  no  offer  had  ever  been  made.  A  proposal  to 
accept,  or  an  acceptance,  upon  terms  varying  from  those  offered,  is  a 
rejection  of  the  offer,  and  puts  an  end  to  the  negotiation,  unless  the 
party  who  made  the  original  offer  renews  it,  or  assents  to  the  modi- 
fication suggested.  The  other  party,  having  once  rejected  the  offer, 
cannot  afterwards  revive  it  by  tendering  an  acceptance  of  it.  Eliason 
v.  Henshaw,  4  Wheat.  225 ;  Carr  v.  Duval,  14  Pet.  77 ;  National  Bank 
v.  Hall,  101  U.  S.  43,  50;  Hyde  v.  Wrench,  3  Beavan,  334;  Fox  v. 
Turner,  1  Bradwell,  153.  If  the  offer  does  lot  limit  the  time  for  its 
acceptance,  it  must  be  accepted  within  a  reasonable  time.  If  it  does, 
it  may,  at  any  time  within  the  limit  and  so  long  as  it  remains  open, 


80  FORMATION    OF   CONTRACT. 

be  accepted  or  rejected  by  the  party  to  whom,  or  be  withdrawn  by 
the  party  by  whom,  it  was  made.  Boston  &  Maine  Railroad  v.  Bart- 
lett,  3  Cush.  224;  Dickinson  v.  Dodds,  2  Ch.  D.  463. 

The  defendant,  by  the  letter  of  December  8,  offered  to  sell  to  the 
plaintiff  two  thousand  to  five  thousand  tons  of  iron  rails  on  certain 
terms  specified,  and  added  that  if  the  offer  was  accepted  the  defendant 
would  expect  to  be  notified  prior  to  December  20.  This  offer,  while 
it  remained  open,  without  having  been  rejected  by  the  plaintiff  or  re- 
voked by  the  defendant,  would  authorize  the  plaintiff  to  take  at  his 
election  any  number  of  tons  not  less  than  two  thousand  nor  more  than 
five  thousand,  on  the  terms  specified.  The  offer,  while  unrevoked, 
might  be  accepted  or  rejected  by  the  plaintiff  at  any  time  before  De- 
cember 20.  Instead  of  accepting  the  offer  made,  the  plaintiff,  on 
December  16,  by  telegram  and  letter,  referring  to  the  defendant's 
letter  of  December  8,  directed  the  defendant  to  enter  an  order  for 
twelve  hundred  tons  on  the  same  terms.  The  mention,  in  both  tele- 
gram and  letter,  of  the  date  and  the  terms  of  the  defendant's  original 
offer,  shows  that  the  plaintiff's  order  was  not  an  independent  proposal, 
but  an  answer  to  the  defendant's  offer,  a  qualified  acceptance  of  that 
offer,  varying  the  number  of  tons,  and  therefore  in  law  a  rejection  of 
the  offer.  On  December  18,  the  defendant  by  telegram  declined  to 
fulfill  the  plaintiff's  order.  The  negotiation  between  the  parties  was 
thus  closed,  and  the  plaintiff  could  not  afterwards  fall  back  on  the 
defendant's  original  offer.  The  plaintiff's  attempt  to  do  so,  by  the 
telegram  of  December  19,  was  therefore  ineffectual  and  created  no 
rights  against  the  defendant. 

Such  being  the  legal  effect  of  what  passed  in  writing  between  the 
parties,  it  is  unnecessary  to  consider  whether,  upon  a  fair  interpreta- 
tion of  the  instructions  of  the  court,  the  question  whether  the  plain- 
tiff's telegram  and  letter  of  December  16  constituted  a  rejection  of 
the  defendants'  offer  of  December  8  was  ruled  in  favor  of  the  defend- 
ant as  matter  of  law,  or  was  submitted  to  the  jury  as  a  question  of  fact. 
The  submission  of  a  question  of  law  to  the  jury  is  no  ground  of  ex- 
ception if  they  decide  it  aright.  Pence  v.  Langdon,  99  TJ.  S.  578. 

Judgment  affirmed. 
9  Cyc.  265-270  (22-53) ;  W.  P.  30  (34). 


BAKER  v.  HOLT. 

56  WISCONSIN,  100.— 1882. 

Appeal  from  the  Circuit  Court  for  "Wood  County. 

TAYLOR,  J.  This  action  is  brought  to  compel  the  specific  perform- 
ance of  a  contract  for  the  sale  of  real  estate  which  the  plaintiff  claimed 
he  had  purchased  from  the  defendant.  The  plaintiff  resided  at  Cen- 


OFFER   AND  ACCEPTANCE.  81 

tralia,  in  this  State,  and  the  defendant  at  Hartford,  Conn.  The  con- 
tract, if  any,  was  made  by  correspondence  through  the  mail.  The 
following  are  copies  of  the  letters  and  telegram  which  plaintiff  claims 
made  the  contract  of  sale : 

"HABTFOKD,  CONN.,  October  24,  1881. 
"C.  O.  BAKER. 

"Dear  Sir:  Your  letter  came  to  hand  a  few  days  ago,  but  I  have  delayed 
answering  it  owing  to  my  being  sick.  In  regard  to  my  land,  I  have  had  let- 
ters from  one  or  two  other  parties  within  a  month  wanting  to  buy  it.  I  have 
told  them  I  was  not  ready  to  sell  yet,  but  if  you  want  to  buy  now  I  will  tell 
you  just  what  I  will  do.  I  will  sell  the  whole  120  acres  for  $800;  one  fourth 
cash  down,  and  the  balance  in  three  equal  notes,  payable  in  one,  two,  and  three 
years,  with  interest  at  6  per  cent.  The  notes  to  be  secured  by  mortgage  back 
on  the  land.  This  is  my  offer,  if  you  want  it  now.  I  would  not  agree  to 
keep  the  offer  good  a  great  while.  I  remain  very  truly  yours, 

"THOMAS  R.  HOLT, 
"29  Benton  Street,  Hartford,  Conn." 

"CENTBALIA,  Wis.,  November  7,  1881. 
'THOMAS  R.  HOLT,  Esq.,  Hartford,  Conn. 

"Dear  Sir:  Yours  of  October  24th  is  at  hand  and  contents  noted.  I  will 
take  your  land  at  the  figures  named  and  upon  the  terms  mentioned  in  your 
letter — $800  for  the  120  acres;  $200  on  receipt  of  deed  and  $600  in  three  an- 
nual payments  of  $200  each,  with  interest  at  6  per  cent;  security  back  on 
the  land.  You  may  make  out  the  deed,  leaving  the  name  of  the  grantee  in 
blank,  and  forward  the  same  to  I.  L.  Mosher,  Esq.,  county  treasurer  of  Wood 
County,  at  Grand  Rapids,  Wis.,  or  to  your  agent,  if  you  have  one  here,  to  be 
delivered  to  me  on  payment  of  the  $200  and  the  delivery  of  the  necessary 
security.  You  will  confer  a  favor  by  notifying  me  whether  you  still  hold 
your  offer  good,  and  to  whom  you  will  send  the  deed,  at  your  earliest  con- 
venience. 

"Yours  truly, 

"C.  0.  BAKES." 

"CENTBALIA,  Wis.,  November  10,  1881. 
"THOMAS  R.  HOLT,  29  Benton  Street: 

"Have  written  you,  will  take  land  at  your  figures.     Answer. 

"C.  0.  BAKEB." 

The  evidence  shows  that  it  takes  four  days  to  transmit  by  mail  a 
letter  from  Centralia  to  Hartford,  and  the  same  time  from  Hartford 
to  Centralia.  It  also  shows  that  on  November  10th,  and  before  he  re- 
ceived the  letter  of  plaintiff,  dated  the  7th  of  the  same  month,  and 
before  the  telegram  was  received,  the  defendant  wrote  again  to  the 
plaintiff,  notifying  him  that  he  had  concluded  not  to  sell  the  land  at 
the  price  named  in  his  letter  of  October  24th,  and  that  after  the  re- 
ceipt by  the  plaintiff  of  defendant's  letter  of  November  10th,  and  on 


82  FORMATION   OF   CONTRACT. 

the  14th  of  said  month,  plaintiff  wrote  and  mailed  to  the  defendant 
the  following  letter: 

"CENTBALIA,  Wis.,  November  14,  1881. 
"THOMAS  R.  HOLT,  Hartford,  Conn.: 

"Dear  Sir:  Yours  of  November  10th  is  at  hand  and  contents  noted.  Will 
you  make  me  your  lowest  cash  offer  on  your  land,  to  hold  good  at  least  twenty 
days,  that  I  may  have  time  in  which  to  signify  my  acceptance  of  the  offer, 
if  considered  reasonable;  $800  is  about  all  the  land  is  worth,  and  I  would  not 
give  much  more  for  it.  Let  me  hear  from  you  by  return  mail,  and  oblige, 
yours  truly,  C.  0.  BAKEB." 

The  answer  of  the  defendant  admitted  all  the  facts  above  stated, 
and  for  the  purposes  of  this  case  it  is  also  presumed  that  the  answer 
admits  that  the  plaintiff  wrote  the  defendant  a  letter  of  inquiry,  as 
stated  in  his  complaint,  in  which  letter  the  lands  of  the  defendant 
were  properly  described  as  alleged  in  said  complaint.  The  plaintiff 
demurred  to  the  answer  on  the  ground  that  it  did  not  state  facts 
sufficient  to  constitute  a  defense.  The  Circuit  Court  sustained  the 
demurrer,  and  from  the  order  sustaining  the  same  the  defendant  ap- 
peals to  this  Court.  This  ruling  can  only  be  sustained  upon  the 
ground  that  the  plaintiff's  letter  of  November  7th  was  an  unqualified 
acceptance  of  the  offer  to  sell  made  by  the  defendant  in  his  letter  of 
October  24th,  or  that  the  telegram  of  November  10th  was  such  an 
acceptance. 

We  are  of  the  opinion  that  the  Court  erred  in  construing  the  letter 
of  November  7th  as  an  unqualified  acceptance  of  the  defendant's  offer, 
and  that  the  two  letters  constituted  a  binding  contract  of  sale.  The 
defendant's  offer  entitled  him  to  have  the  money  paid  to  him  at  Hart- 
ford, and  the  notes  and  mortgage  delivered  there,  and  to  deliver  his 
deed  there  and  not  in  Centralia,  or  any  other  place  in  Wisconsin.  This 
construction  of  the  defendant's  letter  is  not  controverted  by  the 
learned  counsel  for  the  respondent ;  but  he  insists  that  what  is  said  in 
the  plaintiff's  letter  about  sending  the  deed  to  the  treasurer  of  Wood 
County,  or  his  agent  in  said  county,  if  he  had  one,  executed  in  blank 
as  to  the  name  of  the  grantee,  and  the  payment  of  the  money  and  the 
delivery  of  the  notes  and  mortgage  to  his  agent  in  said  county,  is 
merely  suggested  as  a  convenient  way  of  carrying  out  the  agreement, 
and  not  as  conditions  of  his  acceptance  of  the  offer.  We  think  the 
letter  of  the  plaintiff  is  not  susceptible  of  the  construction  given  it  by 
the  learned  counsel.  We  are  clearly  of  the  opinion  that  the  defendant 
could  not  have  compelled  the  plaintiff  to  perform  the  contract  on  his 
part  unless  he  had  remitted  the  deed  to  the  treasurer  of  Wood  County, 
or  to  some  agent  appointed  by  him  there,  executed  in  blank  as  to  the 
grantee,  and  have  demanded  the  payment  of  the  money  and  the  de- 
livery of  the  security  there,  and  not  at  his  residence  at  Hartford,  Conn. 
We  are  unable  to  distinguish  this  case  from  the  case  of  the  North- 


OFFER   AND   ACCEPTANCE.  83 

western  Iron  Co.  v.  Mead,  21  Wis.  474 ;  and  it  is  clearly  distinguish- 
able from  the  case  of  Matteson  v.  Scofield,  27  Wis.  671. 

In  the  case  last  cited,  the  purchaser,  in  his  letter  of  acceptance, 
states  that  he  has  deposited  the  money  in  a  bank  in  Milwaukee,  and 
requested  the  deed  to  be  sent  to  the  bank  for  him;  but  he  adds:  "I 
suggest  this  method  of  making  the  transfer,  as  it  saves  time  and  ex- 
pense." This  statement  in  the  letter  of  acceptance  shows  that  it  was 
not  intended  to  qualify  his  previous  unconditional  acceptance  of  the 
vendor's  offer,  and  in  addition  the  vendor  acknowledged  the  receipt  of 
the  letter  of  acceptance  and  made  no  objection  to  it  in  any  way,  nor 
did  he  withdraw  his  offer,  but  stated  that  he  had  made  up  his  mind 
to  come  to  Hudson  and  do  the  business  in  person.  In  the  case  at  bar 
the  defendant  waived  nothing;  and,  in  fact,  before  he  received  the 
plaintiff's  letter  of  acceptance  wrote  another  letter  withdrawing  his 
offer.  It  is  probably  true  that  he  could  not  withdraw  his  offer  so  as 
to  bind  the  plaintiff  if  the  plaintiff  had  in  proper  time  mailed  his 
letter  to  defendant  containing  an  unqualified  acceptance  of  his  offer. 
But  this  letter  of  the  defendant  withdrawing  his  offer  is  proper  evi- 
dence tending  to  show  that  he  waived  none  of  the  terms  of  his  orig- 
inal offer.  The  telegram  was  no  more  an  absolute  acceptance  than 
the  letter.  It  refers  to  the  letter  as  containing  plaintiff's  acceptance 
of  his  offer,  and  if  that  letter  is  not  an  unconditional  acceptance  the 
telegram  does  not  help  it. 

We  think  there  was  another  question  in  the  case — viz.,  Was  the 
acceptance  made  in  time?  The  defendant's  letter  clearly  intimated 
that  he  required  an  immediate  reply  to  his  offer.  He  notifies  the  plain- 
tiff that  he  has  inquiries  for  the  land  from  other  parties,  and  that  if 
plaintiff  wants  to  buy  now  he  will  sell,  etc.  The  plaintiff  must  have 
received  the  defendant's  letter  as  early  as  October  28th  or  29th,  and  he 
did  not  write  his  letter  of  acceptance  until  November  7th,  either  nine 
or  ten  days  after  its  receipt,  and  in  this  letter  the  plaintiff  seems  to  en- 
tertain a  doubt  as  to  whether  his  letter  of  acceptance  was  in  time, 
and  closes  it  with  the  following  inquiry:  "Yon  will  confer  a  favor 
by  notifying  me  whether  you  still  hold  your  offer  good,  and  to  whom 
you  will  send  your  deed,  at  your  earliest  convenience."  We  have 
serious  doubts  whether  the  letter  of  acceptance  was  mailed  in  time; 
but  we  prefer  to  put  our  decision  upon  the  ground  that  the  letter  was 
not  an  unconditional  acceptance  of  the  defendant's  offer. 

For  the  reason  stated,  the  Court  erred  in  sustaining  the  demurrer 
to  the  defendant's  answer. 

By  the  Court.  The  order  of  the  Circuit  Court  is  reversed,  and  the 
cause  remanded  for  further  proceedings  according  to  law.1 

9  Cyc.  265   (22)  ;  267   (33)  ;  W.  P.  43   (47). 

iln  Neufville  v.  Stuart,  1  Hill  Ch.  (S.  C.)  159.  the  defendant  in  a  letter 
to  the  plaintiff's  agent,  proposed  to  purchase  a  plantation  at  eight  thousand 


84  FORMATION    OF    CONTRACT. 

Execution  of  written  contract  contemplated. 
SANDERS  v.  POTTLITZER  BEOS.  FRUIT  CO. 

144  NEW  YORK,  209.— 1894. 

Action  by  Archie  D.  Sanders  and  others  against  Pottlitzer  Bros. 
Fruit  Company  for  damages  for  breach  of  a  contract  of  sale.  From 
a  judgment  of  the  general  term  affirming  a  judgment  in  favor  of 
defendant,  plaintiffs  appeal. 

dollars — six  thousand  dollars  in  cash,  and  two  thousand  dollars  in  January 
following,  and  requested  an  immediate  answer;  the  agent,  by  return  post  re- 
plied, accepting  the  proposal,  but  added  that  he  presumed  the  two  thousand 
dollars  were  to  bear  interest  from  the  date.  The  court  said:  "The  proposition 
of  the  defendant  to  buy,  is  distinctly  and  in  terms  accepted,  upon  the  terms 
which  she  stated.  The  agent,  in  another  part  of  his  letter,  speaking  of  the 
execution  of  titles,  the  cash  payment,  and  the  security  for  the  payment  to  be 
made  in  January,  1832,  in  reference  to  the  letter,  says  'I  presume  with  in- 
terest.' These  words  were  obviously  used  as  his  construction  of  the  contract 
which  he  had  accepted,  and  which  he  supposed  the  defendant  to  have  intended 
by  her  offer.  But  they  are  not  made  a  condition  on  which  the  acceptance  is 
to  depend.  It  is  what  in  common  fairness  and  in  the  usual  course  of  such 
contracts,  he  supposed  the  defendant  to  have  intended;  still,  however,  leaving 
it  perfectly  optional  to  the  defendant  to  admit  or  deny  his  construction,  with- 
out affecting  the  legal  effect  of  the  contract,  which  he  had  accepted  in  such 
terms,  and  so  unconditionally  as  to  prevent  the  plaintiff  from  refusing  to 
comply  with  it." 

In  Culton  v.  Gilchrist,  92  la.  718,  plaintiff  answered  a  proposition  to  lease, 
"I  will  accept  your  offer  to  lease  to  you  at  $200  per  year  for  three  or  five 
years  as  you  choose."  Defendant  answered,  "make  out  lease  for  place  for 
five  years  at  $200  per  year."  He  also  said  in  this  letter  that  he  would  like 
to  build  on  a  cookroom,  with  privilege  to  remove  it.  Plaintiff  recognized  that 
a  lease  for  five  years  existed.  Held,  these  letters  made  a  lease,  and  the  re- 
quest as  to  the  cookroom  did  not  attach  a  condition  to  defendant's  acceptance. 
(Syllabus.) 

In  Turner  v.  McCormick,  56  W.  Va.  161,  173,  the  court  says  that  a  review 
of  authorities  bearing  upon  the  question  of  unconditional  acceptance  "seems 
to  establish  the  following  propositions:  First — A  request  for  a  change  or 
modification  of  a  proposed  contract,  made  before  an  acceptance  thereof, 
amounts  to  a  rejection  of  it.  Second — A  mere  inquiry  as  to  whether  the  pro- 
poser will  alter  or  modify  its  terms,  made  before  acceptance  or  rejection, 
does  not  amount  to  a  rejection,  and  if  the  offer  be  not  withdrawn  before  ac- 
ceptance made  within  a  reasonable  time,  the  offer  becomes  a  binding  contract. 
Third — A  request,  suggestion  or  proposal  of  alteration  or  modification,  made 
after  unconditional  acceptance,  and  not  assented  to  the  opposite  party,  does 
not  affect  the  contract  put  in  force  and  effect  by  the  acceptance,  nor  amount 
to  a  breach  thereof,  giving  right  of  rescission.  Fourth — Acceptance  of  a  for- 
mal and  carefully  prepared  option  of  sale  of  land,  within  the  time  allowed 
by  it,  and  according  to  its  terms,  although  accompanied  by  a  request  for  a  de- 


OFFER   AND   ACCEPTANCE.  85 

O'BRIEN,  J.  The  plaintiffs  in  this  action  sought  to  recover  dam- 
ages for  the  breach  of  a  contract  for  the  sale  and  delivery  of  a 
quantity  of  apples.  The  complaint  was  dismissed  by  the  referee,  and 
his  judgment  was  affirmed  upon  appeal.  The  only  question  to  be 
considered  is  whether  the  contract  stated  in  the  complaint,  as  the 
basis  for  damages,  was  ever  in  fact  made,  so  as  to  become  binding 
upon  the  parties.  On  the  28th  of  October,  1891,  the  plaintiffs  sub- 
mitted to  the  defendant  the  following  proposition  in  writing: 

"BUFFALO,  N.  Y.,  Oct.  28,  1891. 
"Messrs.  Pottlitzer  Bros.  Fruit  Co.,  Lafayette,  Ijid. — 

"Gentlemen:  We  offer  you  ten  car  loads  of  apples,  to  be  from  175  to  200 
barrels  per  car,  put  up  in  good  order,  from  stock  inspected  by  your  Mr.  Leo 
Pottlitzer  at  Nunda  and  Silver  Springs.  The  apples  not  to  exceed  one-half 
green  fruit,  balance  red  fruit,  to  be  shipped  as  follows:  First  car  between 
1st  and  15th  December,  1891;  second  car  between  15th  and  30th  December. 
1891;  and  one  car  each  ten  days  after  January  1,  1892,  until  all  are  shipped. 
Dates  above  specified  to  be  considered  as  approximate  a  few  days  either  way, 
at  the  price  of  $2.00  per  barrel,  free  on  board  cars  at  Silver  Springs  and  Nunda, 
in  refrigerator  cars;  this  proposition  to  be  accepted  not  later  than  the  31st 
inst.,  and  you  to  pay  us  $500  upon  acceptance  of  the  proposition,  to  be  de- 
ducted from  the  purchase  price  of  apples  at  the  rate  of  $100  per  car  on  the 
last  five  cars. 

"Yours  respectfully, 

"J.  SANDKBS  &  SON." 

To  this  proposition  the  defendant  replied  by  telegraph  on  October 
31st  as  follows: 

"LAFAYETTE,  IND.,  3  Is*  October. 
"J.  Sanders  &  Son: 

"We  accept  your  proposition  on  apples,  provided  you  will  change  it  to  read 
car  every  eight  days  from  January  first,  none  in  December;  wire  acceptance. 

"POTTLITZEB  BBOS.    FBUIT   Co." 

On  the  same  day  the  plaintiffs  replied  to  this  dispatch,  to  the 
effect  that  they  could  not  accept  the  modification  proposed,  but  must 
insist  upon  the  original  offer.  On  the  same  day  the  defendant  an- 
swered the  plaintiff's  telegram  as  follows : 

"Can  only  accept  condition  as  stated  in  last  message.  Only  way  we  can 
accept.  Answer  if  accepted.  Mail  contract,  and  we  will  then  forward  draft. 

"POTTLITZEB  BBOS.  FBUIT  Co." 

The  matter  thus  rested  till  November  4th,  when  the  plaintiffs  re- 
ceived the  following  letter  from  the  defendant : 

parture  from  its  terms  as  to  the  time  and  place  of  performance,  is  an  un- 
conditional acceptance  and  converts  the  option  into  an  executory  contract  of 
sale,  provided  the  request  be  not  so  worded  as  to  limit  or  qualify  the  accept- 
ance." 


86  FORMATION    OF    CONTRACT. 

"LAFAYETTE,  IND.,  November  2,  1891. 
"J.  Sanders  &  Son,  Stafford,  N.  Y.— 

"Gents:  We  are  in  receipt  of  your  telegrams,  also  your  favor  of  the  31st 
ult.  While  we  no  doubt  think  we  have  offered  you  a  fair  contract  on  apples, 
still  the  dictator  of  this  has  learned  on  his  return  home  that  there  are  so 
many  near-by  apples  coming  into  market  that  it  will  affect  the  sale  of  apples 
in  December,  and  therefore  we  do  not  think  it  advisable  to  take  the  contract 
unless  you  made  it  read  for  shipment  from  the  1st  of  January.  We  are  very 
sorry  you  cannot  do  this,  but  perhaps  we  will  be  able  to  take  some  fruit  from 
you,  as  we  will  need  it  in  the  spring.  If  you  can  change  the  contract  so  as  to 
read  as  we  wired  you  we  will  accept  it  and  forward  you  draft  in  payment  on 
same. 

"POTTLITZEB  BROS.   FBUIT  Co." 

On  receipt  of  this  letter  the  plaintiffs  sent  the  following  message 
to  the  defendant  by  telegraph : 

November  4th. 
"Pottlitzer  Brothers  Fruit  Company,  Lafayette,  Ind. — 

"Letter  received.  Will  accept  conditions.  If  satisfactory,  answer,  and 
will  forward  contract. 

"J.  SANDERS  &  SON." 

The  defendant  replied  to  this  message  by  telegraph  saying: 
"All  right.     Send  contract  as  stated  in  our  message." 

The  plaintiffs  did  prepare  and  send  on  the  contract  precisely  in 
the  terms  embraced  in  the  foregoing  correspondence,  which  was  the 
original  proposition  made  by  the  plaintiffs,  as  modified  by  defendant's 
telegram  above  set  forth,  and  which  was  acceded  to  by  the  plaintiffs. 
This  was  not  satisfactory  to  the  defendant,  and  it  returned  it  to  the 
plaintiffs  with  certain  modifications,  which  were  not  referred  to  in 
the  correspondence.  These  modifications  were:  (1)  That  the  fruit 
should  be  well  protected  from  frost  and  well  hayed;  (2)  that  if,  in 
the  judgment  of  the  plaintiffs,  it  was  necessary  or  prudent  that  the 
cars  should  be  fired  through,  the  plaintiffs  should  furnish  the  stoves 
for  the  purpose,  and  the  defendant  pay  the  expense  of  the  man  to  be 
employed  in  looking  after  the  fires  to  be  kept  in  the  cars;  (3)  that 
the  plaintiffs  should  line  the  cars  in  which  the  fruit  was  shipped. 
These  conditions  were  more  burdensome,  and  rendered  the  contract 
less  profitable  to  the  plaintiffs.  They  were  not  expressed  in  the  cor- 
respondence and  I  think  cannot  be  implied.  They  were  not  assented 
to  by  the  plaintiffs,  and  on  their  declining  to  incorporate  them  in  the 
paper  the  defendant  treated  the  negotiations  as  at  an  end  and 
notified  the  plaintiffs  that  it  had  placed  its  order  with  other  parties. 
There  was  some  further  correspondence  but  it  is  not  material  to  the 
question  presented  by  the  appeal. 

The  writings  and  telegrams  that  passed  between  the  parties  con- 
tain all  the  elements  of  a  complete  contract.  Nothing  was  wanting 


OFFER   AND   ACCEPTANCE.  87 

in  the  plaintiffs'  original  proposition  but  the  defendant's  assent  to 
it  in  order  to  constitute  a  contract  binding  upon  both  parties  ac- 
cording to  its  terms.  This  assent  was  given  upon  condition  that  a 
certain  specified  modification  was  accepted.  The  plaintiffs  finally 
assented  to  the  modification,  and  called  upon  the  defendant  to  signify 
its  assent  again  to  the  whole  arrangement  as  thus  modified,  and  it 
replied  that  it  was  "all  right,"  which  must  be  taken  as  conclusive 
evidence  that  the  minds  of  the  parties  had  met  and  agreed  upon  cer- 
tain specified  and  distinct  obligations  which  were  to  be  observed  by 
both. 

It  is  true,  as  found  by  the  learned  referee,  that  the  parties  intended 
that  the  agreement  should  be  formally  expressed  in  a  single  paper, 
which,  when  signed,  should  be  the  evidence  of  what  had  already  been 
agreed  upon.  But  neither  party  was  entitled  to  insert  in  the  paper 
any  material  condition  not  referred  to  in  the  correspondence,  and  if 
it  was  inserted  without  the  consent  of  the  other  party  it  was  un- 
authorized. Hence  the  defendant,  by  insisting  upon  further  mate- 
rial conditions,  not  expressed  or  implied  in  the  correspondence,  de- 
feated the  intention  to  reduce  the  agreement  to  the  form  of  a  single 
paper  signed  by  both  parties.  The  plaintiffs  then  had  the  right  to 
fall  back  upon  their  written  proposition,  as  originally  made,  and  the 
subsequent  letters  and  telegrams;  and,  if  they  constituted  a  contract 
of  themselves,  the  absence  of  the  formal  agreement  contemplated  was 
not,  under  the  circumstances,  material. 

When  the  parties  intend  that  a  mere  verbal  agreement  shall  be 
finally  reduced  to  writing,  as  the  evidence  of  the  terms  of  the  con- 
tract, it  may  be  true  that  nothing  is  binding  upon  either  party  until 
the  writing  is  executed.  But  here  the  contract  was  already  in  writing, 
and  it  was  none  the  less  obligatory  upon  both  parties  because  they 
intended  that  it  should  be  put  into  another  form,  especially  when 
their  intention  is  made  impossible  by  the  act  of  one  or  the  other  of 
the  parties  by  insisting  upon  the  insertion  of  conditions  and  pro- 
visions not  contemplated  or  embraced  in  the  correspondence.  Vassar 
V.  Camp,  11  N.  Y.  441 ;  Brown  v.  Norton,  50  Hun,  248 ;  Pratt  v.  Rail- 
road Co.,  21  N.  Y.  308.  The  principle  that  governs  in  such  cases 
was  clearly  stated  by  Judge  Selden  in  the  case  last  cited,  in  these 
words:  "A  contract  to  make  and  execute  a  certain  written  agreement, 
the  terms  of  which  are  mutually  understood  and  agreed  upon,  is, 
in  all  respects,  as  valid  and  obligatory,  where  no  statutory  objection 
interposes,  as  the  written  contract  itself  would  be,  if  executed.  If, 
therefore,  it  should  appear  that  the  minds  of  the  parties  had  met ;  that 
a  proposition  for  a  contract  had  been  made  by  one  party  and  accepted 
by  the  other;  that  the  terms  of  this  contract  were  in  all  respects 
definitely  understood  and  agreed  upon,  and  that  a  part  of  the  mutual 
understanding  was  that  a  written  contract  embodying  these  terms 


88  FORMATION   OF   CONTRACT. 

should  be  drawn  and  executed  by  the  respective  parties, — this  is  an 
obligatory  contract,  which  neither  party  is  at  liberty  to  refuse  to  per- 
form/' 

In  this  case  it  is  apparent  that  the  minds  of  the  parties  met,  through 
the  correspondence,  upon  all  the  terms,  as  well  as  the  subject-matter, 
of  the  contract,  and  that  the  subsequent  failure  to  reduce  this  contract 
to  the  precise  form  intended,  for  the  reason  stated,  did  not  affect  the 
obligations  of  either  party,  which  had  already  attached,  and  they  may 
now  resort  to  the  primary  evidence  of  their  mutual  stipulations.  Any 
other  rule  would  always  permit  a  party  who  has  entered  into  a  con- 
tract like  this,  through  letters  and  telegraphic  messages,  to  violate  it 
whenever  the  understanding  was  that  it  should  be  reduced  to  another 
written  form,  by  simply  suggesting  other  and  additional  terms  and 
conditions.  If  this  were  the  rule  the  contract  would  never  be  com- 
pleted in  cases  where,  by  changes  in  the  market,  or  other  events  oc- 
curing  subsequent  to  the  written  negotiations,  it  became  the  interest 
of  either  party  to  adopt  that  course  in  order  to  escape  or  evade  obliga- 
tions incurred  in  the  ordinary  course  of  commercial  business.  A 
stipulation  to  reduce  a  valid  written  contract  to  some  other  form 
cannot  be  used  for  the  purpose  of  imposing  upon  either  party  ad- 
ditional burdens  or  obligations,  or  of  evading  the  performance  of 
those  things  which  the  parties  have  mutually  agreed  upon  by  such 
means  as  made  the  promise  or  assent  binding  in  law.  There  was  no 
proof  of  any  custom  existing  between  the  shippers  and  consignees  of 
such  property  in  regard  to  the  payment  of  the  expense  of  firing, 
lining,  and  haying  the  cars.  If  it  be  said  that  such  precautions  are 
necessary  in  order  to  protect  the  property  while  in  transit,  that  does 
not  help  the  defendant.  The  question  still  remains,  who  was  to 
bear  the  expense?  The  plaintiffs  had  not  agreed  to  pay  it,  any 
more  than  they  had  agreed  to  pay  the  freight  or  incur  the  other  ex- 
penses of  transportation.  The  plaintiffs  sent  a  plain  proposition 
which  the  defendant  accepted  without  any  such  conditions  as  it 
subsequently  sought  to  attach  to  it.  That  the  parties  intended  to 
make  and  sign  a  final  paper  does  not  warrant  the  inference  that  they 
also  intended  to  make  another  and  different  agreement.  The  defend- 
ant is  in  no  better  position  than  it  would  be  in  case  it  had  refused 
to  sign  the  final  writing  without  alleging  any  reasons  whatever. 

The  principle,  therefore,  which  is  involved  in  the  case,  is  this: 
Can  parties  who  have  exchanged  letters  and  telegrams  with  a  view  to 
an  agreement,  and  have  arrived  at  a  point  where  a  clear  and  definite 
proposition  is  made  on  the  one  side  and  accepted  on  the  other,  with 
an  understanding  that  the  agreement  shall  be  expressed  in  a  formal 
writing,  ever  be  bound  until  that  writing  is  signed?  If  they  are  at 
liberty  to  repudiate  the  proposition  or  acceptance,  as  the  case  may  be, 
at  any  time  before  the  paper  is  signed,  and  as  the  market  may  go  up 


OFFER   AND   ACCEPTANCE.  89 

or  down,  then  this  case  is  well  decided.  But  if,  at  the  close  of  the 
correspondence,  the  plaintiffs  became  bound  by  their  offer,  and  the 
defendant  by  its  acceptance  of  that  offer,  whether  the  final  writing 
was  signed  or  not,  as  1  think  they  did,  under  such  circumstances  as 
the  record  discloses,  then  the  conclusion  of  the  learned  referee  was 
erroneous.  To  allow  either  party  to  repudiate  the  obligations  clearly 
expressed  in  the  correspondence,  unless  the  other  will  assent  to  ma- 
terial conditions,  not  before  referred  to,  or. to  be  implied  from  the 
transaction,  would  be  introducing  an  element  of  confusion  and  un- 
certainty into  the  law  of  contract.  If  the  parties  did  not  become 
bound  in  this  case,  they  cannot  be  bound  in  any  case  until  the  writing 
is  executed. 

The  judgment  should  be  reversed,  and  a  new  trial  granted,  costs  to 
abide  the  event. 

All  concur,  except  EARL,  GRAY,  and  BARTLETT,  JJ.,  dissenting. 

Judgment  reversed. 

9  Cyc.  280-282  (93-99);  267  (33).  29  L.  R.  A.  431;  W.  P.  47  (53);  8 
H.  L.  R.  498. 


CHAPTER  II. 
FORM  AND  CONSIDERATION. 
Contracts  of  record. 

O'BRIEN,  late  sheriff,  v.  YOUNG  et  al 

95  NEW  YORK,  428.— 1884. 

Appeal  from  order  of  the  General  Term  of  the  Supreme  Court,  in 
the  first  judicial  department,  made  January  8,  1884,  which  affirmed 
an  order  of  Special  Term,  denying  a  motion  to  restrain  the  sheriff 
of  the  county  of  New  York  from  collecting,  upon  a  judgment  issued 
to  him  herein,  interest  at  a  greater  rate  than  six  per  cent  after 
January  1,  1880. 

Judgment  was  perfected  against  the  defendants  February  10,  1877, 
at  which  time  the  legal  rate  of  interest  in  the  State  was  seven  per 
cent.  By  Chap.  538  of  the  laws  of  1879  the  legal  rate  of  interest 
was  reduced  from  seven  to  six  per  cent,  the  act  to  go  into  effect 
January  1,  1880.  Execution  on  the  judgment  was  issued  to  the 
sheriff  November  19,  1883,  instructing  him  to  collect  the  amount 
thereof  with  interest  at  the  rate  of  seven  per  cent  from  the  date  of 
the  entry  of  judgment,  February  10,  1877. 

EARL,  J.  By  the  decided  weight  of  authority  in  this  State,  where 
one  contracts  to  pay  a  principal  sum  at  a  certain  future  time  with 
interest,  the  interest  prior  to  the  maturity  of  the  contract  is  payable 
by  virtue  of  the  contract,  and  thereafter  as  damage  for  the  breach  of 
the  contract.  Macomber  v.  Dunham,  8  Wend.  550;  United  States 
Bank  v.  Chapin,  9  Id.  471;  Hamilton  v.  Van  Eensselaer,  43  N.  Y. 
244;  Bitter  v.  Phillips,  53  Id.  586;  Southern  Central  R.  R.  Co.  v. 
Town  of  Moravia,  61  Barb.  180.  And  such  is  the  rule  as  laid  down 
by  the  Federal  Supreme  Court.  Brewster  v.  Wakefield,  22  How. 
(U.  S.)  118;  Burnhisel  v.  Firman,  22  Wall.  170;  Holden  v.  Trust 
Co.,  100  U.  S.  72. 

The  same  authorities  show  that  after  the  maturity  of  such  a 
contract,  the  interest  is  to  be  computed  as  damages  according  to 
the  rate  prescribed  by  the  law,  and  not  according  to  that  prescribed 
in  the  contract  if  that  be  more  or  less. 

But  when  the  contract  provides  that  the  interest  shall  be  at  a 
specified  rate  until  the  principal  shall  be  paid,  then  the  contract  rate 
governs  until  payment  of  the  principal  or  until  the  contract  is  merged 

90 


FOEM:  CONTRACTS  OF  RECORD.  91 

in  a  judgment.  And  where  one  contracts  to  pay  money  on  demand 
"with  interest/'  or  to  pay  money  generally  "with  interest,"  without 
specifying  time  of  payment,  the  statutory  rate  then  existing  becomes 
the  contract  rate,  and  must  govern  until  payment  or  at  least  until  de- 
mand and  actual  default,  as  the  parties  must  have  so  intended.  Paine 
v.  Caswell,  68  Me.  80;  28  Am.  Kep.  21;  Eaton  v.  Boissonnault,  67 
Me.  540;  24  Am.  Eep.  52. 

If,  therefore,  this  judgment,  the  amount  of  which  is  by  its  terms 
payable  with  interest,  is  to  be  treated  as  a  contract — as  a  bond  executed 
by  the  defendants  at  its  date — then  the  statutory  rate  of  interest  ex- 
isting at  the  date  of  the  rendition  of  the  judgment  is  to  be  treated 
as  part  of  the  contract  and  must  be  paid  by  the  defendants  according 
to  the  terms  of  the  contract,  and  thus  the  plaintiff's  contention  is  well 
founded. 

But  is  a  judgment,  properly  speaking,  for  the  purposes  now  in  hand, 
a  contract?  I  think  not.  The  most  important  elements  of  a  con- 
tract are  wanting.  There  is  no  aggregatio  mentium.  The  defend- 
ant has  not  voluntarily  assented.  All  the  authorities  assert  that  the 
existence  of  parties  legally  capable  of  contracting  is  essential  to 
every  contract,  and  yet  they  nearly  all  agree  that  judgments  entered 
against  lunatics  and  others  incapable  in  law  of  contracting  are  con- 
clusively binding  until  vacated  or  reversed.  In  Wyman  v.  Mitchell 
(1  Cowen,  316),  Sutherland,  J.,  said  that  "a  judgment  is  in  no 
sense  a  contract  or  agreement  between  the  parties."  In  McCoun  v. 
The  New  York  Central  and  Hudson  Eiver  Railroad  Company  (50 
N.  Y.  176),  Allen,  J.,  said  that  "a  statute  liability  wants  all  the  ele- 
ments of  a  contract,  consideration  and  mutuality  as  well  as  the  assent 
of  the  party.  Even  a  judgment  founded  upon  contract  is  no  con- 
tract." In  Bidleson  v.  Whytel  (3  Burrows,  1545-1548)  it  was  held 
after  great  deliberation  and  after  consultation  with  all  the  judges, 
Lord  Mansfield  speaking  for  the  court,  "that  a  judgment  is  no  con- 
tract, nor  can  be  considered  in  the  light  of  a  contract,  for  judicium 
redditur  in  invitum."  To  the  same  effect  are  the  following  au- 
thorities: Rae  v.  Hulbert,  17  111.  572;  Todd  v.  Crumb,  5  McLean, 
172 ;  Smith  v.  Harrison,  33  Ala.  706 ;  Masterson  v.  Gibson,  56  Id.  56 ; 
Keith  v.  Estill,  9  Port.  669 ;  Larrabee  v.  Baldwin,  35  Cal.  156 ;  In  re 
Kennedy,  2  S.  C.  (N.  S.)  226;  State  of  Louisiana  v.  City  of.  New 
Orleans,  109  TJ.  S.  Sup.  Ct.  285. 

But  in  some  decided  cases,  and  in  text-books,  judges  and  jurists 
have  frequently,  and,  as  I  think,  without  strict  accuracy,  spoken  of 
judgments  as  contracts.  They  have  been  classified  as  contracts  with 
reference  to  the  remedies  upon  them.  In  the  division  of  actions 
into  ex  contractu  and  ex  delicto,  actions  upon  judgments  have  been 
assigned  to  the  former  class.  It  has  been  said  that  the  law  of  con- 
tracts, in  its  widest  extent,  may  be  regarded  as  including  nearly  all 


92  FORMATION    OF    CONTRACT. 

the  law  which  regulates  the  relations  of  human  life;  that  contract  is 
co-ordinate  and  commensurate  with  duty;  that  whatever  it  is  the 
duty  of  one  to  do  he  may  be  deemed  in  law  to  have  contracted  to  do, 
and  that  the  law  presumes  that  every  man  undertakes  to  perform 
what  reason  and  justice  dictate  he  should  perform.  1  Pars,  on  Cont. 
(6th  ed.)  3;  2  Black.  Com.  443;  3  Id.  160;  McCoun  v.  N.  Y.  C.  & 
H.  E.  E.  K.  Co.,  supra.  Contracts  in  this  wide  sense  are  said  to 
spring  from  the  relations  of  men  to  each  other  and  to  the  society  of 
which  they  are  members.  Blackstone  says:  "It  is  a  part  of  the 
original  contract  entered  into  by  all  mankind  who  partake  the  benefits 
of  society,  to  submit  in  all  points  to  the  municipal  constitutions  and 
local  ordinances  of  that  State  of  which  each  individual  is  a  member." 
In  the  wide  sense  thus  spoken  of,  the  contracts  are  mere  fictions 
invented  mainly  for  the  purpose  of  giving  and  regulating  remedies. 
A  man  ought  to  pay  for  services  which  he  accepts,  and  hence  the 
law  implies  a  promise  that  he  will  pay  for  them.  A  man  ought  to 
support  his  helpless  children,  and  hence  the  law  implies  a  promise 
that  he  will  do  so.  So  one  ought  to  pay  a  judgment  rendered 
against  him,  or  a  penalty  which  he  has  by  his  misconduct  incurred, 
and  hence  the  law  implies  a  promise  that  he  will  pay.  There  is  no 
more  contract  to  pay  the  judgment  than  there  is  to  pay  the  penalty. 
He  has  neither  promised  to  pay  the  one  nor  the  other.  The  promise 
is  a  mere  fiction,  and  is  implied  merely  for  the  purpose  of  the  remedy. 
Judgments  and  penalties  are,  in  the  books,  in  some  respects,  placed 
upon  the  same  footing.  At  common  law  both  could  be  sued  for  in 
an  action  ex  contractu  for  debt,  the  action  being  based  upon  the 
implied  promise  to  pay.  But  no  one  will  contend  that  a  penalty 
is  a  contract,  or  that  one  is  really  under  a  contract  liability  to  pay 
it.  McCoun  v.  N.  Y.  C.  &  H.  E.  E.  E.  Co.,  supra. 

Suppose  a  statute  gives  a  penalty  to  an  aggrieved  party,  with  in- 
terest, what  interest  could  he  recover?  The  interest  allowed  by  law 
when  the  penalty  accrued,  if  the  statutory  rate  has  since  been  altered  ? 
Clearly  not.  He  would  be  entitled  to  the  interest  prescribed  by  law 
during  the  time  of  the  defendant's  default  in  payment.  There 
would,  in  such  a  case,  be  no  contract  to  pay  interest,  and  the  statu- 
tory rate  of  interest  at  the  time  the  penalty  accrued  would  become 
part  of  no  contract.  If,  therefore,  a  subsequent  law  should  change 
the  rate  of  interest,  no  vested  right  would  be  interfered  with,  and  no 
contract  obligation  would  be  impaired. 

The  same  principles  apply  to  all  implied  contracts.  When  one  makes 
a  valid  agreement  to  pay  interest  at  any  stipulated  rate,  for  any 
time,  he  is  bound  to  pay  it,  and  no  legislative  enactment  can  release 
him  from  his  obligation.  But  in  all  cases  where  the  obligation  to 
pay  interest  is  one  merely  implied  by  the  law,  or  is  imposed  by  law, 
and  there  is  no  contract  to  pay  except  the  fictitious  one  which  the 


FORM:  CONTRACTS  OF  RECORD.  93 

law  implies,  then  the  rate  of  interest  must  at  all  times  be  the  statutory 
rate.  The  rate  existing  at  the  time  the  obligation  accrued  did  not 
become  part  of  any  contract,  and  hence  the  law  which  created  the 
obligation  could  change  or  alter  it  for  the  future  without  taking 
away  a  vested  right  or  impairing  a  contract. 

In  the  case  of  all  matured  contracts  which  contain  no  provision 
for  interest  after  they  are  past  due,  as  I  have  before  said,  interest 
is  allowed,  not  by  virtue  of  the  contract,  but  as  damages  for  the 
breach  thereof.  In  such  cases  what  would  be  the  effect  of  a  statute 
declaring  that  no  interest  should  be  recovered?  As  to  the  interest 
which  had  accrued  as  damages  before  the  date  of  the  law,  the  law 
could  have  no  effect  because  that  had  become  a  vested  right  of  prop- 
erty which  could  not  be  taken  away.  But  the  law  could  have  effect 
as  to  the  subsequent  interest,  and  in  stopping  that  from  running 
would  impair  no  contract.  A  law  could  be  passed  providing  that 
in  all  cases  of  unliquidated  claims  which  now  draw  no  interest,  in- 
terest should  thereafter  be  allowed  as  damages;  and  thus  there  is 
ample  legislative  power  in  such  cases  to  regulate  the  future  rate  of 
interest  without  invading  any  constitutional  right.  When  a  man's 
obligation  to  pay  interest  is  simply  that  which  the  law  implies,  he 
discharges  that  obligation  by  paying  what  the  law  exacts. 

This  judgment,  so  far  as  pertains  to  the  question  we  are  now 
considering,  can  have  no  other  or  greater  force  than  if  a  valid 
statute  had  been  enacted  requiring  the  defendant  to  pay  the  same 
sum  with  interest.  Under  such  a  statute,  interest  would  be  com- 
puted, not  at  the  rate  in  force  when  the  statute  was  enacted,  but  ac- 
cording to  the  rate  in  force  during  the  time  of  default  in  payment. 
A  different  rule  would  apply  if  a  judgment  or  statute  should  require 
the  payment  of  a  given  sum  with  interest  at  a  specified  rate.  Then 
interest  at  the  rate  specified  would  form  part  of  the  obligation  to 
be  discharged. 

Here,  then,  the  defendant  did  not  in  fact  contract  or  promise  to 
pay  this  judgment,  or  the  interest  thereon.  The  law  made  it  his 
duty  to  pay  the  interest,  and  implied  a  promise  that  he  would  pay 
it.  That  duty  is  discharged  by  paying  such  interest  as  the  law,  dur- 
ing the  time  of  default  in  paying  the  principal  sum,  prescribed  as  the 
legal  rate. 

If  this  judgment  had  been  rendered  at  the  date  the  execution  was 
issued,  interest  would  have  been  computed  upon  the  original  demand 
at  seven  per  cent  to  January  1,  1880,  and  then  at  the  rate  of  six 
per  cent.  Shall  the  plaintiff  have  a  better  position  because  the  judg- 
ment was  rendered  prior  to  1880? 

As  no  intention  can  be  imputed  to  the  parties  in  reference  to  the 
clause  in  the  judgment  requiring  payment  "with  interest,"  we  may 
inquire  what  intention  the  court  had.  It  is  plain  that  it  could  have 


94  FORMATION    OF   CONTRACT. 

had  no  other  intention  than  that  the  judgment  should  draw  the  statu- 
tory interest  until  payment.  It  cannot  be  presumed  that  the  court 
intended  that  the  interest  should  be  at  the  rate  of  seven  per  cent  if 
the  statutory  rate  should  become  less. 

That  there  is  no  contract  obligation  to  pay  the  interest  upon  judg- 
ments which  is  beyond  legislative  interference  is  shown  by  legislation 
in  this  country  and  in  England.  Laws  have  been  passed  providing 
that  all  judgments  should  draw  interest,  and  changing  the  rate  of 
interest  upon  judgments,  and  such  laws  have  been  applied  to  judg- 
ments existing  at  their  date,  and  yet  it  was  never  supposed  that  such 
laws  impaired  the  obligation  of  contracts. 

It  is  claimed  that  the  provision  in  section  1  of  the  act  of  1879, 
which  reduced  the  rate  of  interest  (Chap.  538),  saves  this  judgment 
from  the  operation  of  that  act.  The  provision  is  that  "nothing  herein 
contained  shall  be  so  construed  as  to  in  any  way  affect  any  contract 
or  obligation  made  before  the  passage  of  this  act."  The  answer  to 
this  claim  is  that  here  there  was  no  contract  to  pay  interest  at  any 
given  rate.  The  implied  contract,  as  I  have  shown,  was  to  pay  such 
interest  as  the  law  prescribed,  and  that  contract  is  not  affected  or  in- 
terfered with. 

The  foregoing  was  written  as  my  opinion  in  the  ease  of  Prouty  v. 
Lake  Shore  and  Michigan  Southern  Railway  Company.  The  only  dif- 
ference between  that  case  and  this  is  that  there  the  judgment  was 
by  its  terms  payable  "with  interest."  Here  the  judgment  contains  no 
direction  as  to  interest.  The  reasoning  of  the  opinion  is  applicable  to 
this  case  and  is,  therefore,  read  to  justify  my  vote  in  this.  Since  writ- 
ing the  opinion,  we  have  decided,  in  the  case  of  Sanders  v.  Lake  Shore 
and  Michigan  Southern  Eailway  Company,  the  law  to  be  as  laid  down 
in  the  first  paragraph  of  the  opinion. 

The  orders  of  the  General  and  Special  Terms  should  be  reversed 
and  the  motion  granted,  without  costs  in  either  court,  the  parties  hav- 
ing so  stipulated. 

RUGER,  C.  J.,  and  FINCH,  J.,  concur  with  EARL  and  ANDREWS,  JJ. ; 
MILLER  and  DAXFORTH,  JJ.,  dissent. 

Orders  reversed  and  motion  granted. 

23  Cyc.  673-674   (39-41)  ;  9  H.  L.  R.  158. 


FORM:  CONTRACT  UNDER  SEAL.  95 

Contract  under  seal. 

(i.)     What  constitutes  a  seal. 

LOEAH  v.  NISSLEY. 
156  PENNSYLVANIA  STATE,  329.— 1893. 

Kule  to  open  judgment  entered  on  a  note  alleged  to  be  tinder  seal. 
The  word  "seal,"  following  the  signature  of  the  maker,  was  printed. 
The  court  below  held  that  the  note  was  not  under  seal  and  made 
absolute  the  rule  to  open  the  judgment,  so  as  to  permit  the  de- 
fendant to  plead  the  statute  of  limitations. 

MITCHELL,  J.  The  days  of  actual  sealing  of  legal  documents,  in 
its  original  sense  of  the  impression  of  an  individual  mark  or  device 
upon  wax  or  wafer,  or  even  on  the  parchment  or  paper  itself,  have 
long  gone  by.  It  is  immaterial  what  device  the  impression  bears  (Alex- 
ander v.  Jameson,  5  Bin.  238),  and  the  same  stamp  may  serve  for 
several  parties  in  the  same  deed.  Not  only  so,  but  the  use  of  wax  has 
almost  entirely — and,  even  of  wafers,  very  largely — ceased.  In  short, 
sealing  has  become  constructive,  rather  than  actual,  and  is  in  a  great 
degree  a  matter  of  intention.  It  was  said  more  than  a  century  ago 
in  McDill's  Lessee  v.  McDill,  1  Ball.  63,  that  the  "the  signing  of  a 
deed  is  now  the  material  part  of  the  execution.  The  seal  has  be- 
come a  mere  form,  and  a  written  or  ink  seal,  as  it  is  called,  is  good." 
And  in  Long  v.  Eamsay,  1  Serg.  &  R.  72,  it  was  said  by 
Tilghman,  C.  J.,  that  a  seal  with  a  flourish  of  the  pen  "is 
not  now  to  be  questioned."  Any  kind  of  flourish  or  mark  will 
be  sufficient,  if  it  be  intended  as  a  seal.  "The  usual  mode,"  said 
Tilghman,  C.  J.,  in  Taylor  v.  Glaser,  2  Serg.  &  R.  502,  "is  to  make 
a  circular,  oval,  or  square  mark  opposite  to  the  name  of  the  signer, 
but  the  shape  is  immaterial."  Accordingly,  it  was  held  in  Hacker's 
Appeal,  121  Pa,  St.  192,  15  Atl.  Eep.  500,  that  a  single  horizontal 
dash,  less  than  an  eighth  of  an  inch  long,  was  a  sufficient  seal,  the 
context  and  the  circumstances  showing  that  it  was  so  intended.  On 
the  other  hand,  in  Taylor  v.  Glaser,  supra,  a  flourish  was  held  not  a 
seal,  because  it  was  put  under,  and  apparently  intended  merely  as 
a  part  of,  the  signature.  So,  in  Duncan  v.  Duncan,  1  Watts,  322, 
a  ribbon  inserted  through  slits  in  the  parchment,  and  thus  carefully 
prepared  for  sealing,  was  held  not  a  seal,  because  the  circumstances 
indicated  the  intent  to  use  a  well-known  mode  of  sealing,  by  attach- 
ing the  ribbon  to  the  parchment  with  wax  or  wafer,  and  the  intent 
had  not  been  carried  out. 

These  decisions  establish  beyond  question  that  any  flourish  or 
mark,  however  irregular  or  inconsiderable,  will  be  a  good  seal,  if 
so  intended;  and,  a  fortiori,  the  same  result  must  be  produced  by 


96  FORMATION    OF   CONTRACT. 

writing  the  word  "seal,"  or  the  letters  "L.  S.,"  meaning  originally 
"locus  sigilli,"  but  now  having  acquired  the  popular  force  of  an 
arbitrary  sign  for  a  seal,  just  as  the  sign  "&"  is  held  and  used  to 
mean  "and"  by  thousands  who  do  not  recognize  it  as  the  Middle  Ages 
manuscript  contraction  for  the  Latin  "et." 

If,  therefore,  the  word  "seal"  on  the  note  in  suit  had  been  written 
by  Nissley  after  his  name,  there  could  have  been  no  doubt  about  its 
efficacy  to  make  a  sealed  instrument.  Does  it  alter  the  case  any  that 
it  was  not  written  by  him,  but  printed  beforehand?  We  cannot  see 
any  good  reason  why  it  should.  Eatification  is  equivalent  to  ante- 
cedent authority,  and  the  writing  of  his  name  to  the  left  of  the 
printed  word,  so  as  to  bring  the  latter  into  the  usual  and  proper 
place  for  a  seal,  is  ample  evidence  that  he  adopted  the  act  of  the 
printer  in  putting  it  there  for  a  seal.  The  note  itself  was  a  printed 
form,  with  blank  spaces  for  the  particulars  to  be  filled  in,  and  the 
use  of  it  raises  a  conclusive  presumption  that  all  parts  of  it  were 
adopted  by  the  signer,  except  such  as  were  clearly  struck  out  or  in- 
tended to  be  canceled  before  signing.  The  pressure  of  business  life 
and  the  subdivision  of  labor,  in  our  day,  have  brought  into  use  many 
things  ready-made  by  wholesale,  which  our  ancestors  made  singly 
for  each  occasion,  and  among  others  the  conveniences  of  printed 
blanks  for  the  common  forms  of  written  instruments.  But  even  in 
the  early  days  of  the  century  the  act  of  sealing  was  commonly  done 
by  adoption  and  ratification,  rather  than  as  a  personal  act,  as  we 
are  told  by  a  very  learned  and  experienced,  though  eccentric,  pred- 
ecessor, in  language  that  is  worth  quoting,  for  its  quaintness :  "  'Illi 
robur  et  aes  triplex/  He  was  a  bold  fellow  who  first  in  these  colonies, 
and  particularly  in  Pennsylvania,  in  time  whereof  the  memory  of 
man  runneth  not  to  the  contrary,  substituted  the  appearance  of  a 
seal  by  the  circumflex  of  a  pen,  which  has  been  sanctioned  by  usage 
and  the  adjudication  of  the  courts  as  equipollent  with  a  stamp  con- 
taining some  effigies  or  inscription  on  stone  or  metal.  .  .  .  How  could 
a  jury  distinguish  the  hieroglyphic  or  circumflex  of  a  pen  by  one  man 
from  another?  In  fact,  the  circumflex  is  usually  made  by  the  scriv- 
ener drawing  the  instrument,  and  the  word  'seal'  inscribed  within  it." 
Brackenridge,  J.,  in  Alexander  v.  Jameson,  5  Bin.  238,  244. 

We  are  of  opinion  that  the  note  in  suit  was  duly  sealed.  We  have 
not  derived  much  light  from  the  decisions  in  other  states,  but,  so 
far  as  we  have  found  any  analogous  cases,  they  are  in  harmony  with 
the  views  herein  expressed.  In  Whitley  v.  Davis,  1  Swan,  (Tenn.)  333, 
the  word  "seal,"  without  any  scroll,  was  held  to  be  a  good  seal, 
even  to  a  public  deed  by  the  clerk  of  a  court,  he  stating  in 
the  certificate  that  no  seal  of  office  had  been  provided.  And  in 
Lewis  v.  Overby,  28  Gratt.  (Va.)  627,  the  word  "seal,"  without  any 
scroll,  was  held  a  good  seal,  within  a  statute  enacting  that  "any  writing 


FORM  :    CONTRACT    UXDER    SEAL.  97 

to  which  the  person  making  it  shall  affix  a  scroll  by  way  of  seal  shall 
be  of  the  same  force  as  if  it  were  actually  sealed.''  The  learned  court 
below,  and  the  counsel  for  appellee,  placed  much  reliance  on  the  de- 
cision in  Bennett  v.  Allen,  10  Pa.  Co.  Ct.  R.  25G.  In  that  case 
the  signature  was  placed  to  the  left  of,  but  below,  the  printed  letters 
"L.  S.,"  and  it  is  said  in  the  opinion  that  there  was  a  space  of  half 
an  inch  between.  The  decision  might  possibly  be  sustained  on  the 
ground  that  the  position  and  distance  showed  that  the  signer 
did  not  intend  to  adopt  the  letters  "L.  S."  as  part  of  his  act,  but, 
unless  distinguished  on  that  special  ground,  the  decision  is  contrary 
to  the  settled  trend  of  our  cases,  and  cannot  be  approved.  Order 
opening  judgment  is  reversed,  and  judgment  reinstated. 
35  Cyc.  1170  (14);  1171  (23);  1172  (29). 


(tt.)     Effect  of  seal. 

ALLER  v.  ALLER. 

40  NEW  JERSEY  LAW,  446.— 1878. 

On  rule  to  show  cause  why  a  new  trial  should  not  be  granted  on 
verdict  for  the  plaintiff  in  Hunterdon  County  Circuit  Court. 
The  action  was  brought  on  the  following  instrument,  viz.: 

"One  day  after  date,  I  promise  to  pay  my  daughter,  Angeline  H.  Aller, 
the  sum  of  three  hundred  and  twelve  dollars  and  sixty-one  cents,  for  value 
received,  with  lawful  interest  from  date,  without  defalcation  or  discount,  as 
witness  my  hand  and  seal  this  fourth  day  of  September,  one  thousand  eight 
hundred  and  seventy-three.  $312.61.  This  note  is  given  in  lieu  of  one-half 
of  the  balance  due  the  estate  of  Mary  A.  Aller,  deceased,  for  a  note  given 
for  one  thousand  dollars  to  said  deceased  by  me.  Peter  H.  Aller.  (L.  S.) 
Witnesses  present:  John  J.  Smith,  John  F.  Grandin." 

SCUDDER,  J.  Whether  the  note  for  $1000  could  have  been  enforced 
in  equity  as  evidence  of  an  indebtedness  by  the  husband  to  the  wife 
during  her  life,  is  immaterial,  for  after  her  death  he  was  entitled, 
as  husband  of  his  deceased  wife,  to  administer  on  her  estate,  and  re- 
ceive any  balance  due. on  the  note,  after  deducting  legal  charges, 
under  the  statute  of  distribution.  The  daughters  could  have  no  legal 
or  equitable  claim  on  this  note  against  their  father  after  their 
mother's  decease.  The  giving  of  these  two  sealed  promises  in  writing 
to  them  by  their  father  was  therefore  a  voluntary  act  on  his  part. 
That  it  was  just  and  meritorious  to  divide  the  amount  represented 
by  the  original  note  between  these  only  two  surviving  children  of 
the  wife,  if  it  was  her  separate  property,  and  keep  it  from  going  into 
the  general  distribution  of  the  husband's  estate  among  his  other 
children,  is  evident,  and  such  appears  to  have  been  his  purpose. 


98  FORMATION    OF    CONTRACT. 

The  question  now  is,  whether  that  intention  was  legally  and  con- 
clusively manifested,  so  that  it  cannot  now  be  resisted. 

This  depends  on  the  legal  construction  and  effect  of  the  instrument 
which  was  given  by  the  father  to  his  daughter. 

It  has  been  treated  by  the  counsel  of  the  defendant  in  his  argu- 
ment, as  a  promissory  note,  and  the  payment  was  resisted  at  the 
trial  on  the  ground  that  it  was  a  gift.  Being  a  gift  inter  vivos,  and 
without  any  legal  consideration,  it  was  claimed  that  the  action  could 
not  be  maintained.  But  the  instrument  is  not  a  promissory  note, 
having  the  properties  of  negotiable  paper  by  the  law  merchant;  nor 
is  it  a  simple  contract,  with  all  the  latitude  of  inquiry  into  the  con- 
sideration allowable  in  such  a  case;  but  it  is  in  form  and  legal  con- 
struction a  deed  under  seal.  It  says  in  the  body  of  the  writing,  "as 
witness,  my  hand  and  seal,"  and  a  seal  is  added  to  the  name  of  Peter 
H.  Aller.  It  is  not  therefore  an  open  promise  for  the  payment  of 
money,  which  is  said  to  be  the  primary  requisite  of  a  bill  or  promis- 
sory note,  but  it  is  closed  or  sealed,  whereby  it  loses  its  character  as 
a  commercial  instrument  and  becomes  a  specialty  governed  by  the 
rules  affecting  common  law  securities.  1  Daniel's  Neg.  Inst.,  §§1, 
31,  34. 

It  is  not  at  this  time  necessary  to  state  the  distinction  between 
this  writing  and  corporation  bonds  and  other  securities  which  have 
been  held  to  have  the  properties  of  negotiable  paper  by  commercial 
usage.  This  is  merely  an  individual  promise  "to  pay  my  daughter, 
Angeline  H.  Aller,  the  sum  of  $312.61,  for  value  received,"  etc. 
It  is  not  even  transferable  in  form,  and  there  is  no  intention  shown 
uppn  its  face  to  make  it  other  than  it  is  clearly  expressed  to  be, 
a  sealed  promise  to  pay  money  to  a  certain  person  or  a  debt  in  law 
under  seal.  How  then  will  it  be  affected  by  the  evidence  which  was 
offered  to  show  that  it  was  a  mere  voluntary  promise,  without  legal 
consideration,  or,  as  it  was  claimed,  a  gift  unexecuted? 

Our  statute  concerning  evidence  (Eev.,  p.  380,  §  16),  which  en- 
acts that  in  any  action  upon  an  instrument  in  writing,  under  seal, 
the  defendant  in  such  action  may  plead  and  set  up  as  a  defense 
therein  fraud  in  the  consideration,  is  not  applicable,  for  here  there 
is  no  fraud  shown. 

But  it  is  said  that  the  act  of  April  6,  1875  (Rev.,  p.  387,  §  52), 
opens  it  to  the  defense  of  want  of  sufficient  consideration,  as  if  it 
were  a  simple  contract,  and,  that  being  shown,  the  contract  becomes 
inoperative. 

The  statute  reads:  "That  in  every  action  upon  a  sealed  instru- 
ment, or  where  a  set-off  is  founded  on  a  sealed  instrument,  the  seal 
thereof  shall  be  only  presumptive  evidence  of  a  sufficient  considera- 
tion, which  may  be  rebutted,  as  if  such  instrument  was  not  sealed," 
etc.1 

i  Held  to  apply  only  to  executory  instruments,  Wain  v.  Wain,  58  N.  J.  L.  640. 


FORM:  CONTRACT  UNDER  SEAL.  99 

Suppose  the  presumption  that  the  seal  carries  with  it,  that  there 
is  a  sufficient  consideration,  is  rebutted,  and  overcome  by  evidence 
showing  there  was  no  such  consideration,  the  question  still  remains, 
whether  an  instrument  under  seal,  without  sufficient  consideration,  is 
not  a  good  promise,  and  enforceable  at  law.  It  is  manifest  that  here 
the  parties  intended  and  understood  that  there  should  be  no  con- 
sideration. The  old  man  said:  "Now  here,  girls,  is  a  nice  present 
for  each  of  you/'  and  so  it  was  received  by  them.  The  mischief  which 
the  above  quoted  law  was  designed  to  remedy,  was  that  where  the  par- 
ties intended  there  should  be  a  consideration,  they  were  prevented  by 
the  common  law  from  showing  none,  if  the  contract  was  under  seal. 
But  it  would  be  going  too  far  to  say  that  the  statute  was  intended 
to  abrogate  all  voluntary  contracts,  and  to  abolish  all  distinction  be- 
tween specialties  and  simple  contracts. 

It  will  not  do  to  hold  that  every  conveyance  of  land,  or  of  chattels, 
is  void  by  showing  that  no  sufficient  consideration  passed  when 
creditors  are  not  affected.  Nor  can  it  be  shown  by  authority  that  an 
executory  contract,  entered  into  intentionally  and  deliberately,  and 
attested  in  solemn  form  by  a  seal,  cannot  be  enforced.  Both  by  the 
civil  and  the  common  law,  persons  were  guarded  against  haste  and 
imprudence  in  entering  into  voluntary  agreements.  The  distinction 
between  "nudum  pactum"  and  "pactum  vestitum"  by  the  civil  law, 
was  in  the  formality  of  execution  and  not  in  the  fact  that  in  one  case 
there  was  a  consideration,  and  in  the  other  none,  though  the  former 
term,  as  adopted  in  the  common  law,  has  the  signification  of  a  con- 
tract without  consideration.  The  latter  was  enforced  without  refer- 
ence to  the  consideration,  because  of  the  formality  of  its  ratification. 
1  Parsons  on  Cont.  (6th  ed.)  427. 

The  opinion  of  Justice  Wilmot  in  Pillans  v.  Van  Mierop  (3  Burr. 
1663)  is  instructive  on  this  point. 

The  early  case  of  Sharington  v.  Strotton  (Plow.  308)  gives  the 
same  cause  for  the  adoption  of  the  sealing  and  delivery  of  a  deed. 
It  says,  among  other  things: 

"Because  words  are  oftentimes  spoken  by  men  unadvisedly  and  without 
deliberation,  the  law  has  provided  that  a  contract  by  words  shall  not  bind 
without  consideration.  And  the  reason  is,  because  it  is  by  words  which  pass 
from  men  lightly  and  inconsiderately;  but  where  the  agreement  is  by  deed, 
there  is  more  time  for  deliberation,  etc.  So  that  there  is  great  deliberation 
used  in  the  making  of  deeds,  for  which  reason  they  are  received  as  a  lien  final 
to  the  party,  and  are  adjudged  to  bind  the  party  without  examining  upon 
what  cause  or  consideration  they  were  made.  And  therefore  in  the  case  put 
in  17  Ed.  IV.,  if  I  by  deed  promise  to  give  you  £20  to  make  your  sale  de  novo, 
here  you  shall  have  an  action  of  debt  upon  the  deed,  and  the  consideration  is 
not  examinable,  for  in  the  deed  there  is  sufficient  consideration,  viz.,  the  will 
of  the  party  that  made  the  deed." 

It  would  seem  by  this  old  law,  that  in  case  of  a  deed  the  say- 
ing might  be  applied,  stat  pro  ratione  voluntas. 


100  FORMATION    OF    CONTRACT. 

In  Smith  on  Contracts,  the  learned  author,  after  stating  the  strict- 
ness of  the  rules  of  law,  that  there  must  be  a  consideration  to  support 
a  simple  contract  to  guard  persons  against  the  consequences  of  their 
own  imprudence,  says:  "The  law  does  not  absolutely  prohibit  them 
from  contracting  a  gratutious  obligation,  for  they  may,  if  they  will, 
do  so  by  deed." 

This  subject  of  the  derivation  of  terms  and  formalities  from  the 
civil  law,  and  of  the  rule  adopted  in  the  common  law,  is  fully  de- 
scribed in  Fonb.  Eq.  335,  note  a.  The  author  concludes  b}r  saying: 
"  If,  however,  an  agreement  be  evidenced,  by  bond  or  other  instru- 
ment, under  seal,  it  would  certainly  be  seriously  mischievous  to  al- 
low its  consideration  to  be  disputed,  the  common  law  not  having 
pointed  out  any  other  means  by  which  an  agreement  can  be  more 
solemnly  authenticated.  Every  deed,  therefore,  in  itself  imports  a 
consideration,  though  it  be  only  the  will  of  the  maker,  and  therefore 
shall  never  be  said  to  be  nudum  pactum"  See  also  1  Chitty  on  Cont. 
(llth  ed.)  6;  Morley  v.  Boothby,  3  Bing.  107;  Rann  v.  Hughes,  7 
T.  R.  350,  note  a. 

These  statements  of  the  law  have  been  thus  particularly  given  in 
the  words  of  others,  because  the  significance  of  writings  under  seal, 
and  their  importance  in  our  common  law  system,  seems  in  danger  of 
being  overlooked  in  some  of  our  later  legislation.  If  a  party  has  fully 
and  absolutely  expressed  his  intention  in  a  writing  sealed  and  deliv- 
ered, with  the  most  solemn  sanction  known  to  our  law,  what  should 
prevent  its  execution  where  there  is  no  fraud  or  illegality  ?  But  be- 
cause deeds  have  been  used  to  cover  fraud  and  illegality  in  the  con- 
sideration, and  just  defenses  have  been  often  shut  out  by  the  con- 
clusive character  of  the  formality  of  sealing,  we  have  enacted  in  our 
State  the  two  recent  statutes  above  quoted.  The  one  allows  fraud  in 
the  consideration  of  instruments  under  seal  to  be  set  up  as  defense,  the 
other  takes  away  the  conclusive  evidence  of  a  sufficient  considera- 
tion heretofore  accorded  to  a  sealed  writing,  and  makes  it  only  pre- 
sumptive evidence.  This  does  not  reach  the  case  of  a  voluntary  agree- 
ment, where  there  was  no  consideration,  and  none  intended  by  the 
parties.  The  statute  establishes  a  new  rule  of  evidence,  by  which 
the  consideration  of  sealed  instruments  may  be  shown,  but  does  not 
take  from  them  the  effect  of  establishing  a  contract  expressing  the 
intention  of  the  parties,  made  with  the  most  solemn  authentication, 
which  is  not  shown  to  be  fraudulent  or  illegal.  It  could  not  have 
been  in  the  mind  of  the  legislature  to  make  it  impossible  for  parties 
to  enter  into  such  promises;  and  without  a  clear  expression  of  the 
legislative  will,  not  only  as  to  the  admissibility,  but  the  effect  of  such 
evidence,  such  construction  should  not  be  given  to  this  law.  Even  if 
it  should  be  held  that  a  consideration  is  required  to  uphold  a  deed, 
yet  it  might  still  be  implied  where  its  purpose  is  not  within  the  mis- 


FORM:  CONTRACT  UNDER  SEAL.  101 

chief  which  the  statute  was  intended  to  remedy.  It  was  certainly 
not  the  intention  of  the  legislature  to  abolish  all  distinction  between 
simple  contracts  and  specialties,  for  in  the  last  clause  of  the  section 
they  say  that  all  instruments  executed  with  a  scroll,  or  other  device 
by  way  of  scroll,  shall  be  deemed  sealed  instruments.  It  is  evident 
that  they  were  to  be  continued  with  their  former  legal  effect,  except  so 
far  as  they  might  be  controlled  by  evidence  affecting  their  intended 
consideration. 

If  the  statute  be  anything  more  than  a  change  of  the  rules  of 
evidence  which  existed  at  the  time  of  the  contract  was  made,  and  in 
effect  makes  a  valuable  consideration  necessary,  where  such  requisite 
to  its  validity  did  not  exist  at  that  time,  then  the  law  would  be  void 
in  this  case,  because  it  would  impair  the  obligation  of  a  prior  contract. 
This  cannot  be  done.  Cooley  on  Const.  Lim.  288,  and  notes. 

The  rule  for  a  new  trial  should  be  discharged.1 

W.  P.  217   (25-26). 

i  The  New  York  Statute: — "At  common  law  the  seal  to  a  written  instru- 
ment was  conclusive  evidence  of  a  sufficient  consideration,  and  its  conclusive 
character  could  not  be  changed  by  parol  testimony.  This  rule  of  the  common 
law,  however,  was  modified  by  the  statute  (2  R.  S.  406,  sec.  77)  which  is  now 
embraced  in  our  Code  of  Civil  Procedure,  section  840,  which  provides  that  'a 
seal  upon  an  executory  instrument,  hereafter  executed,  is  only  presumptive  evi- 
dence of  a  sufficient  consideration,  which  may  be  rebutted,  as  if  the  instrument 
was  not  sealed.'  Neither  a  receipt  nor  a  release  is  a  contract  or  an  executory 
instrument.  They  are  merely  declarations  or  admissions  in  writing,  and  con- 
sequently it  was  held  that  the  modification  of  the  statute  with  reference  to  seals 
upon  executory  instruments  does  not  extend  to  releases,  which,  when  under  seal, 
continue  to  be  conclusive  evidence  of  a  sufficient  consideration.  (Gray  v.  Bar- 
ton, 55  N.  Y.  68-71;  Ryan  v.  Ward,  48  N.  Y.  204-208.)"— Stiebel  v.  Grosberg, 
202  N.  Y.  266.  In  Talbert  v.  Storum,  21  N.  Y.  Supp.  719,  the  court  held  that 
the  absolute  assignment,  under  seal,  of  an  insurance  policy,  was  an  executed 
agreement  and  not  an  executory  agreement,  within  the  meaning  of  sec.  840  of 
the  Code  of  Civil  Procedure.  The  seal  was  therefore  held  to  be  conclusive 
evidence  of  consideration.  A  seal  will  not  support  a  gratuitous  promise,  but 
merely  raises  a  rebuttable  presumption  of  consideration. — Anthony  v.  Harri- 
son, 14  Hun,  198  (affirmed,  74  N.  Y.  613). 

Views  of  the  relation  of  seal  and  consideration  at  common  law: — 1.  "We 
are  not  aware  of  any  rule  of  law,  by  which  a  consideration  is  inferred  from 
the  fact  of  the  execution  of  a  sealed  instrument.  No  consideration  is  neces- 
sary, in  order  to  give  validity  to  a  deed.  It  derives  its  efficacy  from  the 
solemnity  of  its  execution — the  acts  of  sealing  and  delivery,  not  upon  the  idea, 
that  the  seal  imports  a  consideration,  but  because  it  is  his  solemn  act  and 
deed,  and  it  is  therefore  obligatory.  No  consideration  being  necessary  to  give 
validity  to  a  deed,  it  follows,  that  the  law  does  not,  from  the  fact  of  execution, 
make  any  inference  one  way  or  the  other  in  reference  to  a  consideration.  A 
misapprehension  of  this  subject  may  have  arisen  from  the  fact  that,  in  deeds 
of  conveyance,  operating  under  the  statute  of  uses,  either  a  valuable  or  a  good 
consideration  is  necessary,  in  order  to  raise  the  use.  But  the  general  rule 
is,  a  deed  is  valid  without  a  consideration.  A  voluntary  bond  for  money, 
executed  to  a  stranger,  and  professing,  on  its  face,  to  be  without  consideration, 


102  FORMATION   OF   CONTRACT. 

BENDER  v.  BEEN. 

78  IOWA,  283.— 1889. 

Action  upon  a  promissory  note.  A  demurrer  to  defendant's  answer 
was  overruled,  and  plaintiff  refusing  to  further  plead,  and  standing 
on  his  demurrer,  judgment  was  rendered  for  defendant.  Plaintiff 
appeals. 

BECK,  J.  I.  The  promissory  note  in  suit  was  jointly  executed 
by  defendant  and  four  others.  It  called  for  two  hundred  and  twenty 
dollars,  and,  after  certain  payments  were  deducted,  it  is  claimed  in 
the  petition  that  one  hundred  and  fifty  dollars  remained  due  thereon, 
for  which  judgment  is  asked.  The  defndant  alleged  in  his  answer 
that  a  prior  indorsee  of  the  note,  while  holding  it,  did  execute  a  writ- 
ing, discharging  defendant  from  all  liability  thereon,  which  is  in  the 
following  words : 

"Mx.  AYB,  IOWA,  5—3,  1887. 

"Received  of  Chas.  A.  Been  forty  dollars,  and  same  credited  on  note  dated 
March  2,  1882,  given  for  two  hundred  and  twenty  dollars,  and  signed  by  Calvin 
Stiles,  Wm.  A.  Been,  J.  S.  Been,  C.  A.  Been  and  Wm.  White,  given  to  G. 
Bender.  The  consideration  of  payment  of  above  forty  dollars  is  that  Chas.  A. 
Been  is  to  be  released  entirely  from  the  above-named  note.  This  is  done  by 
consent  of  G.  Bender. 

"(Signed)  DAY  DUNNING,  Cashier." 

It  is  further  alleged  in  the  answer  that  the  note  came  into  the  pos- 
session of  plaintiff  long  after  maturity,  who  had  full  knowledge  of  the 
release  pleaded.  A  demurrer  to  the  answer  was  overruled,  and  from 
that  decision  plaintiff  appeals. 

II.  It  is  a  familiar  rule  of  the  law  that  a  payment  of  a  part  of  a 
promissory  note,  or  of  a  debt  existing  in  any  different  form,  in  dis- 
charge of  the  whole,  will  not  bar  recovery  of  the  balance  unpaid. 

and  for  mere  friendship,  is  binding." — Walker  v.  Walker,   13  Ire.  Law    (N. 
C.),  335. 

2.  "A  seal  imports  a  consideration  and  creates  a  legal  obligation.     Candor 
&  Henderson's  Appeal,  27  Pa.  120.     In  an  action  upon  a  bond  or  note  under 
seal  want  of  consideration  is  no  defense:   Sherk  v.  Endress,  3  W.  &  S.  255; 
Yard  v.  Patton,  13  Pa.  278;   Anderson  v.  Best,   176  Pa.  498." — Cosgrove  v. 
Cummings,  195  Pa.  St.  497.     "The  bond  is  under  seal  and  imports  a  consid- 
eration and  it  is  not  necessary  to  state  the  consideration  that  induced  its  exe- 
cution.    The  defendant  cannot  be  heard  to  say  that  it  is  without  consideration. 
Chitty  on  Pleadings,  vol.  I,  p.  366;   Chitty  on  Contracts,  p.  4." — Barrett  v. 
Garden,  65  Vt.  431. 

3.  "The  sealing  of  an  instrument  is  a  legal  implication  of  a  consideration; 
it  dispenses  with  the  proof  on  the  part  of  the  plaintiff.     The  onus  of  showing 
that  it  was  without  consideration  is  cast  on  the  defendant.     If  he  is  able  to 
make  it  appear,  the  defense  is  just  as  available  to  him  against  a  single  bill  or 
•bond,  as  it  is  against  a  note  of  hand  or  other  parol  contract." — Maltock  v. 
Gibson,  8  Rich.  Law  (S.  C.),  437. 


FORM:  CONTRACT  UNDER  SEAL.  103 

The  rule  is  based  upon  the  principle  that  there  is  no  consideration 
for  the  promise  of  discharge;  the  sum  paid  being  in  fact  due  from 
the  payer  on  the  debt,  he  renders  no  consideration  to  the  payee  for 
his  promise  to  release  the  balance  of  the  debt.  This  doctrine  has  been 
recognized  in  more  than  one  decision  of  this  court.  Myers  v.  Bying- 
ton,  34  Iowa,  205 ;  Works  v.  Hershey,  35  Iowa,  340 ;  Rea  v.  Owens,  37 
Iowa,  262;  Bryan  v.  Brazil,  52  Iowa,  350;  Early  v.  Burt,  68  Iowa, 
716.  Under  this  rule  the  discharge  pleaded  by  defendant  is  without 
consideration,  and  is  therefore  void. 

III.  But  counsel  for  defendant  make  an  ingenious  argument  to 
show  that  the  rule  of  the  common  law  applicable  to  sealed  instru- 
ments, under  which  they  import  a  consideration  in  this  State,  since 
the  abolition  of  private  seals,  is  transferred  to  all  writings  which,  like 
sealed  instruments  under  the  common  law,  import  consideration. 
Without  at  all  approving  the  position  advocated  by  counsel,  but  re- 
garding it  as  more  than  doubtful,  it  may  be  assumed  for  the  purpose 
of  showing  that  it  cannot  be  applied  to  the  case  before  us.  It  is  not 
and  cannot  be  claimed  that  a  sealed  instrument  imports  a  valid  con- 
sideration when  it  shows,  by  its  own  conditions  and  recitations,  that 
it  is  in  fact  not  founded  upon  a  consideration.  In  other  words,  the 
presumption  of  consideration  arising  from  a  seal  will  not  overcome 
the  express  language  and  conditions  of  a  sealed  instrument,  showing 
that  it  is  without  consideration.  We  think  that  this  proposition  need 
only  to  be  stated  to  gain  assent.  It  does  not  demand  in  its  sup- 
port the  citation  of  authorities.  Attention  to  the  release  pleaded  by 
defendant,  and  quoted  above,  discloses  the  fact  that  it  shows,  by  posi- 
tive and  direct  recitations,  that  a  payment  of  a  part  of  the  debt  was 
the  alleged  consideration  of  the  instrument  for  the  release  of  the  bal- 
ance of  the  debt.  The  instrument,  therefore,  relied  upon  to  show  the 
release  establishes  the  fact  that  it  is  entirely  without  consideration, 
and  cannot  therefore  be  enforced. 

It  is  our  opinion  that  the  District  Court  erred  in  overruling  plain- 
tiff's demurrer  to  defendant's  answer.  Its  judgment  is  therefore 
reversed. 


(Hi.)     Delivery. 
GORHAM'S  ADM'R  v.  MEACHAM'S  ADM'R. 

63  VERMONT,  231.— 1891. 

Bill  in  chancery  for  foreclosure  of  a  mortgage.  Heard  at  the 
September  term,  1890,  upon  pleadings  and  an  agreed  statement  of 
facts.  Taft,  Chancellor,  dismissed  the  bill,  pro  forma. 

TYLER,  J.  The  following  facts  are  reported:  Rollin  S.  Meacham 
in  his  lifetime  was  administrator  with  the  will  annexed  of  the  estate  of 


104  FORMATION    OF    CONTRACT. 

Angeline  W.  Gorham,  and  became  largely  indebted  to  the  estate  for 
moneys  that  had  come  into  his  hands  as  such  administrator.  For  the 
purpose  of  securing  the  estate  for  this  indebtedness,  on  March  1, 
1889,  he  made  and  executed  a  promissory  note  for  $1550,  payable  to 
himself  as  administrator,  on  demand,  and  in  like  manner  a  mortgage 
of  his  home  place,  conditioned  for  the  payment  of  the  note.  He 
never  settled  the  estate  nor  rendered  any  account  to  the  Probate 
Court.  He  converted  the  assets  into  money  and  appropriated  it  to 
his  own  use  in  his  private  business.  At  the  time  the  note  and  mort- 
gage were  executed,  and  at  his  decease,  he  was  indebted  to  the  estate 
to  the  amount  of  $7000,  and  was  insolvent.  His  debts,  besides  what 
he  owed  the  estate,  amounted  to  about  $9000,  and  his  assets  to  about 
$4000.  The  note  and  mortgage  were  retained  by  him  and  were 
found  after  his  decease  in  his  safe  among  other  papers  that  belonged 
to  the  estate,  and  among  certain  deeds  and  mortgages  of  his  own. 
He  died  November  17,  1889.  His  wife  was  the  daughter  of  the 
testatrix,  and  is  the  only  person  interested  in  her  estate.  After 
Meacham's  decease,  the  defendant,  as  his  administrator,  handed  the 
note  and  mortgage  to  Burditt,  after  the  latter's  appointment  as  ad- 
ministrator upon  the  estate  of  Mrs.  Gorham,  and  Burditt  caused  the 
mortgage  to  be  recorded  in  the  town  clerk's  office.  The  question  is 
as  to  its  validity. 

1.  The  mortgage  must  be  held  invalid  for  want  of  contracting 
parties.  A  contract  necessarily  implies  a  concurrence  of  intention  in 
two  parties,  one  of  whom  promises  something  to  the  other,  who  on 
his  part  accepts  such  promise.  One  person  cannot  by  his  promise 
confer  a  right  against  himself  until  the  person  to  whom  the  promise  is 
made  has  accepted  the  same.  Until  the  concurrence  of  the  two 
minds  there  is  no  contract;  there  is  merely  an  offer  which  the  promisor 
may  at  any  time  retract.  Chitty  on  Cont.  9,  quoting  Pothier  on  Obli- 
gations. It  is  essential  to  the  validity  of  a  deed  that  there  be  proper 
parties,  a  person  able  to  contract  and  a  person  able  to  be  contracted 
with.  3  Wash.  Keal  Prop.  217. 

To  uphold  this  mortgage  we  must  say  that  there  may  be  two  distinct 
persons  in  one,  for  in  law  this  mortgagor  and  mortgagee  are  identical. 
The  addition  of  the  words,  "executor  of  A.  W.  Gorham's  estate," 
does  not  change  the  legal  effect  of  the  ,grant,  which  is  to  Meacham  in 
his  individual  capacity.  In  3  Wash.  279,  it  is  said  that  a  grant  to 
A,  B,  and  C,  trustees  of  a  society  named,  their  heirs,  etc.,  is  a  grant 
to  them  individually,  and  Austin  v.  Shaw,  10  Allen,  552,  Towar  v. 
Hale,  46  Barb.  361,  and  Brown  v.  Combs,  29  N.  J.  L.  36,  are  cited. 
In  this  case  the  grant  and  the  habendum  are  not  to  the  estate  and  ita 
legal  representatives,  but  to  Meacham,  executor,  his  heirs  and 
assigns.  Meacham  had  misappropriated  the  funds  of  the  estate,  and 


FORM:  CONTRACT  UNDER  SEAL.  105 

no  one  but  himself  assented  to  his  giving  a  note  and  mortgage  for  the 
purpose  of  partially  covering  his  default. 

2.  The  mortgage  was  not  delivered.  An  actual  manual  delivery 
of  a  deed  or  mortgage  is  not  necessary.  If  it  has  been  so  disposed 
of  as  to  evince  clearly  the  intention  of  the  parties  that  it  should  take 
effect  as  a  conveyance,  it  is  a  sufficient  delivery.  Orr  v.  Clark,  62 
Vt.  136.  Whether  it  has  been  so  disposed  of  or  not  depends  upon  the 
facts  of  a  given  case.  In  Elmore  v.  Marks  (39  Vt.  538)  the  orator 
was  indebted  to  Marks,  and  for  the  purpose  of  security  made  and 
executed  to  him  a  deed  of  certain  land  and  carried  it  to  the  town 
clerk's  office  to  be  filed  but  not  recorded,  and  to  be  returned  to  him 
when  his  indebtedness  to  Marks  should  be  paid.  Through  inadver- 
tence the  deed  was  recorded  and  the  orator  took  it  into  his  possession. 
It  was  never  delivered  to  Marks  and  he  had  no  knowledge  of  it  until 
several  months  after  it  was  recorded,  when  the  orator  told  him  that 
it  had  been  recorded  by  mistake.  It  was  held  that  there  was  no 
delivery.  Pierpoint,  C.  J.,  said:  "All  authorities  seem  to  agree 
that  to  constitute  a  delivery  the  grantor  must  part  with  the  custody 
and  control  of  the  instrument,  permanently,  with  the  intention  of 
having  it  take  effect  as  a  transfer  of  the  title,  and  must  part  with  his 
ri.pht  to  the  instrument  as  well  as  with  the  possession.  So  long  as 
he  retains  the  control  of  the  deed  he  retains  the  title." 

Anything  which  clearly  manifests  the  intention  of  the  grantor  and 
the  person  to  whom  it  is  delivered  that  the  deed  should  presently 
become  operative  and  effectual,  that  the  grantor  loses  all  control  over 
it,  and  that  by  it  the  grantee  is  to  become  possessed  of  the  estate,  con- 
stitutes a  delivery.  Byars  v.  Spencer,  101  111.  429. 

In  Stone  v.  French  (1  Am.  St.  Rep.  237)  it  appeared  that  Francis 
B.  French  formed  an  intention  of  giving  a  certain  piece  of  land  to 
his  brother  unless  he  should  dispose  of  it  during  his  lifetime;  accord- 
ingly he  wrote  a  letter  to  his  brother  in  which  he  stated  that  in  case  of 
his  decease  his  brother  should  have  the  land  and  do  with  it  as  he 
pleased;  that  he,  the  grantor,  would  make  a  deed  of  it,  inclose  it  in 
an  envelope  and  direct  it  to  his  brother,  to  be  mailed  in  event  of  the 
grantor's  death.  The  grantor  afterwards  made  a  deed  which  con- 
tained the  usual  words,  "signed,  sealed,  and  delivered  in  the  presence 
of,''  etc.  It  was  in  all  respects  properly  executed  and  was  placed  in 
an  envelope  in  the  grantor's  table  drawer  with  directions  indorsed 
upon  the  envelope  to  have  the  deed  recorded,  but  it  was  in  fact  never 
delivered.  It  was  held  that  there  was  no  delivery  of  the  deed  and  that 
the  title  to  the  land  did  not  pass  to  the  grantee ;  that  the  deed  being 
void,  the  recording  of  it  after  the  grantor's  death  gave  it  no  validity. 

A  mere  intention  to  convey  a  title  is  not  sufficient.  The  intention 
and  the  act  of  delivery  of  the  deed  are  both  essential.  To  constitute 


106  FORMATION    OF   CONTRACT. 

a  complete  delivery  of  a  deed  the  grantor  must  do  some  act  putting  it 
beyond  his  power  to  revoke.  2  Cowen  &  Hill's  Notes  to  Phillips'  Ev. 
(5th  ed.)  660,  and  authorities  collated.  In  Younge  v.  Guilbeau  (3 
Wall.  636)  it  is  said  that  "the  delivery  of  a  deed  is  essential  to  the 
transfer  of  a  title.  It  is  the  final  act  without  which  all  other  formali- 
ties are  ineffectual.  To  constitute  such  delivery  the  grantor  must 
part  with  the  possession  of  the  deed  or  the  right  to  retain  it."  In 
Fisher  v.  Hall  (41  N.  Y.  416)  the  Court  of  Appeals  said:  "A  rule 
of  law,  by  which  a  voluntary  deed  executed  by  the  grantor,  afterward 
retained  by  him  during  his  life  in  his  own  exclusive  possession  and 
control,  never  during  that  time  made  known  to  the  grantee,  and  never 
delivered  to  any  one  for  him,  or  declared  by  the  grantor  to  be  intended 
as  a  present  operative  conveyance,  could  be  permitted  to  take  effect 
as  a  transmission  of  the  title,  is  so  inconsistent  with  every  substantial 
right  of  property  as  to  deserve  no  toleration  whatever  from  any  in- 
telligent court,  either  of  law  or  equity." 

Without  a  delivery  and  acceptance  there  is  no  mortgage,  but  only 
an  attempt  at  one,  or  a  proposition  to  make  one.  1  Jones  on  Morts. 
sec.  104;  Jewett  v.  Preston,  27  Me.  400;  Foster  v.  Perkins,  42  Me. 
168 ;  3  Wash.  Real  Prop.  299. 

The  fact  that  the  note  and  mortgage,  duly  executed  by  Meacham, 
were  found  after  his  decease  among  his  papers  and  papers  of  the 
estate,  shows  no  delivery  of  them  in  any  legal  sense ;  on  the  contrary, 
the  facts  that  he  omitted  to  have  the  mortgage  recorded,  that  he  re- 
tained it  in  his  possession  and  under  his  control  so  long  a  time,  and 
that  it  ran  to  him  and  his  heirs  and  assigns,  indicate  that  he  never 
decided  to  give  it  legal  effect.  He  did  not  make  it  operative  in  his 
lifetime,  or  direct  that  it  should  take  effect  at  his  death,  which  was 
necessary  to  give  it  a  testamentary  character.  The  act  of  recording 
it  after  that  event  could  not  give  it  validity. 

Decree  affirmed,  and  cause  remanded. 

9  Cyc.  371-372  (76-78);  27  Cyc.  1113   (8-9). 


Simple  contracts  required  to  be  in  writing:    Statute  of  Frauds. 
STATUTE  OF  FRAUDS. 

29  CAR.  II.  c.  3.  s.  4. 

§  4.  No  action  shall  be  brought  whereby  to  charge  any  executor  or 
administrator  upon  any  special  promise  to  answer  damages  out  of  his 
own  estate;  or  whereby  to  charge  the  defendant  upon  any  special 
promise  to  answer  for  the  debt,  default,  or  miscarriage  of  another 
person ;  or  to  charge  any  person  upon  any  agreement  made  in  consid- 
eration of  marriage ;  or  upon  any  contract  or  sale  of  lands,  tenements 


POEM:  STATUTE  OF  FRAUDS.  107 

or  hereditaments,  or  any  interest  in  or  concerning  them ;  or  upon  any 
agreement  that  is  not  to  be  performed  within  the  space  of  one  year 
from  the  making  thereof;  unless  the  agreement  upon  which  such 
action  shall  be  brought,  or  some  memorandum  or  note  thereof  shall 
be  in  writing,  and  signed  by  the  party  to  be  charged  therewith  or  some 
other  person  thereunto  by  him  lawfully  authorized. 

§  17.  No  contract  for  the  sale  of  any  goods,  wares  or  merchandise 
for  the  price  of  ten  pounds  sterling,  or  upwards,  shall  be  allowed  to 
be  good,  except  the  buyer  shall  accept  part  of  the  goods  so  sold  and 
actually  receive  the  same,  or  give  something  in  earnest  to  bind  the 
bargain  or  in  part  payment,  or  that  some  note  or  memorandum  in 
writing  of  the  said  bargain  be  made  and  signed  by  the  parties  to  be 
charged  by  such  contract,  or  their  agents  thereunto  lawfully  author- 
ized. 


(i.)  Requirements  of  form. 
BIRD  v.  MUNROE. 

66  MAINE,  337.— 1877. 

Assumpsit.  Defense,  the  statute  of  frauds.  After  hearing  the 
evidence,  which  sufficiently  appears  in  the  opinion,  the  court  directed 
that  the  action  be  made  law  on  report  to  stand  for  trial  if  maintain- 
able upon  evidence  legally  admissible,  otherwise  the  plaintiffs  to  be 
nonsuit. 

PETERS,  J.  On  March  2,  1874,  at  Rockland,  in  this  State,  the 
defendant  contracted  verbally  with  the  plaintiffs  for  the  purchase  of 
a  quantity  of  ice,  to  be  delivered  (by  immediate  shipments)  to  the 
defendant  in  New  York.  On  March  10,  1874,  or  thereabouts,  the 
defendant,  by  his  want  of  readiness  to  receive  a  portion  of  the  ice 
as  he  had  agreed  to,  temporarily  prevented  the  plaintiffs  from  per- 
forming the  contract  on  their  part  according  to  the  preparations  made 
by  them  for  the  purpose.  On  March  24,  1874,  the  parties,  then  in 
New  York,  put  their  previous  verbal  contract  into  writing,  antedating 
it  as  an  original  contract  made  at  Rockland  on  March  2,  1874.  On 
the  same  day  (March  24),  by  consent  of  the  defendant,  the  plaintiffs 
sold  the  same  ice  to  another  party,  reserving  their  claim  against  the 
defendant  for  the  damages  sustained  by  them  by  the  breach  of  the 
contract  by  the  defendant  on  March  10th  or  about  that  time.  This 
action  was  commenced  on  April  11,  1874,  counting  on  the  contract  as 
made  on  March  2,  and  declaring  for  damages  sustained  by  the  breach 
of  contract  on  March  10,  or  thereabouts,  and  prior  to  March  24,  1874. 
Several  objections  are  set  up  against  the  plaintiffs'  right  to  recover. 

The  first  objection  is,  that  in  some  respects  the  allegations  in  the 
writ  and  the  written  proof  do  not  concur.  But  we  pass  this  point, 


108  FORMATION    OF    CONTRACT. 

as  any  imperfection  in  the  writ  may,  either  with  or  without  terms, 
be  corrected  by  amendment  hereafter. 

Then  it  is  claimed  for  the  defendant  that,  as  matter  of  fact,  the 
parties  intended  to  make  a  new  and  original  contract  as  of  March 
24,  by  their  writing  made  on  that  day  and  antedated  March  2,  and 
that  it  was  not  their  purpose  thereby  to  give  expression  and  efficacy 
to  any  unwritten  contract  made  by  them  before  that  time.  But  we 
think  a  jury  would  be  well  warranted  in  coming  to  a  different  con- 
clusion. Undoubtedly  there  are  circumstances  tending  to  throw 
some  doubt  upon  the  idea  that  both  parties  understood  that  a  contract 
was  fully  entered  into  on  March  2,  1874,  but  that  doubt  is  much 
more  than  overcome  when  all  the  written  and  oral  evidence  is  consid- 
ered together.  We  think  the  writing  made  on  the  24th  March,  with 
the  explanations  as  to  its  origin,  is  to  be  considered  precisely  as  if 
the  parties  on  that  day  had  signed  a  paper  dated  of  that  date,  certify- 
ing and  admitting  that  they  had  on  the  2d  day  of  March  made  a 
verbal  contract,  and  stating  in  exact  written  terms  just  what  such 
verbal  c.ontract  was.  Parol  evidence  is  proper  to  show  the  situation 
of  the  parties  and  the  circumstances  under  which  the  contract  was 
made.  It  explains  but  does  not  alter  the  terms  of  the  contract.  The 
defendant  himself  invokes  it  to  show  that,  according  to  his  view,  the 
paper  bears  an  erroneous  date.  Such  evidence  merely  discloses 
in  this  case  such  facts  as  are  part  of  the  res  gestce.  Benjamin  on 
Sales,  §  213;  Stoops  v.  Smith,  100  Mass.  63,  66,  and  cases  there 
cited. 

Then  the  defendant  next  contends  that,  even  if  the  writing  signed 
by  the  parties  was  intended  by  them  to  operate  retroactively  as  of 
the  first-named  date,  as  a  matter  of  law,  it  cannot  be  permitted  to 
have  that  effect  and  meet  the  requirements  of  the  statute  of  frauds. 
The  position  of  the  defendant  is,  that  all  which  took  place  between 
the  parties  before  the  24th  of  March  was  of  the  nature  of  negotia-' 
tion  and  proposition  only;  and  that  there  was  no  valid  contract, 
such  as  is  called  for  by  the  statute  of  frauds,  before  that  day;  and 
that  the  action  is  not  maintainable,  because  the  breach  of  contract 
is  alleged  to  have  occurred  before  that  time.  The  plaintiffs,  on  the 
other  hand,  contend  that  the  real  contract  was  made  verbally  on  the 
2d  of  March,  and  that  the  written  instrument  is  sufficient  proof  to 
make  the  verbal  contract  a  valid  one  as  of  that  date  (March  2),  al- 
though the  written  proof  was  not  made  out  until  twenty-two  days 
after  that  time.  Was  the  valid  contract,  therefore,  made  on  March 
2d  or  March  the  24th?  The  point  raised  is,  whether,  in  view  of  the 
statute  of  frauds,  the  writing  in  this  case  shall  be  considered  as  con- 
stituting the  contract  itself,  or  at  any  rate  any  substantial  portion  of 
it,  or  whether  it  may  be  regarded  as  merely  the  necessary  legal  evi- 
dence by  means  of  which  the  prior  unwritten  contract  may  be  proved. 


FORM:  STATUTE  OF  FRAUDS.  109 

In  other  words,  is  the  writing  the  contract,  or  only  evidence  of  it? 
We  incline  to  the  latter  view. 

The  peculiar  wording  of  the  statute  presents  a  strong  argument 
for  such  a  determination.  The  section  reads:  "N"o  contract  for 
the  sale  of  an}r  goods,  wares,  or  merchandise,  for  thirty  dollars  or 
more,  shall  be  valid,  unless  the  purchaser  accepts  and  receives  part 
of  the  goods,  or  gives  something  in  earnest  to  bind  the  bargain,  or  in 
part  payment  thereof,  or  some  note  or  memorandum  thereof  is  made 
and  signed  by  the  party  to  be  charged  thereby,  or  his  agent." 
In  the  first  place,  the  statute  does  not  go  to  all  contracts  of  sale,  but 
only  to  those  where  the  price  is  over  a  certain  sum.  Then  the  re- 
quirement of  the  statute  is  in  the  alternative.  The  contract  need 
not  be  evidenced  by  writing  at  all,  provided  "the  purchaser  accepts 
and  receives  a  part  of  the  goods,  or  gives  something  in  earnest  to  bind 
the  bargain  or  in  part  payment  thereof."  If  any  one  of  these  circum- 
stances will  as  effectually  perfect  the  sale  as  a  writing  would,  it  is 
not  easily  seen  how  the  writing  can  actually  constitute  the  contract, 
merely  because  a  writing  happens  to  exist.  It  could  not  with  any 
correctness  be  said,  that  anything  given  in  earnest  to  bind  a  bargain 
was  a  substantial  part  of  the  bargain  itself,  or  anything  more  than  a 
particular  mode  of  proof.  Then  it  is  not  the  contract  that  is  re- 
quired to  be  in  writing,  but  only  "some  note  or  memorandum  there- 
of." This  language  supposes  that  the  verbal  bargain  may  be  first 
made,  and  a  memorandum  of  it  given  afterwards.  It  also  implies 
that  no  set  and  formal  agreement  is  called  for.  Chancellor  Kent  says 
"the  instrument  is  liberally  construed  without  regard  to  forms." 
The  briefest  possible  forms  of  a  bargain  have  been  deemed  sufficient 
in  many  cases.  Certain  important  elements  of  a  completed  contract 
may  be  omitted  altogether.  For  instance,  in  this  State,  the  considera- 
tion for  the  promise  is  not  required  to  be  expressed  in  writing. 
Gillighan  v.  Boardman,  29  Me.  79.  Again,  it  is  provided  that  the 
note  or  memorandum  is  sufficient,  if  signed  only  by  the  person  sought 
to  be  charged.  One  party  may  be  held  thereby  and  the  other  not  be. 
.There  may  be  a  mutuality  of  contract  but  not  of  evidence  or  of 
remedy.  Still,  if  the  writing  is  to  be  regarded  in  all  cases  as  con- 
stituting the  contract,  in  many  cases  there  would  be  but  one  con- 
tracting party. 

Another  idea  gives  weight  to  the  argument  for  the  position  advo- 
cated by  the  plaintiffs.;  and  that  is,  that  such  a  construction  of  the 
statute  upholds  contracts  according  to  the  intention  of  parties  thereto, 
while  it,  at  the  same  time,  fully  subserves  all  the  purposes  for  which 
the  statute  was  created.  It  must  be  borne  in  mind  that  verbal  bar- 
gains for  the  sale  of  personal  property  are  good  at  common  law.  Xor 
are  they  made  illegal  by  the  statute.  Parties  can  execute  them  if 
they  mutually  please  to  do  so.  The  object  of  the  statute  is  to  prevent 


110  FORMATION   OF   CONTRACT. 

perjury  and  fraud.  Of  course,  perjury  and  fraud  cannot  be  wholly 
prevented;  but,  as  said  by  Bigelow,  J.  (Marsh  v.  Hyde,  3  Gray,  331), 
"a  memorandum  in  writing  will  be  as  effectual  against  perjury,  al- 
though signed  subsequently  to  the  making  of  a  verbal  contract,  as  if 
it  had  been  executed  at  the  moment  when  the  parties  consummated 
their  agreement  by  word  of  mouth."  We  think  it  would  be  more 
so.  A  person  would  be  likely  to  commit  himself  in  writing  with 
more  care  and  caution  after  time  to  take  a  second  thought.  The 
locus  penitentice  remains  to  him. 

By  no  means  are  we  to  be  understood  as  saying  that  all  written 
instruments  will  satisfy  the  statute,  by  having  the  effect  to  make 
the  contracts  described  in  them  valid  from  their  first  verbal  incep- 
tion. That  must  depend  upon  circumstances.  In  many,  and  per- 
haps most,  instances  such  a  version  of  the  transaction  would  not  agree 
with  the  actual  understanding  of  the  parties.  In  many  cases,  un- 
doubtedly, the  written  instrument  is  per  se  the  contract  of  the  parties. 
In  many  cases,  as,  for  instance,  like  the  antedating  of  the  deed  in 
Egery  v.  Woodard  (56  Maine,  45),  cited  by  the  defendant,  the  contract 
(by  deed)  could  not  take  effect  before  delivery;  the  law  forbids  it. 
So  a  will  made  by  parol  is  absolutely  void.  But  all  these  classes  of 
cases  differ  from  the  case  before  us. 

A  distinction  is  attempted  to  be  set  up  between  the  meaning  to  be 
given  to  E.  S.  c.  Ill,  §  4,  where  it  is  provided  that  no  unwritten  con- 
tract for  the  sale  of  goods  "shall  be  valid,"  and  that  to  be  given  to 
the  several  preceding  sections  where  it  provided  that  upon  certain 
other  kinds  of  unwritten  contracts  "no  action  shall  be  maintained"; 
the  position  taken  being  that  in  the  former  case  the  contract  is  void, 
and  in  the  other  cases  only  voidable  perhaps,  or  not  enforceable  by  suit 
at  law.  But  the  distinction  is  without  any  essential  difference,  and 
is  now  so  regarded  by  authors  generally  and  in  most  of  the  decided 
cases.  All  the  sections  referred  to  rest  upon  precisely  the  same  policy. 
Exactly  the  same  object  is  aimed  at  in  all.  The  difference  of  phrase- 
ology in  the  different  sections  of  the  original  English  statute,  of 
which  ours  is  a  substantial  copy,  may  perhaps  be  accounted  for  by 
the  fact,  as  is  generally  conceded,  that  the  authorship  of  the  statute 
was  the  work  of  different  hands.  Although  our  statute  (R.  S.  1871, 
§  4)  uses  the  words  "no  contracts  shall  be  valid,"  our  previous  statutes 
used  the  phrase  "shall  be  allowed  to  be  good";  and  the  change  was 
made  when  the  statutes  were  revised  in  1857,  without  any  legislative 
intent  to  make  any  alteration  in  the  sense  of  the  section.  E.  S. 
1841,  c.  136,  §  4.  The  two  sets  of  phrases  were  undoubtedly  deemed 
to  be  equivalent  expressions.  The  words  of  the  original  English  sec- 
tion are,  "shall  not  be  allowed  to  be  good,"  meaning,  it  is  said,  not 
good  for  the  purpose  of  sustaining  an  action  thereon  without  written 
proof.  Browne,  St.  Frauds  §§  115,  136,  and  notes  to  the  sections; 


FORM:  STATUTE  OF  FRAUDS.  Ill 

Benjamin's  Sales,  §  114;  Townsend  v.  Hargraves,  118  Mass.  325,  and 
cases  there  cited. 

There  are  few  decisions  that  bear  directly  upon  the  precise  point 
which  this  case  presents  to  us.  From  the  nature  of  things,  a  state  of 
facts  involving  the  question  would  seldom  exist.  But  we  regard  the 
case  of  Townsend  v.  Hargraves,  above  cited,  as  representing  the  prin- 
ciple very  pointedly.  It  was  there  held  that  the  statute  of  frauds 
affects  the  remedy  only  and  not  the  validity  of  the  contract;  and  that 
where  there  has  been  a  completed  oral  contract  of  sale  of  goods,  the 
acceptance  and  receipt  of  part  of  the  goods  by  the  purchaser  takes 
the  case  out  of  the  statute,  although  such  acceptance  and  receipt  are 
after  the  rest  of  the  goods  are  destroyed  by  fire  while  in  the  hands  of 
the  seller  or  his  agent.  The  date  of  the  agreement  rather  than  the 
date  of  the  part  acceptance  was  treated  as  the  time  when  the  contract 
was  made;  and  the  risk  of  the  loss  of  the  goods  was  cast  upon  the 
buyer.  Vincent  v.  Germond  (11  Johns.  283)  is  to  the  same  effect. 
We  are  not  aware  of  any  case  where  the  question  has  been  directly 
adjudicated  adversely  to  these  cases.  Webster  v.  Zielly  (52  Barb. 
[N.  Y.]  482),  in  the  argument  of  the  court,  directly  admits  the  same 
principle.  The  case  of  Leather  Cloth  Co.  v.  Hieronimus  (L.  R.  10 
Q.  B.  140)  seems  also  to  be  an  authority  directly  in  point.  Thompson 
v.  Alger  (12  Met.  428,  435)  and  Marsh  v.  Hyde  (3  Gray,  331),  relied 
on  by  defendant,  do  not,  in  their  results,  oppose  the  idea  of  the  above 
cases,  although  there  may  be  some  expressions  in  them  inconsistent 
therewith.  Altogether  another  question  was  before  the  court  in 
the  latter  cases. 

But  there  are  a  great  many  cases  where,  in  construing  the  statute 
of  frauds,  the  force  and  effect  of  the  decisions  go  to  sustain  the  view 
we  take  of  this  question,  by  the  very  strongest  implication;  such 
as,  that  the  statute  does  not  apply  where  the  contract  has  been  exe- 
cuted on  both  sides,  Bucknam  v.  Nash,  12  Maine,  474;  that  no  per- 
son can  take  advantage  of  the  statute  but  the  parties  to  the  contract, 
and  their  privies,  Cowan  v.  Adams,-  10  Maine,  374;  that  the  memo- 
randum may  be  made  by  a  broker,  Hinckley  v.  Arey,  27  Maine,  362 ;  or 
by  an  auctioneer,  Cleaves  v.  Foss,  4  Maine,  1 ;  that  a  sale  of  personal 
property  is  valid  when  there  has  been  a  delivery  and  acceptance  of 
part,  although  the  part  be  accepted  several  hours  after  the  sale, 
Davis  v.  Moore,  13  Maine,  424;  or  several  days  after,  Bush  v.  Holmes, 
53  Maine,  417;  or  ever  so  long  after,  Browne,  St.  Frauds,  §  337,  and 
cases  there  noted ;  that  a  creditor,  receiving  payments  from  his  debtor 
without  any  direction  as  to  their  application,  may  apply  them  to  a 
debt  on  which  the  statute  of  frauds  does  not  allow  an  action  to  be 
maintained,  Haynes  v.  Nice,  100  Mass.  327;  that  a  contract  made  in 
France,  and  valid  there  without  a  writing,  could  not  be  enforced  in 
England  without  one,  upon  the  ground  that  the  statute  related  to 


112  FORMATION   OF   CONTRACT. 

the  mode  of  procedure  and  not  to  the  validity  of  the  contract,  Leroux 
v.  Brown,  12  C.  B.  801;  but  this  case  has  been  questioned  somewhat; 
that  a  witness  may  be  guilty  of  perjury  who  falsely  swears  to  a  fact 
which  may  not  be  competent  evidence  by  the  statute  of  frauds,  but 
which  becomes  material  because  not  objected  to  by  the  party  against 
whom  it  was  offered  and  received,  Howard  v.  Sexton,  4  Comstock, 
157;  that  an  agent  who  signs  a  memorandum  need  not  have  his 
authority  at  the  time  the  contract  is  entered  into,  if  his  act  is  orally 
ratified  afterwards,  Maclean  v.  Dunn,  4  Bing.  722;  that  the  identical 
agreement  need  not  be  signed,  and  that  it  is  sufficient  if  it  is  acknowl- 
edged by  any  other  instrument  duly  signed,  Gale  v.  Nixon,  6  Cow. 
445 ;  that  the  recognition  of  the  contract  may  be  contained  in  a  letter, 
or  in  several  letters,  if  so  connected  by  "written  links"  as  to  form 
sufficient  evidence  of  the  contract;  that  the  letters  may  be  addressed 
to  a  third  person,  Browne,  St.  Frauds,  §  346 ;  Fyson  v.  Kitton,  30 
E.  L.  &  Eq.  374 ;  Gibson  v.  Holland,  L.  K.  1  C.  P.  1 ;  that  an  agent 
may  write  his  own  name  instead  of  that  of  his  principal  if  intending 
to  bind  his  principal  by  it,  Williams  v.  Bacon,  2  Gray,  387,  393,  and 
citations  there;  that  a  proposal  in  writing,  if  accepted  by  the  other 
party  by  parol,  is  a  sufficient  memorandum,  Eeuss  v.  Picksley,  L.  E. 
1  Exc.  342 ;  that  where  one  party  is  bound  by  a  note  or  memorandum 
the  other  party  may  be  bound  if  he  admits  the  writing  by  another 
writing  by  him  subsequently  signed,  Dobell  v.  Hutchinson,  3  A.  &  E. 
355 ;  that  .the  written  contract  may  be  rescinded  by  parol,  although 
many  decisions  are  opposed  to  this  proposition,  Eichardson  v.  Cooper, 
25  Maine,  450;  that  equity  will  interfere  to  prevent  a  party  making 
the  statute  an  instrument  of  fraud,  Eyan  v.  Dox,  34  N".  Y.  307; 
Hassam  v.  Barrett,  115  Mass.  256,  258;  that  a  contract  verbally 
made  may  be  maintained  for  certain  purposes,  notwithstanding  the 
statute;  that  a  person  who  pays  his  money  under  it  cannot  recover 
it  back  if  the  other  side  is  willing  to  perform;  and  he  can  recover  if 
performance  is  refused,  Chapman  v.  Eich,  63  Maine,  588,  and  cases 
cited;  that  a  respondent  in  equity  waives  the  statute  as  a  defense 
unless  set  up  in  plea  or  answer,  Adams  v.  Patrick,  30  Vt.  516 ;  that 
it  must  be  specially  pleaded  in  an  action  at  law,  Middlesex  Co.  v. 
Osgood,  4  Gray,  447;  Lawrence  v.  Chase,  54  Maine,  196;  that  the 
defendant  may  waive  the  protection  of  the  statute  and  admit  verbal 
evidence  and  become  bound  by  it,  Browne,  St.  Frauds,  §  135. 

It  may  be  remarked,  however,  that  in  most  courts  a  defendant  may 
avail  himself  of  a  defense  of  the  statute  under  the  general  issue.  The 
different  rule  in  Massachusetts  and  Maine  grew  out  of  the  practice  act 
in  the  one  State  and  in  the  statute  requiring  the  filing  of  specifica- 
tions in  the  other. 

It  is  clear  from  the  foregoing  cases,  as  well  as  from  many  more 
that  might  be  cited,  that  the  statute  does  not  forbid  parol  con- 


FORM  I  STATUTE  OF  FRAUDS.  113 

tracts,  but  only  precludes  the  bringing  of  actions  to  enforce  them. 
As  said  in  Thornton  v.  Kempster  (5  Taunt.  786,  788),  "the  statute 
of  frauds  throws  a  difficulty  in  the  way  of  the  evidence."  In  a  case 
already  cited,  Jervis,  C.  J.,  said:  "The  effect  of  the  section  is  not 
to  avoid  the  contract,  but  to  bar  the  remedy  upon  it,  unless  there  be 
writing."  See  analogous  case  of  McClellan  v.  McClellan,  65  Maine, 
500. 

But  the  defendant  contends  that  this  course  of  reasoning  would 
make  a  memorandum  sufficient  if  made  after  action  brought,  and  that 
the  authorities  do  not  agree  to  that  proposition.  There  has  been 
some  judicial  inclination  to  favor  the  doctrine  to  that  extent  even, 
and  there  may  be  some  logic  in  it.  Still  the  current  of  decision  re- 
quires that  the  writing  must  exist  before  action  brought.  And  the 
reason  for  the  requirement  does  not  militate  against  the  idea  that  a 
memorandum  is  only  evidence  of  the  contract.  There  is  no  action- 
able contract  before  memorandum  obtained.  The  contract  cannot  be 
sued  until  it  has  been  legally  verified  by  writing;  until  then  there  is 
no  cause  of  action,  although  there  is  a  contract.  The  writing  is  a 
condition  precedent  to  the  right  to  sue.  Willes,  J.,  perhaps  correctly 
describes  it  in  Gibson  v.  Holland,  supra,  when  he  says,  "the  memoran- 
dum is  in  some  way  to  stand  in  the  place  of  a  contract."  He  adds: 
"The  courts  have  considered  the  intention  of  the  legislature  to  be  of 
a  mixed  character;  to  prevent  persons  from  having  actions  brought 
against  them  so  long  as  no  written  evidence  was  existing  when  the 
action  was  instituted."  Browne,  St.  Frauds,  §  338 ;  Benjamin's  Sales, 
§  159 ;  Fricker  v.  Thomlinson,  1  Man.  &  Gr.  772 ;  Bradford  v.  Spyker, 
32  Ala.  134 ;  Bill  v.  Bament,  9  M.  &  \V.  36 ;  Philbrook  v.  Belknap,  6 
Vt.  383.  In  the  last  case  it  is  said,  "strictly  speaking,  the  statute 
does  not  make  the  contract  void,  except  for  the  purpose  of  sustaining 
an  action  upon  it,  to  enforce  it." 

Action  to  stand  for  trial. 

APPLETON,  C.  J.,  WALTON,  DANFORTH,  VIRGIN,  and  LIBBEY,  JJ., 
concurred.1 

20  Cyc.  257  (92)  ;  284  (48)  ;  W.  P.  782  (18). 

i  Is  the  contract  void? — In  Kleeman  and  Co.  v.  Collins,  9  Bush  (Ky.),  460, 
an  action  was  brought  upon  a  contract  made  in  Illinois,  to  be  performed  in 
Louisiana,  and  it  was  alleged  that  it  was  by  its  terms  not  to  be  performed 
within  a  year,  and  the  statute  of  frauds  was  set  up  as  a  defense.  The  court 
said:  "It  is  insisted  by  appellee's  counsel  that  the  statute  of  frauds  of  this 
state  cannot  affect  the  contract  or  a  recovery  upon  it,  as  it  was  made  in  Il- 
linois to  be  performed  in  Louisiana,  and  in  the  latter  state  no  such  statute 
exists.  .  .  .  The  principle  that  the  legal  character  and  validity  of  a  contract 
is  to  be  determined  by  the  lex  loci  contractus,  or  by  the  laws  of  the  place 
where  it  is  to  be  performed,  is  so  well  understood  as  not  to  require  the  citation 
of  any  authority  in  support  of  it,  and  it  is  equally  as  well  settled  that  the  mode 
of  proceeding  and  character  of  actions  to  be  instituted  are  governed  by  the 


114  FORMATION    OF    CONTRACT. 

O'DONNELL  v.  LEEMAN. 

43  MAINE,  158.— 1857. 

MAY,  J.  The  declaration  in  this  case  alleges  a  contract  in  writing,, 
of  a  sale  from  the  defendant  to  the  plaintiff,  of  a  dwelling-house  at 
auction,  upon  certain  specified  terms  and  conditions.  According  to 
the  contract  alleged,  the  price  to  be  paid  was  twelve  hundred  dollars; 
one-third  cash  down,  and  the  residue  in  equal  payments,  in  one  and 
two  years.  The  memorandum  of  sale,  as  contained  in  the  auctioneer's 
book,  is  as  follows: 

"Oct.  9,  1855.  This  day  sold  W.  H.  Leeman  house  and  land  on  Bartlett 
street,  in  Lewiston;  was  struck  down  to  Patrick  O'Donnell  for  $1200,  one- 
third  cash  down. 

"HAM  BBOOKS,  Auctioneer." 

That  the  auctioneer  in  cases  of  such  sales,  whether  of  real  or 
personal  estate,  is  the  agent  of  both  parties,  and  that  a  memoran- 
dum signed  by  him  at  the  time  of  the  sale,  stating  the  particulars 
of  the  contract,  and  the  parties  thereto,  is  a  sufficient  signing  within 
the  statute  of  frauds,  is  well  settled.  Emmerson  v.  Heelis,  2  Taunt. 

laws  of  the  place  where  the  remedy  is  sought.  Story  on  Conflict  of  Laws,  sec. 
556,  p.  935.  If  therefore  the  statute  of  frauds  in  this  state  affects  the  validity 
of  contracts  made  in  parol  when  not  to  be  performed  within  a  year  the  de- 
fense relied  on  should  be  disregarded;  and  on  the  other  hand,  if  the  statute 
is  to  be  applied  to  the  remedy  only,  no  recovery  can  be  had  upon  such  a  con- 
tract. In  the  case  of  Leroux  v.  Brown  (reported  in  14  English  Law  and 
Equity  Reports)  [12  C.  B.  801]  the  action  was  instituted  in  one  of  the  Eng- 
lish courts  upon  a  contract  made  in  France.  The  defence  was  the  fourth 
section  of  the  statute  of  frauds,  and  the  plaintiff  insisted  that  as  the  contract 
was  made  in  France  the  English  statute  had  no  application  to  the  case.  It 
was  adjudged  in  that  case  that  no  action  could  be  maintained  upon  such  a 
contract  (it  being  in  parol,  and  not  to  be  performed  within  a  year)  in  Eng- 
land, because  the  fourth  section  of  the  statute  related  to  the  mode  of  procedure, 
and  not  to  the  validity  of  the  contract.  This  section  of  the  English  statute 
is  identical  with  the  statute  of  this  state  upon  the  same  subject."  See  also 
19  L.  R.  A.  119;  64  L.  R.  A.  792. 

That  the  statute  affects  only  executory  contracts,  see  Finch,  J.,  in  Brown 
v.  Farmers'  Loan  &  Trust  Co.,  117  N.  Y.  266,  273  (1889)  :  "It  is  insisted, 
however,  that  the  sale  cannot  stand  because  the  contract  was  void  under  the 
statute  of  frauds.  But  that  statute  affects  only  executory  and  not  executed 
contracts  (Dodge  v.  Crandall,  30  N.  Y.  304).  It  is  the  rule  of  evidence 
where  the  one  party  or  the  other  is  seeking  performance  or  damages  for  non- 
performance.  It  has  no  office  to  perform  when  the  contract  has  been  executed 
on  both  sides,  has  been  fully  carried  out  by  the  parties,  and  requires  no  aid 
from  the  law." 

In  some  states  the  contract  is  not  merely  unenforceable,  but  is  void.  Nelson 
v.  Shelby  Co.,  96  Ala.  515;  Scott  v.  Bush/26  Mich.  418,  29  Mich.  523;  Koch  v. 
Williams,  82  Wis.  186. 


FORM:  STATUTE  OF  FRAUDS.  115 

46;  McComb  v.  Wright,  4  John.  Ch.  R.  666;  Chitty  on  Contracts,  305; 
Cleaves  v.  Foss,  4  Maine,  R.  1 ;  Alna  v.  Plummer,  4  Id.  258. 

It  is  equally  well  settled  that  unless  there  be  a  memorandum  show- 
ing, within  itself,  or  by  reference  to  some  other  paper,  all  the  mate- 
rial conditions  of  the  contract,  no  action  can  be  maintained  upon  such 
contract,  either  at  law  or  in  equity.  Sales  at  auction  are  now  held 
to  fall  within  the  statute;  as  much  so  as  other  sales.  Pike  v.  Balch 
et  al.,  38  Maine  R.  302 ;  Merritt  v.  Clason,  12  Johns.  R.  102 ;  Bailey 
et  al.  v.  Ogden,  3  Johns.  R.  399;  Morton  v.  Dean,  13  Met.  R.  385. 
And  it  cannot  well  be  doubted  that  evasions  of  this  statute,  made  as 
it  was  for  the  suppression  of  perjury,  ought  not  to  be  encouraged. 

The  memorandum  in  this  case  contains  no  reference  to  the  condi- 
tion of  the  payment,  except  in  the  words,  "one-third  cash  down." 
It  does  not  appear  from  it  when  the  residue  was  intended  to  be  paid. 
It  was  attempted  at  the  trial  to  show  the  terms  of  the  payment  to  be 
as  alleged  in  the  writ,  by  the  introduction  of  certain  handbills  and 
newspaper  notices,  signed  by  the  defendant,  and  published  by  him 
just  before  the  sale,  and  which,  it  is  said  in  argument,  were  exhibited 
at  the  time  of  the  sale,  and  in  which  the  terms  of  the  sale,  it  is  said, 
were  fully  stated.  The  evidence  offered  by  the  plaintiff  to  connect 
the  handbills  and  notices  with  the  memorandum,  and  to  explain  it, 
was  excluded  by  the  presiding  judge. 

That  such  extrinsic  evidence  was  inadmissible  the  following  authori- 
ties clearly  show:  2  Parson  on  Contracts,  p.  298;  Hinde  v.  White- 
house,  7  East,  558;  The  First  Baptist  Church  in  Ithaca  v.  Bigelow, 
16  Wend.  28;  The  Inhab.  of  the  First  Parish  in  Freeport  v.  Bartol, 
3  Maine  R.  340. 

It  is  said,  however,  that  if  such  evidence  is  not  admissible,  then 
the  contract,  upon  its  face,  as  stated  in  the  memorandum,  stipulates 
for  the  payment  of  one-third  cash  down,  and  the  residue  in  a  reason- 
able time ;  and  that,  if  so,  the  notes  tendered  in  this  case,  having  been 
made  payable  in  one  and  two  years,  should  be  deemed  a  compliance 
with  the  terms  of  the  contract  in  this  respect.  Considering  the  na- 
ture and  value  of  the  estate  to  be  conveyed,  and  that  long  credit  is 
often  if  not  usually  given  in  such  sales,  perhaps  a  somewhat  extended 
time  of  payment  might  be  regarded  as  reasonable;  but  we  know  of 
no  rule  by  which  money  that  is  made  payble  in  a  reasonable  time,  can, 
at  the  election  of  the  party  paying,  be  divided  so  as  to  make  it  pay- 
able at  different  times,  and  in  different  years.  A  reasonable  time  is 
indivisible ;  and  the  party  to  whom  the  money  is  payable,  under  such 
a  contract,  cannot  be  required  to  take  it  in  separate  payments,  and 
at  separate  times. 

The  auctioneer's  memorandum  in  this  case  failing  to  show  any 
such  contract  as  is  alleged,  so  far  as  relates  to  the  terms  of  pay- 


116  FORMATION   OF   CONTRACT. 

ment,  it  becomes  unnecessary  to  decide  upon  its  sufficiency  in  other 
respects,  or  upon  the  admissibility  of  the  other  evidence  offered. 
According  to  the  agreement  of  the  parties,  the  nonsuit  must  stand. 

29  Cyc.  278   (8-9)  ;  12  C.  L.  R.  566. 


FIELD  v.  KIESER. 

77  N.  Y.  MISCELLANEOUS  REPORTS,  105.— 1912. 
(Supreme  Court,  Appellate  Term.) 

LEHMAN,  J.  Plaintiff  sues  upon  a  contract  made  on  or  about  the 
7th  day  of  May,  1907.  On  that  day  the  plaintiff  wrote  and  mailed 
to  the  defendants  the  following  letter: 

"May  7,  1909. 

"F.  Kieser  &  Son — Dear  Sirs:  I  beg  to  confirm  my  sale  to  you  to-day: 
10  m.  Bus.  Standard  wht.  oats,  at  58£  cents  per  bushel.  C.  I.  F.  Haverstraw, 
Erie.  Shipment,  July.  To  be  billed.  Western  official  certificates  of  weight 
and  grade  final.  Draft  payable  at  sight  with  proper  documents  attached. 
Excluding  date  of  sale,  time  of  shipment  dates  from  receipt  of  full  shipping 
instructions  and  excludes  Sundays  and  legal  holidays.  Terms  in  this  con- 
tract final.  If  not  correct,  advise  me  at  once.  In  writing  or  wiring,  please 
refer  to  ALBEBT  C.  FIELD,  Inc., 

"By  A.  C.  Field,  Pres." 

It  was  shown  at  the  trial  that  it  is  the  usage  in  the  grain  trade  to 
send  a  letter  of  similar  form — 

"on  the  evening  of  the  day  when  you  had  a  transaction  about  the  grain  to  the 
person  you  had  a  contract  with.  It  is  also  the  custom  and  usage  of  the 
trade  that,  if  no  advice  is  received  from  the  party  you  have  sent  it  to,  the 
contract  mailed  is  adopted  as  the  written  contract  between  the  parties." 

No  answer  was  received  to  this  letter,  and  the  plaintiff  shipped  the 
grain  at  the  end  of  July.  On  August  2d  the  defendants  telegraphed 
to  plaintiff: 

"No  delivery  made  on  July  oats  contract  ten  thousand  bushels  considered 
same  canceled." 

The  plaintiff  claims  that  this  telegram  incorporates  the  terms 
of  the  letter  written  by  them,  and  is  a  sufficient  memorandum  to  take 
the  case  out  of  the  statute  of  frauds.  The  telegram,  while  stating 
that  defendants  considered  the  contract  on  July  oats  canceled  by 
failure  to  deliver,  admits,  by  fair  construction,  that  a  contract  for 
10,000  bushels  of  July  oats  was  made.  The  letter  of  May  7,  1909, 
written  by  the  plaintiff,  concededly  contains  all  the  terms  of  a  com- 
plete contract,  and  would  be  sufficient  to  take  the  case  out  of  the  stat- 
ute of  frauds  as  against  the  plaintiff.  If,  therefore,  the  letter  can  be 
incorporated  in  and  read  with  the  telegram,  the  defendants  have 


FORM:  STATUTE  OF  FRAUDS.  117. 

signed  a  memorandum  setting  forth  the  complete  terms  of  the  agree- 
ment, even  though,  at  the  same  time,  they  state  that  they  regarded 
it  as  canceled.  In  the  case  of  Brauer  v.  Oceanic  Steam  Nav.  Co.,  3  78 
N.  Y.  339,  344,  70  N.  E.  863,  865,  it  was  said : 

"A  note  or  memorandum  sufficient  to  take  a  contract  out  of  the  operation 
of  the  statute  of  frauds  must  state  the  whole  contract  with  reasonable  cer- 
tainty, so  that  the  substance  thereof  may  be  made  to  appear  from  the  record 
itself  without  regard  to  parol  evidence." 

This  rule,  however,  does  not  mean  that  extrinsic  evidence  may 
not  be  given  for  the  purpose  of  identifying  an  object  named  in  the 
memorandum  (Waring  v.  Ayres,  40  N.  Y.  357),  and  it  is  well  estab- 
lished that,  where  one  memorandum  is  imputed  by  reference  or  an- 
nexation into  another  one,  evidence  of  the  identity  of  the  memorandum 
referred  to  may  be  supplied  by  parol  (Abbott's  Trial  Evidence  [2d 
Ed.]  pp.  358,  359).  This  parol  evidence  must,  of  course,  be  sufficient 
to  identify  this  memorandum  clearly,  leaving  no  room  for  a  fair  dis- 
pute as  to  the  contract  referred  to.  In  this  case  I  think  the  evidence 
is  amply  sufficient  for  the  purpose.  The  uncontradicted  proof  shows 
that  on  August  2d  the  plaintiff  had  no  other  transaction  with  the 
defendants  than  the  sale  of  10,000  bushels  of  July  oats,  as  set  forth 
in  the  complaint ;  that  a  letter  setting  forth  the  terms  of  the  sale  in 
writing  was  mailed  to  the  defendants,  and  presumably  received  by 
them;  that  this  letter  was  never  answered;  that  it  was  denominated 
a  "contract" ;  and  that,  by  custom  and  usage  of  trade,  if  unanswered, 
such  a  letter  is  adopted  as  the  contract  of  the  parties.  It  seems  to 
me  that,  so  long  as  this  evidence  is  uncontradicted,  it  established  that 
the  "contract"  referred  to  was  the  letter  of  May  7th,  and  incorpo- 
rated that  letter  by  reference  into  the  telegram.  See  Beckwith  v. 
Talbot,  95  U.  S.  289,  24  L.  Ed.  496;  Cave  v.  Hastings,  7  Q.  B.  D. 
125. 

Judgment  should  be  reversed,  and  a  new  trial  ordered,  with  costs. 
to  appellant  to  abide  the  event.  All  concur.1 

i  In  Doherty  v.  Hill,  144  Mass.  165,  the  court  said:  "The  memorandum 
would  have  satisfied  the  Statute  of  Frauds,  if  the  evidence  had  shown  that 
there  was  only  one  'estate  on  Congress  Street  owned  by  Sarah  A.  Hill,'  in 
Stoneham,  where  the  memorandum  is  dated.  Hurley  v.  Brown,  98  Mass.  545; 
Scanlan  v.  Geddes,  112  Mass.  15;  Mead  v.  Parker,  115  Mass.  413.  But  the 
evidence  shows  that  there  was  more  than  one.  ...  If,  on  the  existing  facts, 
they  apply  only  to  one,  then  the  document  identifies  the  land ;  if  not,  it  fails  to 
do  so.  In  every  case,  the  words  used  must  be  translated  into  things  and  facts 
by  parol  evidence.  But  if,  when  so  translated,  they  do  not  'identify  the  estate 
intended,  as  the  only  one  which  would  satisfy  the  description,'  they  do  not 
satisfy  the  statute.  See  Slater  v.  Smith,  117  Mass.  96,  98;  Potter  v.  Duffield, 
L.  R.  18  Eq.  4,  7."  In  Holmes  v.  Evans,  48  Miss.  247,  the  clause  was,  "a 
piece  of  property  on  the  corner  of  Main  and  Pearl  Streets,  city  of  Natchez, 
county  of  Adams,  State  of  Mississippi."  The  clause  was  held  insufficient  be- 


118  FORMATION   OF   CONTRACT. 

CLASON  v.  BAILEY. 

14  JOHNSON   (N.  Y.),  484.— 1817. 

These  causes  came  before  this  court  on  writs  of  error  to  the  Su- 
preme Court.  The  facts  in  all  were,  substantially,  the  same.  See 
Merritt  &  Merritt  v.  Clason,  12  Johns.  Eep.  102. 

THE  CHANCELLOR.  The  case  struck  me  upon  the  argument  aa 
being  very  plain.  But  as  it  may  have  appeared  to  other  members 
of  the  court  in  a  different,  or,  at  least,  in  a  more  serious  light,  I  will 
very  briefly  state  the  reasons  why  I  am  of  opinion  that  the  judgment 
of  the  Supreme  Court  ought  to  be  affirmed. 

The  contract  on  which  the  controversy  arises  was  made  in  the  fol- 
lowing manner: 

Isaac  Clason  employed  John  Townsend  to  purchase  a  quantity  of 
rye  for  him.  He,  in  pursuance  of  this  authority,  purchased  of  Bailey 
&  Voorhees  3000  bushels,  at  one  dollar  per  bushel,  and  at  the  time 
of  closing  the  bargain,  he  wrote  a  memorandum  in  his  memorandum 
book  in  the  presence  of  Bailey  &  Voorhees,  in  these  words :  "February 
29th,  bought  for  Isaac  Clason,  of  Bailey  &  Voorhees,  3000  bushels  of 
good  merchantable  rye,  deliverable  from  the  5th  to  the  15th  of  April 
next,  at  one  dollar  per  bushel,  and  payable  on  delivery." 

The  terms  of  the  sale  and  purchase  had  been  previously  communi- 
cated to  Clason,  and  approved  of  by  him,  and  yet  at  the  time  of  de- 
livery he  refused  to  accept  and  pay  for  the  rye. 

The  objection  to  the  contract,  on  the  part  of  Clason,  is  that  it 
was  not  a  valid  contract  within  the  statute  of  frauds. 

1.  Because  the  contract  was  not  signed  by  Bailey  &  Voorhees. 

2.  Because  it  was  written  with  a  lead  pencil,  instead  of  pen  and  ink. 
I  will  examine  each  of  these  objections. 

1.  It  is  admitted  that  Clason  signed  this  contract,  by  the  insertion 
of  his  name  by  his  authorized  agent,  in  the  body  of  the  memorandum. 
The  counsel  for  the  plaintiff  in  error  do  not  contend  against  the 
position  that  this  was  a  sufficient  subscription  on  his  part.  It  is  a 

cause  there  was  no  reference  in  the  memorandum  itself  to  anything  extrinsic 
that  would  define  which  corner  was  intended.  In  Mellon  v.  Davidson,  123 
Pa.  298,  the  clause  was,  "a  lot  of  ground  fronting  about  190  feet  on  the  P.  R.  R. 
in  the  21st  ward  Pittsburgh,  Pa."  This  clause  was  held  insufficient,  though 
the  seller  owned  but  one  piece  of  land  in  the  ward  named.  But  in  Pelletreau 
v.  Brennan  and  May,  113  N.  Y.  Appellate  Div.  806,  where  the  clause  was: 
"May  agree  to  sell  and  Pelletreau  agree  to  buy  Clinton  and  Joralemon  Street." 
The  court  held:  "The  description,  'Clinton  and  Joralemon  Street,'  suffices,  for 
it  enables  the  land  to  be  identified  and  fully  described  by  evidence  dehora 
(Waring  v.  Ayres,  40  N.  Y.  357;  Miller  v.  Tuck,  95  App.  Div.  134;  Levin  v. 
Dietz,  106  id.  208)  ;  and  such  evidence  was  given.  As  the  parties  were  deal- 
ing in  the  city  of  New  York,  the  legal  inference  is  that  the  contract  refers  to 
land  there." 


FORM:  STATUTE  OF  FBADDS.  119 

point  settled,  that  if  the  name  of  a  party  appears  in  the  memoran- 
dum, and  is  applicable  to  the  whole  substance  of  the  writing,  and  is 
put  there  by  him  or  by  his  authority,  it  is  immaterial  in  what  part 
of  the  instrument  the  name  appears,  whether  at  the  top,  in  the  mid- 
dle, or  at  the  bottom.  Saunderson  v.  Jackson,  2  B.  &  Puller,  238 ; 
Welford  v.  Beazely,  3  Atk.  503;  Stokes  v.  Moore,  cited  by  Mr.  Coxe 
in  a  note  to  1  P.  Wms.  771.  Forms  are  not  regarded,  andHhe  statute 
is  satisfied  if  the  terms  of  the  contract  are  in  writing,  and  the  names 
of  the  contracting  parties  appear.  Clason's  name  was  inserted  in 
the  contract  by  his  authorized  agent,  and  if  it  were  admitted  that 
the  name  of  the  other  party  was  not  there  by  their  direction,  yet  the 
better  opinion  is,  that  Clason,  the  party  who  is  sought  to  be  charged, 
is  estopped,  by  his  name,  from  saying  that  the  contract  was  not  duly 
signed  within  the  purview  of  the  statute  of  frauds;  and  that  it  is 
sufficient,  if  the  agreement  be  signed  by  the  party  to  be  charged. 

It  appears  to  me,  that  this  is  the  result  of  the  weight  of  authority 
both  in  the  courts  of  law  and  equity. 

In  Ballard  v.  Walker  (3  Johns.  Cases,  60),  decided  in  the  Supreme 
Court,  in  1802,  it  was  held,  that  a  contract  to  sell  land,  signed  by  the 
vendor  only,  and  accepted  by  the  other  party,  was  binding  on  the 
vendor,  who  was  the  party  there  sought  to  be  charged.  So  in  Eoget 
v.  Merrit  (2  Caines,  117)  an  agreement  concerning  goods  signed  by 
the  seller,  and  accepted  by  the  buyer,  was  considered  a  valid  agree- 
ment, and  binding  on  the  party  who  signed  it. 

These  were  decisions  here,  under  both  branches  of  the  statute,  and 
the  cases  in  the  English  courts  are  to  the  same  effect. 

In  Saunderson  v.  Jackson  (2  Bos.  &  Pull.  238)  the  suit  was  against 
the  seller,  for  not  delivering  goods  according  to  a  memorandum 
signed  by  him  only,  and  judgment  was  given  for  the  plaintiff,  not- 
withstanding the  objection  that  this  was  not  a  sufficient  note  within 
the  statute.  In  Champion  v.  Plummer  (4  Bos.  &  Pull.  252)  the  suit 
was  against  the  seller,  who  alone  had  signed  the  agreement.  No  ob- 
jection was  made  that  it  was  not  signed  by  both  parties,  but  the  memo- 
randum was  held  defective,  because  the  name  of  the  buyer  was  not 
mentioned  at  all,  and  consequently  there  was  no  certainty  in  the 
writing.  Again,  in  Egerton  v.  Mathews  (6  East,  307)  the  suit  was 
on  a  memorandum  for  the  purchase  of  goods,  signed  only  by  the 
defendant,  who  was  the  buyer,  and  it  was  held  a  good  agreement 
within  the  statute.  Lastly,  in  Allen  v.  Bennet  (3  Taunton,  169)  the 
seller  was  sued  for  the  non-delivery  of  goods,  in  pursuance  of  an 
agreement  signed  by  him  only,  and  judgment  was  rendered  for  the 
plaintiff.  In  that  case  Ch.  J.  Mansfield  made  the  observation,  that 
"the  cases  of  Egerton  v.  Mathews,  Saunderson  v.  Jackson,  and  Cham- 
pion v.  Plummer,  suppose  the  signature  of  the  seller  to  be  sufficient ; 
and  every  one  knows  it  is  the  daily  practice  of  the  Court  of  Chancery 


120  FORMATION    OF    CONTRACT. 

to  establish  contracts  signed  by  one  person  only,  and  yet  a  court  of 
equity  can  no  more  dispense  with  the  statute  of  frauds  than  a  court 
of  law  can."  So  Lawrence,  J.,  observed,  that  "the  statute  clearly 
supposes  the  probability  of  there  being  a  signature  by  one  person 
only." 

If  we  pass  from  the  decisions  at  the  law  to  the  courts  of  equity,  we 
meet  with  the  same  uniform  construction.  Indeed,  Lord  Eldon  has 
said  (18  Vesey,  183)  that  chancery  professes  to  follow  courts  of  law 
in  the  construction  of  the  statute  of  frauds. 

In  Hatton  v.  Gray  (2  Chan.  Cas.  164;  1  Eq.  Cas.  Abr.  21,  pi.  10) 
the  purchaser  of  the  land  signed  the  agreement,  and  not  the  other 
party,  and  yet  the  agreement  was  held  by  Lord  Keeper  North  to  be 
binding  on  him,  and  this  too  on  a  bill  for  a  specific  performance. 
So  in  Coleman  v.  Upcot  (5  Viner,  527,  pi.  17)  the  Lord  Keeper 
Wright  held,  that  an  agreement  concerning  lands  was  within  the 
statute,  if  signed  by  the  party  to  be  charged,  and  that  there  was 
no  need  of  its  being  signed  by  both  parties,  as  the  plaintiff,  by  his 
bill  for  a  specific  performance,  had  submitted  to  perform  what  was 
required  on  his  part  to  be  performed. 

Lord  Hardwicke  repeatedly  adopted  the  same  language.  In  Buck- 
house  v.  Crosby  (2  Eq.  Cas.  Abr.  32,  pi.  44)  he  said  he  had  often 
known  the  objection  taken,  that  a  mutual  contract  in  writing  signed 
by  both  parties  ought  to  appear,  but  that  the  objection  had  as  often 
been  overruled;  and  in  Welford  v.  Beazely  (3  Atk.  503)  he  said  there 
were  cases  where  writing  a  letter,  setting  forth  the  terms  of  an  agree- 
ment, was  held  a  signing  within  the  statute;  and  in  Owen  v.  Davies 
(1  Ves.  82)  an  agreement  to  sell  land,  signed  by  the  defendant  only, 
was  held  binding. 

The  modern  cases  are  equally  explicit.  In  Cotton  v.  Lee,  before 
the  lords  commissioners,  in  1770,  which  is  cited  in  2  Bro.  564,  it 
was  deemed  sufficient  that  the  party  to  be  charged  had  signed  the 
agreement.  So  in  Seton  v.  Slade  (7  Vesey,  275)  Lord  Eldon,  on 
a  bill  for  a  specific  performance  against  the  buyer  of  land,  said  that 
the  agreement  being  signed  by  the  defendant  only,  made  him  within 
the  statute,  a  party  to  be  charged.  The  case  of  Fowle  v.  Freeman 
(9  Vesey,  351)  was  an  express  decision  of  the  master  of  the  rolls,  on 
the  very  point  that  an  agreement  to  sell  lands,  signed  by  the  vendor 
only,  was  binding. 

There  is  nothing  to  disturb  this  strong  and  united  current  of  au- 
thority but  the  observations  of  Lord  Ch.  Redesdale,  in  Lawrenson  v. 
Butler  (1  Sch.  &  Lef.  13),  who  thought  that  the  contract  ought  to 
be  mutual  to  be  binding,  and  that  if  one  party  could  not  enforce  it, 
the  other  ought  not.  To  decree  performance,  when  one  party  only 
was  bound,  would  "make  the  statute  really  a  statute  of  frauds,  for 
it  would  enable  any  person  who  had  procured  another  to  sign  an 


FORM:  STATUTE  OF  FRAUDS.  121 

agreement,  to  make  it  depend  on  his  own  will  and  pleasure  whether 
it  should  be  an  agreement  or  not."  The  intrinsic  force  of  this 
argument,  the  boldness  with  which  it  was  applied,  and  the  com- 
manding weight  of  the  very  respectable  character  who  used  it,  caused 
the  courts  for  a  time  to  pause.  Lord  Eldon,  in  11  Vesey,  592,  out 
of  respect  to  this  opinion,  waived,  in  that  case,  the  discussion  of  the 
point;  but  the  courts  have,  on  further  consideration,  resumed  their 
former  track.  In  Western  v.  Russell  (3  Vesey  &  Beames,  192)  the 
tnaster  of  the  rolls  declared  he  was  hardly  at  liberty,  notwithstanding 
the  considerable  doubt  thrown  upon  the  point  by  Lord  Redesdale,  to 
refuse  a  special  performance  of  a  contract  to  sell  land,  upon  the 
ground  that  there  was  no  agreement  signed  by  the  party  seeking  a 
performance;  and  in  Ormond  v.  Anderson  (2  Ball  &  Beatty,  370) 
the  present  lord  chancellor  of  Ireland  (and  whose  authority,  if  we 
may  judge  from  the  ability  of  his  decisions,  is  not  far  short  of  that 
of  his  predecessor)  has  not  felt  himself  authorized  to  follow  the 
opinion  of  Lord  Redesdale.  "I  am  well  aware,"  he  observes,  "that 
a  doubt  has  been  entertained  by  a  judge  of  this  court,  of  very  high 
authority,  whether  courts  of  equity  would  specifically  execute  an 
agreement  where  one  party  only  was  bound;  but  there  exists  no  pro- 
vision in  the  statute  of  frauds  to  prevent  the  execution  of  such  an 
agreement."  He  then  cites  with  approbation  what  was  said  by  Sir 
J.  Mansfield  in  Allen  v.  Bennet. 

I  have  thought,  and  have  often  intimated,  that  the  weight  of  argu- 
ment was  in  favor  of  the  construction  that  the  agreement  concerning 
lands,  to  be  enforced  in  equity,  should  be  mutually  binding,  and  that 
the  one  party  ought  not  to  be  at  liberty  to  enforce  at  his  pleasure  an 
agreement  which  the  other  was  not  entitled  to  claim.  It  appears  to 
be  settled  (Hawkins  v.  Holmes,  1  P.  Wms.  770)  that  though  the 
plaintiff  has  signed  the  agreement,  he  never  can  enforce  it  against 
the  party  who  has  not  signed  it.  The  remedy,  therefore,  in  such 
case  is  not  mutual.  But,  notwithstanding  this  objection,  it  appears 
from  the  review  of  the  cases  that  the  point  is  too  well  settled  to  be 
now  questioned. 

There  is  a  slight  variation  in  the  statute  respecting  agreements 
concerning  the  sale  of  lands,  and  agreements  concerning  the  sale  of 
chattels,  inasmuch  as  the  one  section  (being  the  4th  section  of  the 
English,  and  the  llth  section  of  our  statute)  speaks  of  the  party,  and 
the  other  section  (being  the  17th  of  English,  and  the  15th  of  ours) 
speaks  of  the  parties  to  be  charged.  But  I  do  not  find  from  the  cases 
that  this  variation  has  produced  any  difference  in  the  decisions.  The 
construction,  as  to  the  point  under  consideration,  has  been  uniformly 
the  same  in  both  cases. 

Clason,  who  signed  the  agreement,  and  is  the  party  sought  to  be 
charged,  is,  then,  according  to  the  authorities,  bound  by  the  agree- 


122  FORMATION    OF    CONTRACT. 

ment,  and  he  cannot  set  up  the  statute  in  bar.  But  I  do  not  deem 
it  absolutely  necessary  to  place  the  cause  on  this  ground,  though,  as 
the  question  was  raised  and  discussed,  I  thought  it  would  be  useful 
to  advert  to  the  most  material  cases,  and  to  trace  the  doctrine  through 
the  course  of  authority.  In  my  opinion,  the  objection  itself  is  not 
well  founded  in  point  of  fact. 

The  names  of  Bailey  &  Voorhees  are  as  much  in  the  memorandum 
as  that  of  Clason.  The  words  are,  "Bought  for  Isaac  Clason,  of 
Bailey  &  Voorhees,  3000  bushels,"  etc.;  and  how  came  their  names 
to  be  inserted?  Most  undoubtedly  they  were  inserted  by  their  direc- 
tion and  consent,  and  so  it  appears  by  the  special  verdict.  The  jury 
find,  that  when  the  bargain  was  closed,  Townsend,  the  agent  of 
Clason,  did  at  the  time,  and  in  their  presence,  write  the  memoran- 
dum ;  and  if  so,  were  not  their  names  inserted  by  their  consent  ?  Was 
not  Townsend  their  agent  for  that  purpose?  If  they  had  not  as- 
sented to  the  memorandum,  they  should  have  spoken.  But  they  did 
assent,  for  the  memorandum  was  made  to  reduce  the  bargain  to  writ- 
ing in  their  presence  at  the  time  it  was  closed.  It  was,  therefore, 
as  much  their  memorandum  as  if  they  had  written  it  themselves. 
Townsend  was,  so  far,  the  acknowledged  agent  of  both  parties.  The 
auctioneer  who  takes  down  the  name  of  a  buyer,  when  he  bids,  is, 
quoad  hoc,  his  agent.  Emrnerson  v.  Heelis,  2  Taunt.  38.  The  con- 
tract was,  then,  in  judgment  of  law  reduced  to  writing,  and  signed 
by  both  parties;  and  it  appears  to  me  to  be  as  unjust  as  it  is  illegal, 
for  Clason  or  his  representatives  to  get  rid  of  so  fair  a  bargain  on  so 
groundless  a  pretext. 

2.  The  remaining  objection  is  that  the  memorandum  was  made 
with  a  lead  pencil. 

The  statute  requires  a  writing.  It  does  not  undertake  to  define 
with  what  instrument,  or  with  what  material,  the  contract  shall  be 
written.  It  only  requires  it  to  be  in  writing,  and  signed,  etc.;  the 
verdict  here  finds  that  the  memorandum  was  written,  but  it  proceeds 
further,  and  tells  us  with  what  instrument  it  was  written,  viz.,  with 
a  lead  pencil.  But  what  have  we  to  do  with  the  kind  of  instrument 
which  the  parties  employed  when  we  find  all  that  the  statute  required, 
viz.,  a  memorandum  of  the  contract  in  writing,  together  with  the 
names  of  the  parties? 

To  write  is  to  express  our  ideas  by  letters  visible  to  the  eye.  The 
mode  or  manner  of  impressing  those  letters  is  no  part  of  the  sub- 
stance or  definition  of  writing.  A  pencil  is  an  instrument  with 
which  we  write  without  ink.  The  ancients  understood  alphabetic 
writing  as  well  as  we  do,  but  it  is  certain  that  the  use  of  paper,  pen, 
and  ink  was,  for  a  long  time,  unknown  to  them.  In  the  days  of  Job 
they  wrote  upon  lead  with  an  iron  pen.  The  ancients  used  to  write 
upon  hard  substances,  as  stones,  metals,  ivory,  wood,  etc.,  with  a  style 


FORM:  STATUTE  OF  FRAUDS.  123 

or  iron  instrument.  The  next  improvement  was  writing  upon  waxed 
tables;  until  at  last  paper  and  parchment  were  adopted,  when  the 
use  of  the  calamus  or  reed  was  introduced.  The  common  law  has 
gone  so  far  to  regulate  writings,  as  to  make  it  necessary  that  a  deed 
should  be  written  on  paper  or  parchment,  and  not  on  wood  or  stone. 
This  was  for  the  sake  of  durability  and  safety;  and  this  is  all  the 
regulation  that  the  law  has  prescribed.  The  instrument  or  the  ma- 
terial  by  which  letters  were  to  be  impressed  on  paper  or  parchment 
has  never  yet  been  defined.  This  has  been  left  to  be  governed  by 
public  convenience  and  usage;  and  as  far  as  questions  have  arisen 
on  this  subject,  the  courts  have,  with  great  latitude  and  liberality, 
left  the  parties  to  their  own  discretion.  It  has  accordingly  been  ad- 
mitted (2  Bl.  Com.  297;  2  Bos.  &  Pull.  238;  3  Esp.  Eep.  180)  that 
printing  was  writing  within  the  statute,  and  (2  Bro.  585)  that  stamp- 
ing was  equivalent  to  signing,  and  (8  Vesey,  175)  that  making  a 
mark  was  subscribing  within  the  act.  I  do  not  find  any  case  in  the 
courts  of  common  law  in  which  the  very  point  now  before  us  has 
been  decided,  viz.,  whether  writing  with  a  lead  pencil  was  sufficient; 
but  there  are  several  cases  in  which  such  writings  were  produced,  and 
no  objection  taken.  The  courts  have  impliedly  admitted  that  writ- 
ing with  such  an  instrument,  without  the  use  of  any  liquid,  was 
valid.  Thus  in  a  case  in  Comyn's  Reports  (p.  451)  the  counsel  cited 
the  case  of  Loveday  v.  Claridge,  in  1730,  where  Loveday,  intending 
to  make  his  will,  pulled  a  paper  out  of  his  pocket,  wrote  some  things 
down  with  ink,  and  some  with  a  pencil,  and  it  was  held  a  good  will. 
But  we  have  a  more  full  and  authentic  authority  in  a  late  case  de- 
cided at  doctors'  commons  (Rymes  v.  Clarkson,  1  Phillim.  Eep.  22), 
where  the  very  question  arose  on  the  validity  of  a  codicil  written  with 
a  pencil.  It  was  a  point  over  which  the  prerogative  court  had  com- 
plete jurisdiction,  and  one  objection  taken  to  the  codicil  was  the 
material  with  which  it  was  written;  but  it  was  contended,  on  the 
other  side,  that  a  man  might  write  his  will  with  any  material  he 
pleased,  quocunque  modo  velit,  quocunque  modo  possit,  and  it  was 
ruled  by  Sir  John  Nicholl,  that  a  will  or  codicil  written  in  pencil  was 
valid  in  law. 

The  statute  of  frauds,  in  respect  to  such  contracts  as  the  one  be- 
fore us,  did  not  require  any  formal  and  solemn  instrument.  It  only 
required  a  note  or  memorandum,  which  imports  an  informal  writing 
done  on  the  spot,  in  the  moment  and  hurry  and  tumult  of  commercial 
business.  A  lead  pencil  is  generally  the  most  accessible  and  con- 
venient instrument  of  writing  on  such  occasions,  and  I  see  no  good 
reason  why  we  should  wish  to  put  an  interdict  on  all  memoranda 
written  with  a  pencil.  I  am  persuaded  it  would  be  attended  with 
much  inconvenience,  and  afford  more  opportunities  and  temptation 
to  parties  to  break  faith  with  each  other,  than  by  allowing  the  writing 


124  FORMATION    OF   CONTRACT. 

with  a  pencil  to  stand.  It  is  no  doubt  very  much  in  use.  The  courts 
have  frequently  seen  such  papers  before  them,  and  have  always  as- 
sumed them  to  be  valid.  This  is  a  sanction  not  to  be  disregarded. 

I  am,  accordingly,  of  opinion  that  the  judgment  of  the  Supreme 
Court  ought  to  be  affirmed. 

This  was  the  opinion  of  the  court.  (Elmendorf  &  Livingston, 
senators,  dissenting.) 

It  was  thereupon  ordered,  adjudged,  and  decreed,  that  the  judg- 
ment of  the  Supreme  Court  be,  in  all  things,  affirmed,  and  that  the 
defendant  recover  from  the  plaintiffs  their  double  costs,  to  be  taxed, 
and  that  the  record  be  remitted,  etc. 

Judgment  affirmed. 

20  Cyc.  272-276  (76-96)  ;  20  Cyc.  253  (60-61);  28  L.  R.  A.  (N.  S.)  680; 
W.  P.  180  (25)  ;  26  H.  L.  R.  276. 


(ii.)  Provisions  of  fourth  section. 

a.  Special  promise  by  an  executor  or  administrator  to  answer  dam- 
ages out  of  his  own  estate. 

BELLOWS  v.  SOWLES. 

57  VERMONT,  164.— 1884. 

Assumpsit.  Heard  on  demurrer  to  the  declaration.  The  declara- 
tion alleged  that  plaintiff,  a  relative  and  heir  at  law  of  defendant's 
testator,  being  left  out  of  the  will  of  the  testator,  had  employed 
counsel,  etc.,  to  contest  the  will,  and  that  defendant,  being  executor 
and  himself  a  legatee,  and  the  husband  of  the  principal  legatee,  had 
also  employed  counsel  to  defend  the  will,  and  that  the  parties  met 
and  agreed  that  if  plaintiff  would  forbear  to  contest  the  will,  de- 
fendant would  pay  the  plaintiff  the  sum  of  five  thousand  dollars,  and 
that  although  plaintiff  did  forbear  and  the  will  was  duly  probated, 
defendant  failed  and  refused  to  pay  the  amount  agreed  on. 

POWERS,  J.  Counsel  for  the  defendant  have  demurred  to  the 
declaration  in  this  case  upon  two  grounds;  first,  that  the  consider- 
ation alleged  is  insufficient;  secondly,  that  the  promise  not  being  in 
writing  comes  within,  and  is  therefore  not  enforceable  under,  the 
etatute  of  frauds. 

It  has  been  so  often  held  that  forbearance  of  a  legal  right  affords 
a  sufficient  consideration  upon  which  to  found  a  valid  contract,  and 
that  the  consideration  required  by  the  statute  of  frauds  does  not 
differ  from  that  required  by  the  common  law,  it  does  not  appear  to  us 
to  be  necessary  to  review  the  authorities  or  discuss  the  principle.  As 
to  the  second  point  urged  in  behalf  of  the  defendant,  this  case  pre- 
eents  greater  difficulties.  Although  the  statute  of  frauds  was  enacted 


FORM:  STATUTE  OF  FRAUDS.  125 

two  centuries  ago,  and  even  then  was  little  more  than  a  re-enactment 
of  the  pre-existing  common  law,  and  though  cases  have  continually 
arisen  under  it,  both  in  England  and  America,  yet  so  confusing  and 
at  times  inconsistent  are  the  decisions,  that  its  consideration  is  always 
attended  with  difficulty  and  embarrassment. 

The  best  understanding  of  the  statute  is  derived  from  the  lan- 
guage itself,  viewed  in  the  light  of  the  authorities  which  seem  to  us 
to  interpret  its  meaning  as  best  to  attain  its  object.  That  clause  of 
the  statute  under  which  this  case  falls,  reads:  "No  action  at  law  or 
in  equity  shall  be  brought  .  .  .  upon  a  special  promise  of  an  executor 
or  administrator  to  answer  damages  out  of  his  own  estate." 

This  special  promise  referred  to  is,  in  short,  any  actual  promise 
made  by  an  executor  or  administrator,  in  distinction  from  promises 
implied  by  law,  which  are  held  not  within  the  statute. 

The  promise  must  be  "to  answer  damages  out  of  his  own  estate." 
This  phraseology  clearly  implies  an  obligation,  duty,  or  liability  on 
the  part  of  the  testator's  estate,  for  which  the  executor  promises  to 
pay  damages  out  of  his  own  estate.  The  statute,  then,  was  enacted 
to  prevent  executors  or  administrators  from  being  fraudulently  held 
for  the  debts  or  liabilities  of  the  estates  upon  which  they  were  called 
to  administer.  In  this  view  of  the  case,  this  clause  of  the  statute  is 
closely  allied,  if  not  identical  in  principle,  with  the  following  clause, 
namely:  "No  action,  etc.,  upon  a  special  promise  to  answer  for  the 
debt,  default,  or  misdoings  of  another."  And  so  Judge  Koyce,  in 
delivering  the  opinion  of  the  court  in  Harrington  v.  Kich  (6  Vt. 
666),  declares  these  two  classes  of  undertakings  to  be  "very  nearly 
allied,"  and  considers  them  together.  This  seems  to  us  to  be  the 
true  idea  of  this  clause  of  the  statute: — that  the  undertaking  con- 
templated by  it,  like  that  contemplated  by  the  next  clause,  is  in  the 
nature  of  a  guaranty;  and  that  reasoning  applicable  to  the  latter  is 
equally  applicable  to  the  former. 

We  believe  this  view  to  be  well  supported  by  the  authorities. 
Browne,  in  his  work  on  the  statute  of  frauds,  p.  150,  says:  "In  the 
fourth  section  of  the  statute  of  frauds,  special  promises  of  executors 
and  administrators  to  answer  damages  out  of  their  own  estates  ap- 
pear to  be  spoken  of  as  one  class  of  that  large  body  of  contracts 
known  as  guaranties."  And  so  on  page  184,  he  interprets  "to  answer 
damages"  as  equivalent  to  to  pay  debts  of  the  decedent.  This  seems 
to  be  the  construction  given  to  the  statute  by  Chief  Justice  Eedfield, 
in  his  work  on  Wills.  Vol.  2,  p.  290,  et  seq. 

The  Revised  Statutes  of  New  York,  Vol.  2,  p.  113,  have  improved 
upon  the  phraseology  of  the  old  statute  as  we  have  adopted  it,  by 
adding  or  to  pay  the  debts  of  the  testator  or  intestate  out  of  his  own 
estate. 

If  we  are  correct  in  this  view  of  the  relation  between  these  two 


126  FORMATION    OF    CONTRACT. 

clauses,  the  solution  of  the  question  presented  by  this  case  is  com- 
paratively easy. 

It  has  been  held  in  this  State,  that  when  the  contract  is  founded 
upon  a  new  and  distinct  consideration  moving  between  the  parties, 
the  undertaking  is  original  and  independent,  and  not  within  the 
statute.  Templeton  v.  Bascom,  33  Vt.  132;  Cross  v.  Eichardson,  30 
Vt  641 ;  Lampson  v.  Hobart,  28  Vt.  697.  Whether  or  not  it  would 
be  safe  to  announce  this  as  a  general  rule  of  universal  application,  it 
is  a  principle  of  law  well  fortified  by  authority,  that  where  the  prin- 
cipal or  immediate  object  of  the  promisor  is  not  to  pay  the  debt  of 
another,  but  to  subserve  some  purpose  of  his  own,  the  promise  is 
original  and  independent,  and  not  within  the  statute.  Brandt  Sur. 
72;  3  Par.  Cont.  24;  Rob.  Fr.  232;  Emerson  v.  Slater,  22  How.  28. 
And  this  seems  to  be  the  real  ground  of  the  decisions  above  cited 
in  the  28th  and  30th  Vt.,  in  which  the  court  seems  to  blend  the  two 
rules  just  laid  down. 

Pierpoint,  J.,  in  delivering  the  opinion  of  the  court  in  Cross  v. 
Richardson,  supra,  says:  "The  consideration  must  be  not  only  suffi- 
cient to  support  the  promise,  but  of  such  a  nature  as  to  take  the 
promise  out  of  the  statute ;  and  that  requisite,  we  think,  is  to  be  found 
in  the  fact  that  it  operates  to  the  advantage  of  the  promisor,  and 
places  him  under  a  pecuniary  obligation  to  the  promisee,  entirely 
independent  of  the  original  debt." 

Apply  this  rule  to  this  case.  Here  the  main  purpose  of  this  promise 
was,  not  to  answer  damages  (for  the  testator)  out  of  his  own  estate, 
but  was  entirely  to  subserve  some  purpose  of  the  defendant.  The 
consideration  did  not  affect  the  estate,  but  was  a  matter  purely  per- 
sonal to  the  defendant.  Here  there  was  no  liability  or  obligation 
on  the  part  of  the  estate  to  be  answered  for  in  damages.  It  could 
make  no  difference  to  the  executor  of  that  estate  whether  it  was  to  be 
divided  according  to  the  will,  or  by  the  law  of  descent.  If  the  sub- 
ject-matter of  this  contract  had  been  something  entirely  foreign  to 
this  estate,  no  one  would  maintain  that  the  defendant  was  not  bound 
by  it,  because  he  happened  to  be  named  executor  in  this  will.  Here 
the  subject-matter  of  the  contract  was  connected  with  the  estate,  but 
in  such  a  way  that  it  was  practically  immaterial  to  the  estate  which 
way  the  question  was  decided.  There  exists,  therefore,  in  this  case, 
no  sufficient,  actual,  primary  liability  to  which  this  promise  could 
be  collateral.  This  seems  to  us  to  be  the  fairest  interpretation  of 
the  law.  The  statute  was  passed  for  the  benefit  of  executors  and 
administrators;  but  it  might  be  said  of  it,  as  has  been  said  of  the 
protection  afforded  to  an  infant  by  the  law  of  contracts,  that  "it  is  a 
shield  to  protect,  not  a  sword  to  destroy."  If  this  class  of  contracts 
was  allowed  to  be  avoided  under  it,  instead  of  being  a  prevention  of 
frauds,  it  would  become  a  powerful  instrument  for  fraud.  As  in  this 


FORM:  STATUTE  OF  FRAUDS.  127 

case  the  plaintiff  would  be  deprived  of  his  legal  right  to  contest  the 
will,  by  a  party  who  has  reaped  all  the  benefits  of  the  transaction,  and 
is  shielded  from  responsibility  by  a  technicality.  We  do  not  believe 
this  was  the  result  contemplated  by  the  statute. 

The  judgment  of  the  County  Court  overruling  the  demurrer  and 
adjudging  the  declaration  sufficient  is  affirmed,  and  case  remanded 
with  leave  to  the  defendant  to  replead  on  the  usual  terms. 

20  Cyc.  159  (23)  ;  W.  P.  214  (23). 


6.  Any  promise  to  answer  for  the  debt,  default,  or  miscarriage  of 
another. 

STERRETT,  J.  IN  NUGENT  v.  WOLFE. 

Ill  PENNSYLVANIA  STATE,  471.— 1886. 

It  is  very  evident  that  the  statute  was  not  intended  to  apply  except 
in  cases  where,  in  addition  to  the  promisor  and  promisee,  there  is 
also  a  third  party  to  whose  debt  or  undertaking  the  agreement  of 
the  promisor  relates,  and  not  even  then  unless  the  liability  of  the 
third  party  continues.  In  other  words,  the  agreement,  to  be  within 
the  purview  of  the  statute,  must  in  a  certain  sense  be  a  collateral 
and  not  an  original  undertaking.  Independently  of  the  debt  or  lia- 
bility of  the  third  party,  there  must,  of  course,  be  a  good  consideration 
for  the  collateral  or  subordinate  agreement,  such  for  example  as  a 
benefit  or  advantage  to  the  promisor  or  an  injury  to  the  promisee. 
It  is  difficult,  if  not  impossible,  to  formulate  a  rule  by  which  to 
determine  in  every  case  whether  a  promise  relating  to  the  debt  or 
liability  of  a  third  person  is  or  is  not  within  the  statute;  but,  as  a 
general  rule,  when  the  leading  object  of  the  promise  or  agreement  is 
to  become  guarantor  or  surety  to  the  promisee,  for  a  debt  for  which 
a  third  party  is  and  continues  to  be  primarily  liable,  the  agreement, 
whether  made  before  or  after,  or  at  the  time  with  the  promise  of  the 
principal,  is  within  the  statute,  and  not  binding  unless  evidenced  by 
writing.  On  the  other  hand,  when  the  leading  object  of  the  promisor 
is  to  subserve  some  interest  or  purpose  of  his  own,  notwithstanding 
the  effect  is  to  pay  or  discharge  the  debt  of  another,  his  promise  is 
not  within  the  statute. 

As  was  said  by  Mr.  Justice  Strong  in  Maule  v.  Bucknell,  50  Pa. 
St.  39,  52,  "It  is  undoubtedly  true  that  a  promise  to  answer  for  the 
debt  or  default  of  another  is  not  within  the  statute,  unless  it  be  col- 
lateral to  a  continued  liability  of  the  original  debtor.  If  it  be  a 
substitute, — an  agreement  by  which  the  debt  of  another  is  extin- 
guished, as  where  the  creditor  gives  up  his  claim  on  his  original 
debtor,  and  accepts  the  new  promise  in  lieu  thereof,  it  need  not  be 


128  FORMATION   OF   CONTRACT. 

in  writing.  And,  as  the  cases  referred  to  show,  it  may  be  unaffected 
by  the  statute,  though  the  original  debt  remains,  if  the  promisor  has 
received  a  fund  pledged,  set  apart,  or  held  for  payment  of  the  debt. 
But,  except  in  such  cases,  and  others  perhaps  of  a  kindred  nature,  in 
which  the  contract  shows  an  intention  of  the  parties  that  the  new 
promisor  shall  become  the  principal  debtor,  and  the  old  debtor  be- 
come but  secondarily  liable,  the  rule,  it  is  believed,  may  be  safely 
stated,  that  while  the  old  debt  remains  the  new  must  be  regarded  as 
not  an  original  undertaking,  and  therefore  within  the  statute.  At 
least  this  may  be  stated  as  a  principle  generally  accurate.  In  Will- 
iams' Saund.  211,  note,  it  is  said:  'The  question  whether  each  par- 
ticular case  comes  within  the  clause  of  the  statute  or  not,  depends 
not  on  the  consideration  for  the  promise,  but  on  the  fact  of  the 
original  party  remaining  liable,  coupled  with  the  absence  of  any  lia- 
bility on  the  part  of  the  defendant  or  his  property,  except  such  as 
arises  from  his  express  promise/ '' 

If  one  says  to  another,  "deliver  goods  to  A.  and  I  will  pay  you," 
the  verbal  promise  is  binding,  because  A.,  though  he  receives  the 
goods,  is  not  responsible  to  the  party  who  furnishes  them.  But,  if 
instead  of  saying,  "I  will  pay  you,"  he  says,  "I  will  see  you  paid,"  or 
"I  will  pay  you  if  he  does  not,"  or  uses  words  equivalent  thereto, 
showing  that  the  debt  is,  in  the  first  instance,  the  debt  of  A.,  the 
undertaking  is  collateral,  and  not  valid  unless  in  writing.  In  these 
latter  cases,  the  same  consideration,  viz.,  the  consideration  of  the 
promise  of  the  principal  is  a  good  consideration  for  the  promise  of 
the  surety  or  collateral  promisor.  The  credit  is  given  as  well  upon 
the  original  consideration  of  the  principal  as  the  collateral  promise 
of  the  surety,  and  is  a  good  consideration  for  both.  Nelson  v.  Boyn- 
ton,  44  Mass.  396,  400. 

20  Cyc.  180  (8)  ;  W.  P.  171   (10)  ;  23  H.  L.  R.  136;  11  C.  L.  R.  355. 


EAABE  et  al  v.  SQUIER  et  al. 
148  NEW  YORK,  81.— 1895. 

Action  brought  to  recover  the  sum  of  $2,800,  the  balance  claimed 
to  be  due  on  contracts  between  the  defendants  Squier  and  Whipple 
and  the  plaintiffs,  in  which  the  plaintiffs  undertook  to  furnish  the 
woodwork  for  ten  houses  which  the  defendants  Squier  and  Whipple 
were  building  on  West  End  avenue  in  the  city  of  New  York,  which 
were  owned  by  the  defendants  Jencks  and  Stokes. 

HAIGHT,  J.  .  .  .  The  facts  then  as  disclosed  by  the  evidence  are 
substantially  as  follows:  Jencks  and  Stokes  were  the  owners  of  the 
premises.  Squier  and  Whipple  were  building  the  houses  thereon  for 


FORM:  STATUTE  OF  FRAUDS.  129 

them.  Squier  and  Whipple  entered  into  a  contract  with  the  plain- 
tiffs to  furnish  the  woodwork  for  the  houses  for  the  sum  of  $20,000. 
The  payments  were  to  be  made  in  installments  in  cash,  less  ten  per 
cent,  discount,  on  the  delivery  of  the  material  at  the  buildings.  The 
contract  specifically  designated  the  material  to  be  delivered  upon 
each  installment.  The  plaintiffs  prepared  the  first  installment  of 
material,  and  delivered  the  same  at  the  buildings,  and  then  called 
upon  the  defendants,  Squier  and  Whipple,  for  the  first  payment  due 
them  under  the  contract,  but  the  same  was  delayed  and  not  made  for 
the  space  of  about  three  months.  The  plaintiffs  prepared  and  de- 
livered the  second  installment  of  material,  and  also  demanded  pay- 
ment for  that,  which  was  neglected  and  delayed.  The  plaintiffs  then 
prepared  the  rest  of  the  material  called  for  by  the  contract,  but 
refused  to  deliver  the  same  until  the  installments  furnished  by  them 
had  been  paid  for.  Under  these  circumstances  the  defendants  Jencks 
and  Stokes  saw  the  plaintiffs  and  told  them  that  they  were  the 
owners  of  the  buildings;  that  they  wanted  them  finished  and  that  if 
the  plaintiffs  would  go  ahead  and  deliver  the  rest  of  the  material 
they  would  see  them  paid  therefor;  that  if  Squier  and  Whipple  did 
not  pay  they  would  take  it  out  of  the  amount  going  to  them  and 
would  pay  the  plaintiffs.  It  further  appears  that,  relying  upon  this 
promise,  the  plaintiffs  proceeded  and  delivered  all  the  material  called 
for  by  the  contracts,  but  that  the  sum  of  $2,800  still  remains  due  to 
them  and  unpaid. 

The  referee  dismissed  the  complaint  as  to  Jencks  and  Stokes  upon 
the  ground,  as  he  says,  that  their  promise  to  pay  being  oral  was  void 
tinder  the  statute  of  frauds  and  as  to  Squier  and  Whipple  upon 
the  ground  that  "before  the  delivery  of  any  goods  by  the  plaintiffs 
under  the  terms  of  the  contract  the  plaintiffs  refused  to  carry  out 
or  fulfill  said  contract  on  their  part  with  the  defendants  Squier  and 
Whipple." 

Considering  the  last  proposition  first,  we  are  at  a  loss  to  under- 
stand upon  what  evidence  it  is  founded.  It  is  true  that  the  last 
batch  of  material  was  not  delivered  until  December,  bait  we  are  told 
that  the  delay  in  delivering  was  because  of  the  non-payment  of  the 
amount  due  on  former  deliveries.  The  refusing  to  deliver  an  install- 
ment until  a  former  installment  had  been  paid  for  was  not  a  breach 
of  the  contract  on  the  part  of  the  plaintiffs.  As  to  the  statute  of 
frauds  At  appears  to  us  that  its  provisions  have  no  application  to  the 
case  under  consideration.  In  the  first  place  the  indebtedness  at  the 
time  the  promise  was  made  has  been  paid.  The  promise,  in  so  far 
as  it  is  here  sought  to  be  enforced,  related  to  the  indebtedness  there- 
after to  be  created.  The  promisors  were  the  owners  of  the  buildings 
in  process  of  construction.  The  woodwork  furnished  by  the  plain- 
tiffs was  for  their  benefit.  The  contractors  had  neglected  to  pay  the 


130  FORMATION    OF    CONTRACT. 

plaintiffs  for  the  material  furnished  and  they  refused  to  deliver  more, 
as  they  had  the  right  to  do.  Under  such  circumstances  the  promise 
was  made,  and  it  was  in  reliance  upon  the  promise  that  the  plaintiffs 
delivered  the  rest  of  the  woodwork.  The  promise  thus  made  was 
original  and  founded  upon  a  new  consideration,  that  of  the  goods. 
It  was  beneficial,  as  we  have  seen,  to  the  promisors,  thus  bringing 
the  case  within  the  rule  stated  by  Finch,  J.,  in  White  v.  Eintoul 
(108  N.  Y.  222,  227),  in  which  he  says:  "Where  the  primary  debt 
subsists  and  was  antecedently  contracted,  the  promise  to  pay  it  is 
original  when  it  is  founded  on  a  new  consideration  moving  to  the 
promisor  and  beneficial  to  him,  and  such  that  the  promisor  thereby 
comes  under  an  independent  duty  of  payment  irrespective  of  the  lia- 
bility of  the  principal  debtor."  Ackley  v.  Parmenter,  98  N.  Y.  425 ; 
Prime  v.  Koehler,  77  N.  Y.  91 ;  Bayles  v.  Wallace,  56  Hun,  428. 

The  judgment  should  be  reversed  and  a  new  trial  granted,  costs 
to  abide  the  event.  All  concur.  Judgment  reversed.1 

20  Cyc.  182  (14). 


MAY  v.  WILLIAMS. 

61  MISSISSIPPI,  125.— 1883. 

COOPER,  J.  It  was  not  an  error  for  the  court  below  to  permit  an 
amendment  to  be  made  of  the  affidavit  on  which  the  writ  of  seizure 
was  issued.  Louisa  Williams  and  her  infant  sisters  were  jointly  in- 
terested under  the  contract  with  Mrs.  May  in  the  fruits  of  their 
labor.  In  the  original  affidavit  Louisa  Williams  had  demanded  in 
her  own  name  the  interest  of  all  the  laborers  in  the  crop,  and  the 
amendment  was  necessary  to  bring  before  the  court  all  the  joint- 
owners  of  the  claim  propounded.  A  suit  to  enforce  a  laborer's  lien 
is,  under  the  Code  of  1880,  c.  52,  a  proceeding  partly  in  rem  and 
partly  in  personam.  A  general  judgment  is  rendered  in  personam 
for  the  amount  found  due,  and  the  property  seized  is  condemned  to 

i  "General  rule  to  distinguish  original  from  collateral  promises  formulated : 

(1)  An  apparent  promise  to  pay  the  debt  of  another  is  not  collateral,  (a) 
where  it  runs  to  the  debtor  only  and  not  to  the  creditor;    (b)   where  there 
never  in  fact  was  any  primary  debt  at  all;    (c)   and  where  once  existing,  it 
had  ceased  to  exist  at  the  date  of  the  promise. 

(2)  Although  the  primary  debt  subsists,  and  there  is  a  third  person  owing 
the  debt,  the  promise  to  pay  it  is  not  collateral,  when,  for  a  new  consideration, 
moving  to  the  promisor  and  beneficial  to  him,  such  promisor  assumes  an  in- 
dependent duty  of  payment,  irrespective  of  the  liability  of  the  principal  debtor." 
Judge  F.  M.  Finch,  Synopsis  of  lectures  on  the  Statute  of  Frauds,  Ithaca,  1897. 
For  an  historical  review  of  the  development  of  the  rules  as  to  original  and 
collateral  promises  in  New  York,  see  Judge  Finch's  opinion  in  White  v.  Rin- 
toul,  108  N.  Y.  222. 


FOBM:  STATUTE  OF  FRAUDS.  131 

be  sold  for  its  satisfaction.  It  is  the  amount  demanded  and  not  the 
value  of  the  property  seized  which  determines  the  jurisdiction  of  the 
court.  Code  1880,  §  1365.  In  suits  of  this  character  the  question 
of  cost  is  left  to  the  discretion  of  the  presiding  judge,  and  costs 
should  be  awarded  in  each  case  against  the  party  by  whom,  in  view 
of  all  the  curcumstances,  it  is  equitable  they  should  be  borne.  Code 
1880,  §  1369. 

On  the  trial  the  defendant  proposed  to  prove  that  in  the  spring 
of  the  year  in  which  the  crop  sued  for  was  planted,  the  husband  of 
the  plaintiff,  Louisa  Williams,  was  incarcerated  in  the  jail  of  Noxubee 
County  on  the  charge  of  grand  larceny,  and  that  Louisa  Williams 
applied  to  her,  the  defendant,  to  become  surety  on  his  bail-bond,  and 
verbally  agreed  that  if  the  defendant  would  become  so  bound,  the 
interest  in  the  crop  to  be  raised  which  belonged  to  Louisa  and  to 
her  infant  sisters  should  remain  in  the  hands  of  the  defendant  to 
indemnify  her  against  the  default  of  the  husband;  that  in  consider- 
ation of  such  agreement  the  defendant  became  surety  as  requested; 
that  Williams,  the  accused,  had  absconded,  and  that  a  judgment  nisi 
had  been  rendered  against  the  defendant  for  the  sum  of  two  hun- 
dred dollars  upon  the  forfeited  bond.  Upon  the  objection  of  the 
plaintiffs  the  evidence  was  excluded  by  the  court  as  being  a  parol 
promise  to  answer  for  the  "debt  or  default  or  miscarriage  of  another," 
and,  therefore,  unenforceable  under  the  statute  of  frauds. 

There  is  great  conflict  of  authority  upon  the  question  whether  a 
parol  promise  to  indemnify  one  who  becomes  surety  for  another  at 
the  request  of  the  promisor  is  within  that  clause  of  the  statute  of 
frauds  which  declares  that  "no  action  shall  be  brought  whereby  to 
charge  the  defendant  upon  any  special  promise  to  answer  for  the 
debt  or  default  or  miscarriage  of  another  person,  unless  the  promise 
or  agreement  upon  which  such  action  shall  be  brought,  or  some 
memorandum  or  note  thereof,  shall  be  in  writing,  and  signed  by  the 
party  to  be  charged  therewith,  or  some  other  person  by  him  or  her 
thereunto  lawfully  authorized."  In  England  the  courts  have  vacil- 
lated upon  the  question,  and  the  courts  of  this  country  have,  to  a 
considerable  extent,  taken  position  with  that  view  which  at  the  time 
of  the  several  decisions  prevailed  in  England.  In  Thomas  v.  Cook 
(8  B.  &  C.  728)  a  promise  to  indemnify  was  held  not  to  be  within 
the  statute.  In  Green  v.  Cresswell  (10  Ad.  &  E.  453)  the  contrary 
view  was  announced.  In  Cripps  v.  Hartnoll  (4  B.  &  S.  414)  the 
distinction  was  drawn  between  those  cases  in  which  the  promisee  was 
surety  upon  a  bond  by  which  the  principal  was  bound  to  answer  a 
criminal  charge  and  those  in  which  the  bond  was  given  in  a  civil 
cause,  the  court  saying  that  there  was  no  implied  contract  on  the 
part  of  a  principal  who  was  bound  over  to  answer  a  criminal  charge 
to  indemnify  his  surety,  and,  therefore,  that  the  promise  of  the 


132  FORMATION    OF    CONTRACT. 

promisee  did  not  come  in  aid  of  that  of  another  person,  for  which 
reason  it  was  decided  that  the  promise  in  that  case  was  not  obnoxious 
to  the  statute.  In  Wildes  v.  Dudlow  (L.  R.  19  Eq.  198)  Vice-Chan- 
cellor Malins  treated  the  case  of  Green  v.  Cresswell  as  virtually  over- 
ruled by  Cripps  v.  Hartnoll,  and  in  Reader  v.  Kingham  (13  C.  B. 
N.  S.  344)  it  was  held  that  a  promise,  to  be  within  the  statute,  must 
be  made  to  the  promisee  to  pay  a  debt  due  by  another  to  him.  It 
may  therefore  be  considered  that  in  England  Green  v.  Cresswell  has 
been  overruled,  and  the  doctrine  of  Thomas  v.  Cook  re-established. 

In  this  country  the  States  of  Massachusetts,  Maine,  New  Hamp- 
shire, Georgia,  Kentucky,  Iowa,  Indiana,  Minnesota,  Wisconsin,  Ver- 
mont, and  Connecticut  have  followed  the  authority  of  Thomas  v. 
Cook,  while  South  Carolina,  North  Carolina,  Missouri,  Alabama,  and 
Ohio  have  adhered  to  the  rule  announced  in  Green  v.  Cresswell.  Sec 
authorities  cited  in  Browne  on  the  Statute  of  Frauds,  §§  161-161  c; 
Anderson  v.  Spence,  72  Ind.  315.  In  this  conflict  of  American 
authority,  produced  in  no  inconsiderable  degree  by  the  inconstancy 
of  the  English  courts,  the  weight  in  numbers  is  in  favor  of  the  rule 
that  such  promises  are  not  within  the  statute ;  but  an  examination  of 
the  cases  holding  this  view  discloses  equally  as  great  conflict  among 
themselves  as  to  the  principle  upon  which  the  decisions  are. rested. 
In  Cripps  v.  Hartnoll  a  promise  to  indemnify  was  held  not  to  be 
within  the  statute,  because  the  bond  was  given  in  a  criminal  proceed- 
ing, and  in  such  cases,  it  was  said,  there  is  no  contract  on  the  part 
of  the  person  bailed  to  indemnify  the  surety.  In  Holmes  v.  Knights 
(10  N".  H.  175)  it  was  suggested  that  the  principal  would  not  be 
bound  to  indemnify  the  surety  unless  he  had  requested  him  to  be- 
come bound;  but,  passing  this  question  by,  the  decision  was  put  upon 
the  ground  that  the  obligation  of  the  principal,  if  it  existed  at  all, 
was  an  implied  one,  and  its  existence  would  not  prevent  the  surety 
from  proceeding  against  the  parol  promisor,  who  was  bound  by  ex- 
press agreement,  the  court  saying  that  if  either  was  to  be  deemed  col- 
lateral, the  liability  of  the  principal,  in  such  a  case,  would  seem  to 
be  collateral  to  that  of  the  defendant.  In  Reader  v.  Kingham  .(13 
C.  B.  N.  S.  344),  Wildes  v.  Dudlow  (L.  R.  19  Eq.  198),  Aldrich  v. 
Ames  (9  Gray  76),  and  Anderson  v.  Spence  (72  Ind.  315),  and 
many  other  cases,  the  promise  is  held  not  to  be  within  the  statute, 
because  it  is  said  not  to  be  made  to  the  creditor,  but  to  one  who  is 
debtor,  while  in  Dunn  v.  West  (5  B.  Mon.  376)  and  Lucas  v.  Cham- 
berlain (8  B.  Mon.  276)  the  promise  was  held  to  be  enforceable,  be- 
cause the  implied  obligation  of  the  principal  to  indemnify  his  surety 
is  said  to  arise  from  a  subsequent  fact,  to  wit,  the  payment  of  the 
debt  by  the  surety.  Upon  some  one  or  the  other  of  these  principles 
the  cases  holding  this  view  which  are  most  approved  by  the  text- 
writers  are  based,  though  there  are  others  in  which  other  reasons  are 


FORM:  STATUTE  OF  FRAUDS.  133 

given,  as  in  Read  v.  Nash,  1  Wils.  305 ;  D'Wolf  v.  Rabaud,  1  Peters, 
476;  Emerson  v.  Slater,  22  How.  U.  S.  28. 

Notwithstanding  the  number. of  cases  in  which  these  views  are  an- 
nounced, we  are  satisfied,  upon  an  examination  of  the  subject,  to 
take  our  stand  with  those  courts  which  hold  such  promises  to  be 
within  the  statute  and  unenforceable,  unless  evidenced  by  writing. 
We  do  not  assent  to  the  proposition  that  a  principal  in  a  bail-bond 
is  not  under  an  implied  contract  to  indemnify  his  surety.  He  knows 
that  the  law  requires  some  one  to  be  bound  for  his  appearance  as  a 
condition  to  his  discharge  from  custody;  he  executes  the  instrument 
by  which  the  surety  is  bound,  and  by  the  bond  he  becomes  bound  as 
principal  to  that  surety.  By  executing  the  bond  and  accepting  the 
benefits  which  flow  from,  he  assumes  the  duties  and  obligations  which 
spring  out  of,  his  engagement,  whether  due  to  the  State  or  to  his 
surety.  Why  should  a  different  rule  be  applied  where  one  is  bound 
to  appear  to  answer  a  criminal  charge  than  would  be  applicable  if 
the  thing  to  be  done  was  the  performance  of  physical  labor,  the 
proper  administration  of  an  estate,  or  the  doing  of  any  other  act  by 
the  principal?  Where  the  engagement  is  made  with  the  knowledge 
and  consent  of  the  principal  debtor,  there  is  in  point  of  law  an  im- 
plied request  from  the  latter  to  the  surety  to  intervene  in  the  princi- 
pal's behalf  if  the  latter  makes  default,  and  money  paid  by  the  surety 
for  the  purpose  of  discharging  the  claim  against  the  principal  is 
money  paid  for  the  use  of  the  principal  at  his  request,  which  may  be 
recovered  from  the  latter.  Exall  v.  Partridge,  8  T.  R.  308. 

It  cannot  be  said  that  the  promise  to  indemnify  the  surety  is  made 
to  him  as  debtor  and  not  as  creditor.  It  is  true  that  both  the  prin- 
cipal and  surety  are  bound  to  the  fourth  person,  the  State;  but  the 
contract  of  the  promisor  is  not  to  discharge  that  obligation.  He  as- 
sumes no  duty  or  debt  to  the  State,  nor  does  he  agree  with  the 
promisee  to  pay  to  the  State  the  debt  which  may  become  due  to  it 
if  default  shall  be  made  by  the  principal  in  the  bond.  It  is  only 
when  the  promisee  has  changed  his  relationship  of  debtor  to  the 
State"  and  assumed  that  of  creditor  to  his  principal  by  paying  to  the 
State  the  penalty  for  which  both  he  and  his  principal  were  bound 
that  a  right  arises  to  go  against  the  guarantor  on  his  contract.  It 
is  to  one  who  is  under  a  conditional  and  contingent  liability  that 
the  promise  is  made;  but  it  is  to  him  as  creditor,  and  not  as  debtor, 
that  a  right  of  action  arises  on  it.  Nor  do  we  think  it  sufficient  to 
take  the  case  from  the  operation  of  the  statute  that  the  liability  of 
the  principal  arises  by  implication  rather  than  by  express  contract. 
The  statute  makes  no  distinction  between  a  debt  due  on  an  implied 
and  one  due  by  express  contract.  It  is  the  existence  of  the  debt 
against  the  principal,  and  not  the  manner  in  which  it  originates,  that 
makes  voidable  a  parol  promise  by  another  to  become  responsible  for 


134  FORMATION   OF   CONTRACT. 

its  payment.  Nor  are  we  able  to  perceive  that  the  contract  of  the 
promisee  is  anterior  to  that  of  the  principal  in  the  bond.  Until  the 
surety  assumes  responsibility  by  executing  the  bond,  the  agreement 
of  the  promisor  to  indemnify  is  only  a  proposition  which  may  be 
withdrawn  by  him  or  declined  by  the  promisee.  It  is  only  when  the 
proposition  is  acted  on  by  the  promisee  that  the  contract  becomes 
absolute;  but  at  the  very  instant  that  it  thus  becomes  a  contract 
there  also  springs  up  an  implied  contract  of  the  principal  to  do  and 
perform  the  same  act,  viz.,  to  indemnify  the  surety  against  loss.  It 
arises  at  the  same  moment,  exists  to  the  same  extent,  is  supported  by 
the  same  consideration,  broken  at  the  same  instant,  and  is  discharged 
by  the  same  act,  whether  it  be  done  by  the  principal  in  the  bond  or 
by  the  promisee  in  the  contract  to  indemnify.  It  is  the  debt  of  the 
principal;  and,  being  his  debt,  no  third  person  can  be  bound  for  its 
payment  unless  the  contract  be  evidenced  by  writing.  This,  we  think, 
is  the  fair  import  of  the  statute  and  it  ought  not  to  be  refined  or 
frittered  away. 

Judgment  affirmed. 
20  Cyc.  180  (8) ;  20  Cyc.  178-179  (6-7)  ;  W.  P.  171  (10) ;  2  C.  L.  R.  104. 


TIGHE  v.  MORRISON. 
116  NEW  YORK,  263.— 1889. 

Plaintiff,  at  the  request  of  defendant  signed  an  administrator's 
bond  (running  to  the  People  of  the  State  of  New  York),  as  surety 
for  Dowdall,  administrator;  and  defendant  orally  promised  to  save 
plaintiff  from  any  loss  plaintiff  might  sustain  by  thus  signing.  Dow- 
dall having  later  defaulted  as  administrator,  and  plaintiff  having 
been  compelled  to  pay  $1200  therefor,  sued  defendant  upon  the  lat- 
ter's  oral  guaranty. 

VANN,  J.  .  .  .  While  the  bond  was  given  to  the  People,  who  stand 
for  "the  creditor,"  as  that  word  is  used  in  the  authorities,  the  promise 
in  question  was  not  made  to  them.  Such  a  promise  would  have  been 
collateral  to  the  main  obligation.  But  this  promise  was  not  made 
to  the  creditor,  and  at  the  time  it  was  made  there  was  no  liability 
of  the  third  person  in  existence  to  which  it  could  be  collateral.  It 
was  not  a  promise  to  answer  for  the  debt,  default  or  miscarriage  of 
another,  for  which  that  other  was,  at  the  time,  liable  to  the  promisee, 
although  he  was  liable  to  the  creditor,  which  is  unimportant.  It  was 
an  original  promise  that  certain  things  should  be  done  by  the  third 
person.  As  there  was  no  original  liability  on  the  part  of  Dowdall 
to  which  the  defendant's  promise  could  be  collateral,  the  case  falls 
within  the  first  class  named  by  Judge  Comstock  in  his  noted  classifi- 
cation in  Mallory  v.  Gillett  [21  N.  Y.  412].  Moreover,  the  rule 


FORM:  STATUTE  OF  FRAUDS.  135 

seems  to  be  well  settled  that  a  promise  not  made  to  the  person  en- 
titled to  enforce  the  liability  assumed  by  the  promisor  is  not  within 
the  statute.  The  special,  which  means  simply  the  express,  promise 
was  not  made  to  the  People,  who,  as  the  obligees  named  in  the  bond, 
were  entitled  to  enforce  it,  but  to  the  plaintiff,  who  had  no  such 
right.  It  was  not  a  promise  to  answer  for  the  default  of  one  who 
owed  any  duty  to  the  plaintiff,  for  Dowdall  had  neither  expressly  nor 
impliedly  entered  into  any  agreement  with  him.  The  duty  owed  by 
Dowdall  was  to  the  People  only,  standing  as  the  creditor  or  fourth  per- 
son. The  following  authorities  are  cited  in  support  of  this  position: 
Harrison  v.  Sawtel  (10  Johns.  242)  ;  Chapin  v.  Merrill  (4  Wend. 
657)  ;  Barry  v.  Eansom  (12  N.  Y.  462)  ;  Mallory  v.  Gillett  (21  id. 
412)  ;  Sanders  v.  Gillespie  (59  id.  250,  252)  ;  McCraith  v.  National 
Mohawk  Valley  Bank  (104  id.  414) ;  Thomas  v.  Cook  (8  Barn.  & 
Cres.  728);  Reader  v.  Kingham  (13  C.  B.  [N.  s.]  344);  Cripps  v. 
Hartnoll  (4  B.  &  S.  414;  10  Jur.  [N,  s.]  200) ;  Aldrich  v.  Ames  (9 
Gray,  76) ;  Smith  v.  Say  ward  (5  Me.  504) ;  Jones  v.  Shorter  (1  Ga. 
294) ;  Birkmyr  v.  Darnell  (1  Smith's  L.  C.  522,  and  cases  cited  in 
note  on  page  550.) 

There  are  cases  holding  the  opposite  doctrine,  the  most  noted  of 
which  are  Green  v.  Cresswell  (10  Ad.  &  Ellis,  453)  and  Kingsley  v. 
Balcome  (4  Barb.  131).  The  former,  which  is  responsible  for  much 
of  the  confusion  existing  upon  the  subject,  can  no  longer  be  regarded 
as  the  law  in  the  country  where  it  was  decided,  as  will  appear  from 
the  later  English  cases.  (Fitzgerald  v.  Dressier,  6  Com.  B.  [N.  s.] 
374;  Reader  v.  Kingham,  supra;  Batson  v.  King,  4  H.  &  N".  739; 
Cripps  v.  Hartnoll,  supra;  Wilkes  v.  Dudlow,  L.  R.,  19  Eq.  Gas. 
198).  .  .  . 

20  Cyc.  179  (7)  ;  W.  P.  171   (10)  ;  3  H.  L.  R.  233. 


c.  Agreement  made  in  consideration  of  marriage. 

WELD  v.  WELD. 
71  KANSAS,  622.— 1905. 

BURCH,  J.  Judith  R.  Kidder  executed  and  delivered  to  Augustus 
Weld  her  promissory  note  for  a  sum  of  money,  and  secured  its  pay- 
ment by  a  mortgage  upon  her  real  estate.  Subsequently  she  mar- 
ried him,  in  consideration  of  his  parol  agreement  that  the  marriage 
should  operate  as  a  satisfaction  of  the  note.  Still  later  he  brought 
an  action  against  her  to  recover  on  the  note  and  to  foreclose  the 
mortgage.  She  pleaded  payment,  and  upon  a  trial  the  jury  re- 
turned a  general  verdict  in  her  favor,  and  made  answers  to  special 
questions  as  follows: 


136  FORMATION    OF    CONTRACT. 

"Question  No.  1.  Did  the  plaintiff  and  the  defendant  Judith  R. 
Weld  (then  Judith  E.  Kidder),  before  they  were  married,  and  after 
the  note  in  suit  had  been  given,  enter  into  a  parol  contract  or  agree- 
ment whereby  it  was  mutually  agreed  between  them  that,  in  considera- 
tion the  said  Judith  would  thereafter  marry  the  plaintiff,  the  note  in 
suit  should  upon  such  marriage  be  by  the  said  parties  mutually  re- 
garded as  paid  or  satisfied?  Ans.  Yes." 

"Question  No.  2.  If  you  answer  the  preceding  question  'yes/  then 
did  the  defendant  Judith  E.  Weld,  in  pursuance  of  such  alleged  con- 
tract, and  as  a  performance  thereof  on  her  part,  marry  the  plaintiff? 
Ans.  Yes." 

Judgment  was  rendered  for  the  defendant  for  costs.  It  is  now 
urged  that  the  evidence  supporting  the  plea  of  payment  was  inad- 
missible, because  the  contract,  being  oral,  is  within  the  statute  of 
frauds,  and  marriage  is  not  a  sufficient  part  performance  to  remove 
the  bar,  and  that  the  evidence  admitted  was  not  sufficient  to  sustain 
the  verdict. 

It  is  true  the  statute  of  frauds  provides  that  no  action  shall  be 
brought  to  charge  any  person  upon  any  agreement  made  upon  con- 
sideration of  marriage,  unless  the  agreement  upon  which  the  action 
is  brought,  or  some  memorandum  or  note  thereof,  shall  be  in  writing, 
and  signed  by  the  party  to  be  charged  therewith,  or  some  other  person 
by  him  or  her  lawfully  authorized.  Gen.  St.  1901,  §  3174. 

It  is  likewise  true  that  authorities  may  be  found  to  the  effect  that 
generally  marriage  is  not  a  sufficient  part  performance  to  avoid  the 
effect  of  the  statute.  But  there  is  no  question  of  part  performance 
in  this  case.  The  contract  was  fully  executed  when  the  defendant 
married  the  plaintiff.  Nothing  further  was  to  be  done  by  either 
party  to  satisfy  her  obligation.  The  agreement  was  not  that  the 
plaintiff  would  after  marriage  deliver  money  or  property  or  securi- 
ties to  the  defendant  in  consideration  of  the  marriage,  or  that  he 
would  after  marriage  execute  and  deliver  to  her  legal  documents 
affecting  her  property  rights.  It  simply  was  that  the  debt  should 
be  paid  when  they  were  married. 

Some  of  the  evidence  on  behalf  of  the  defendant  as  given  by  differ- 
ent witnesses  is  as  follows :  "  They  were  out  in  the  yard,  and  they 
came  into  the  house,  and  he  put  his  hand  on  her  shoulder  and  said : 
'Well,  Anna,  you  needn't  worry  about  the  debt;  after  we  are  married 
the  debt  will  be  paid/  About  three  weeks  after  they  were  married 
they  'came  back  to  our  house.  She  and  I  were  preparing  something 
for  dinner.  We  were  in  the  dining  room,  and  he  was  outside  pitching 
a  tent.  He  came  into  the  room.  He  slapped  her  on  the  shoulder, 
and  he  said  to  me:  'Anna  need  not  worry  no  more  about  the  debt; 
her  mortgage  is  paid.'  We  were  talking,  he  and  I  and  his  wife,  about 
the  indebtedness  on  the  place.  My  recollection  is  now  that  he  told 


FORM  :  STATUTE  OF  FRAUDS.        •         137 

her  that  there  was  no  indebtedness  on  the  place.  Right  then  I  said 
to  him  that  to  protect  Anna,  his  wife,  he  ought  to  cancel  the  mortgage. 
He  said  that  would  be  the  first  thing  to  do  when  they  got  home." 
The  statute  of  frauds  does  not  render  void  the  verbal  contracts  to 
which  it  refers.  They  are  valid  for  all  purposes  except  that  of  suit. 
Stout  v.  Ennis,  28  Kan.  713.  The  parties  may,  if  they  desire,  per- 
form them,  and,  when  performed,  the  statute  has  no  application  to 
them.  29  A.  &  E.  Encycl.  of  L.,  829,  941. 

The  plaintiff  argues  the  case  as  if  the  contract  were  that  he  should 
enter  of  record  a  satisfaction  of  the  mortgage.  Such,  however,  was 
not  the  tenor  of  the  agreement,  and  that  duty  followed,  upon  demand 
being  made,  whenever  the  debt  was  paid.  Gen.  St.  1901,  §  4224. 
Since  the  parol  evidence  introduced  established  a  contract  fully  per- 
formed, it  was  competent.  The  evidence  might  perhaps  have  been 
made  the  basis  of  different  conclusions  as  to  the  existence  of  the  con- 
tract relied  upon  as  a  defense  to  the  action.  It  was  therefore  properly 
eubmitted  to  the  jury  for  interpretation.  The  jury  has  performed 
its  duty  in  that  respect,  and  the  trial  judge  has  approved  the  result. 
Hence  this  court  will  not  interfere. 

Other  assignments  of  error  all  converge  in  the  proposition  first 
discussed  above',  and  need  not  be  separately  considered. 

The  judgment  of  the  district  court  is  affirmed.  All  the  Justices 
concurring.1 

20  Cyc.  302   (69)  ;  19  H.  L.  R.  58. 


ULLMAN  v.  MEYER. 

10  FEDERAL  REPORTER,  241. — 1882. 
(Circuit  Court,  8.  D.,  N.  Y,) 

Motion  for  a  new  trial. 

WALLACE,  D.  J.  I  am  constrained  to  hold  that  the  defendant 
was  erroneously  precluded  from  the  benefit  of  his  defence  under  the 
statute  of  frauds  on  the  trial  of  the  action,  and  that  the  construction 
of  the  statute,  which,  upon  a  hasty  reading  seemed  correct,  cannot 
be  maintained.  The  case  turns  upon  the  construction  of  the  statute 
of  frauds,  the  phraseology  of  which  differs  from  that  of  the  statute 
of  Charles  II.  It  is  stated  in  Parsons  on  Contracts,  vol.  3,  p.  3, 

i  Marriage  is  not  such  part  performance  of  an  oral  ante-nuptial  contract,  the 
sole  consideration  of  which  is  marriage,  as  to  take  it  out  of  the  operation  of 
the  Statute  of  Frauds,  and  the  contract  cannot  be  specifically  enforced  in  a 
court  of  equity. — Hunt  v.  Hunt,  171  N.  Y.  396  (Syllabus). 

For  review  of  cases  of  oral  contracts  based  upon  consideration  of  marriage, 
see  Kramer  v.  Kramer,  90  N.  Y.  Appellate  Division,  176  (reversed  181  N.  Y. 
477).  Upon  marriage  as  constituting  a  consideration,  see  7  C.  L.  R.  223. 


138  .  FORMATION    OF    CONTRACT. 

that  although  provisions  substantially  similar  have  been  made  by  the 
statutes  of  this  country,  in  no  one  State  is  the  English  statute  ex- 
actly copied. 

It  was  alleged  in  the  present  case,  and  the  evidence  tended  to 
show,  that  by  the  terms  of  the  agreement  of  marriage  between  the 
parties,  the  marriage  was  not  to  take  place  until  sometime  after  the 
expiration  of  one  year.  It  was  held  that,  by  force  of  the  exception 
in  the  third  section  of  our  statute,  promises  to  marry  were  not  re- 
quired to  be  in  writing  under  any  circumstances,  the  view  being  taken 
that  it  was  the  intention  of  the  statute  to  withdraw  agreements  to 
marry  altogether  from  its  operation. 

As  an  original  proposition  it  might  be  debated  whether  the  statute 
of  frauds  was  ever  intended  to  apply  to  agreements  to  marry.  They 
are  agreements  of  a  private  and  confidential  nature,  which,  in  coun- 
tries where  the  common  law  prevails,  are  usually  proved  by  circum- 
stantial evidence,  and  at  the  time  the  English  statute  was  passed 
were  not  actionable  at  law,  but  were  the  subjects  of  proceedings  in 
the  ecclesiastical  courts  to  compel  performance  of  them.  Neverthe- 
less, at  an  early  day  after  such  actions  became  cognizable  in  courts 
of  law  the  defence  of  the  statute  of  frauds  was  interposed,  under  that 
clause  of  the  statute  which  denies  a  right  of  action  upon  any  agree- 
ment made  upon  consideration  of  marriage  unless  the  agreement 
is  in  writing;  and  though  it  was  held  that  such  clause  only  related 
to  agreements  for  marriage  settlements,  there  seems  to  have  been 
no  doubt  in  the  minds  of  the  judges  that  promises  to  marry  were 
within  the  general  purview  of  the  statute.  In  our  own  country,  in 
Derby  v.  Phelps,  2  If.  H.  515,  the  question  was  directly  decided,  and 
it  was  held  that  although  the  defence  could  not  be  maintained  under 
the  marriage  clause  of  the  statute,  it  was  tenable  under  the  clause 
requiring  all  agreements  not  to  be  performed  within  a  year  to  be  in 
writing.  To  the  same  effect  are  Nichols  v.  Weaver,  7  Kan.  373,  and 
Lawrence  v.  Cooke,  56  Me.  193. 

The  question  has  never  been  presented  in  our  own  State,  and  the 
ruling  upon  the  trial  was  made  under  the  impression  that  the  excep- 
tion in  the  third  clause  of  our  statute  was  meaningless,  unless  intended 
to  relate  to  all  the  clauses.  It  was  entirely  unnecessary  if  limited  to  the 
particular  clause  in  which  it  is  placed,  because  by  the  settled  construc- 
tion of  the  statute  the  clause  did  not  apply  to  the  excepted  class  of 
promises.  1  Ld.  Raym.  387;  1  Strange,  34.  When  English  statutes, 
such  as  the  statute  of  frauds,  have  been  adopted  into  our  own  legisla- 
tion, the  known  and  settled  construction  of  these  statutes  has  been 
considered  as  silently  incorporated  into  the  acts.  Pennock  v.  Dia- 
logue, 2  Pet.  1. 

A  more  careful  examination  has,  however,  satisfied  me  that  the 
only  purpose  of  inserting  the  exception  was  by  way  of  explanation, 


FORM:  STATUTE  OF  FRAUDS.  139 

and  to  remove  any  doubt  as  to  the  meaning  of  the  clause  by  incor- 
porating into  it  expressly  what  would  otherwise  have  been  left  to  im- 
plication. This  conclusion  is  more  reasonable  than  the  supposition 
that  so  important  an  innovation  upon  the  statute  of  frauds  would 
have  been  engrafted  so  ambiguously.  If  it  had  been  intended  to 
exclude  promises  of  marriage  altogether  from  the  operation  of  the 
statute,  it  could  have  been  plainly  evinced  by  inserting  the  exception 
where  it  would  naturally  apply  to  all  the  classes  of  promises  required 
to  be  in  writing;  as  it  is,  it  more  obviously  refers  to  the  marriage 
clause,  and  the  class  of  promises  covered  by  that  clause.  It  has  no 
necessary  relation  to  the  other  classes  of  promises.  While  the  letters 
of  the  parties  show  a  marriage  engagement,  the  terms  of  the  engage- 
ment and  the  time  of  the  marriage  are  not  indicated  sufficiently  to 
take  the  case  out  of  the  statute.  The  evidence  offered  to  show  that 
the  promise  of  the  defendant  was  not,  by  its  terms,  to  be  performed 
within  a  year,  was  sufficient  to  present  a  question  of  fact  for  the 
jury. 

As  this  question  was  withdrawn  from  their  consideration,  there 
must  be  a  new  trial.1 

5  Cyc.  999  (8)  ;  20  Cyc.  199  (4-5)  ;  W.  P.  177  (19)  ;  14  H.  L.  R.  603. 


d.  Contract  for  sale  of  lands  or  hereditaments,  or  any  interest  in 
or  concerning  them. 

HEYN  v.  PHILIPS. 

37  CALIFORNIA,  529.— 1869. 

Appeal  from  the  District  Court,  Third  Judicial  District,  Ala- 
meda  County.  Judgment  for  defendant.  Plaintiff  appeals. 

SAWYER,  C.  J.  The  question  in  this  case  is,  whether  the  contract 
sued  on  and  proved  is  a  contract  "for  the  sale  of  any  lands,  or  in- 
terest in  lands,"  within  the  meaning  of  the  eighth  section  of  the 
statute  of  frauds,  and  which  is  required  to  be  in  writing,  and  sub- 
scribed by  the  party  to  be  charged. 

The  contract  alleged  is,  that  defendant  employed  said  plaintiff  to 
negotiate  a  sale  of  certain  described  lands,  and  find  a  purchaser 
for  the  same;  that  it  was 

"stipulated  and  agreed  by  and  between  said  defendant  and  said  plaintiff,  that 
if  said  plaintiff  would  and  should,  within  ten  days  from  said  last-named  day, 
find  a  purchaser  or  purchasers  for  said  land,  at  the  price  of  two  hundred  dol- 
lars per  acre,  that  the  said  defendant  would  sell  and  convey  the  same  for  that 
sum  to  such  purchaser  or  purchasers,  and  that  said  plaintiff  might  and  should 
have  for  his  services  in  making  such  negotiation  and  finding  a  purchaser  or 

i  Contra,  Brick  v.  Gannar,  36  Hun,  52;  Lewis  v.  Tapman,  90  Md.  294. 


140  FORMATION   OF   CONTRACT. 

purchasers,  all  that  might  or  could  be  obtained  from  such  purchaser  or  pur- 
chasers over  said  sum  of  two  hundred  dollars  per  acre;" 

that  plaintiff  found  a  purchaser  at  that  sum  and  four  thousand 
dollars  over;  that  said  purchaser  tendered  the  money  to  defendant 
and  'demanded  a  conveyance,  and  that  said  defendant  refused  to 
receive  said  sum,  or  make  a  conveyance,  whereby  plaintiff  was  pre- 
vented from  receiving  the  said  excess  of  four  thousand  dollars  as 
compensation  for  his  services. 

It  does  not  appear  to  us  that  this  is  a  contract  for  the  sale  of 
land,  or  an  interest  in  land,  within  the  meaning  of  the  statute  of 
frauds.  It  was  a  mere  contract  of  employment  between  the  plain- 
tiff and  defendant.  There  was  no  sale  of  land  from  the  defendant 
to  the  plaintiff.  The  plaintiff  was  simply  employed  to  find  a  pur- 
chaser for  defendant's  land  at  a  given  price  to  be  realized  by  de- 
fendant, and  the  compensation  to  be  received  by  plaintiff  was  to  be 
such  sum  as  he  could  get  for  the  land  over  the  given  price.  It  is 
true  that  defendant  agreed  that  in  case  a  purchaser  should  be  found 
willing  to  pay  the  given  price  or  a  larger  sum,  he  would  convey 
to  such  purchaser  upon  the  receipt  of  the  money  so  as  to  enable  plain- 
tiff to  realize  the  compensation,  and  he  did  not  agree  to  pay  anything 
himself,  but  this  was  still  but  a  mode  of  ascertaining  and  obtaining 
a  compensation  for  plaintiff's  services.  The  plaintiff  had  no  interest, 
and  was  to  have  no  interest  whatever  in  the  land,  as  such.  The  con- 
tract was  substantially  one  of  employment  to  find  a  purchaser  of 
land,  and  not  as  between  the  parties  a  sale  or  agreement  to  sell  land, 
or  any  interest  in  land.  The  subject-matter  of  the  contract  was  the 
business  of  finding  a  party  who  would  purchase  the  land  for  a  given 
price  and  such  sum  over  as  would  compensate  the  plaintiff  for  his 
services.  He  found  a  purchaser,  and  he  was  prevented  from  re- 
ceiving his  compensation  by  the  refusal  of  the  defendant  to  enter 
into  the  contract  of  sale  with  the  purchaser  found  by  plaintiff. 

We  think  the  judgment  and  order  denying  a  new  trial  should  be 
reversed  and  a  new  trial  had,  and  it  is  so  ordered.1 

20  Cyc.  234-235  (34-35)  ;  W.  P.  174  (15). 

i  In  Bates  v.  Babcock,  95  Cal.  479,  the  court  said :  "A  partnership  may 
be  formed  for  the  purpose  of  dealing  in  lands,  as  well  as  for  dealing  in  per- 
sonal estate,  or  for  engaging  in  professional,  or  commercial,  or  manufacturing 
occupations.  Like  any  other  contract  of  partnership,  it  is  an  agreement  to 
share  in  the  profit  and  loss  of  certain  business  transactions.  Such  a  partner- 
ship may  be  formed  for  the  purpose  of  buying  and  selling  land  generally,  or  it 
may  be  limited  to  a  speculation  upon  a  single  venture.  Dudley  v.  Littlefield, 
21  Me.  422;  Chester  v.  Dickerson,  54  N.  Y.  1,  13  Am.  Rep.  550;  Williams  v. 
Gillies,  75  N.  Y.  201.  Whether  such  a  partnership  can  be  formed,  except  by 
an  agreement  in  writing,  has  been  the  subject  of  conflicting  decisions.  There 
is  a  dictum  in  Gray  v.  .Palmer,  9  Cal.  639,  to  the  effect  that  it  must  be  in 
writing,  for  which  Story  on  Partnership,  section  83,  is  cited  as  authority;  and 


FORM  :  STATUTE  OF  FRAUDS.  141 

• 

e.  Agreement  not  to  be  performed  within  the  space  of  one  year 
from  the  making  thereof. 

WARNER  v.  TEXAS  &  PACIFIC  EY.  CO. 

164  UNITED  STATES,  418.— 1896. 

This  was  an  action  brought  May  9,  1892,  by  Warner  against  the 
Texas  &  Pacific  Railway  Company,  a  corporation  created  by  the  laws 
of  the  United  States,  upon  a  contract  made  in  1874,  by  which  it  was 
agreed  between  the  parties  that,  if  the  plaintiff  would  grade  the  ground 

in  Smith  v.  Burnham,  3  Sum.  458,  it  was  so  held  by  that  distinguished  jurist. 
The  great  weight  of  modern  authority,  however,  is  in  support  of  the  rule  that 
such  a  partnership  may  be  formed  in  the  same  mode  as  in  any  other,  and  that 
its  existence  may  be  established  by  the  same  character  of  evidence.  .  .  .  Ir- 
respective of  any  decision,  however,  an  agreement  of  this  character  cannot  be 
said  to  contravene  the  provisions  of  the  Statute  of  Frauds.  It  does  not  con- 
template any  transfer  of  land  from  one  party  to  the  other,  or  the  creation  of 
any  interest  or  estate  in  lands.  In  one  sense,  the  parties  to  such  an  agreement 
may  be  said  to  have  an  interest  in  the  lands  that  are  to  be  purchased  under 
the  agreement, — that  sense  in  which  the  beneficiary,  under  a  trust  for  the  sale 
of  real  estate,  and  payment  to  him  of  the  proceeds  of  the  sale,  has  an  interest 
in  the  land;  but  it  is  only  a  pecuniary  interest  resulting  from  the  sale  and 
a  right  to  have  the  land  sold,  rather  than  an  interest  in  the  land  itself."  See 
also  5  Mich.  L.  R.  698;  16  L.  R.  A.  745;  33  L.  R.  A.  (N.  s.)  883;  Lilienthal, 
Oral  agreements  for  real  estate  copartnerships,  13  H.  L.  R.  455. 

In  McKnight  v.  Bell,  135  Pa.  358,  it  was  held:  "A  parol  partition  of  lands 
between  tenants  in  common  is  not  a  sale  or  transfer  of  lands,  within  the  Statute 
of  Frauds.  If  tenants  in  common,  intending  to  make  a  partition  of  their  lands, 
run  a  line,  which  is  marked  on  the  ground  as  a  division  line,  and  actually 
take  possession  of  their  respective  parts  in  pursuance  thereof,  and  the  parti- 
tion is  fully  executed  between  them,  it  is  sufficient  to  vest  the  title  in  sev- 
eralty."  For  cases  accord  and  contra  see  30  Cyc.  160-161  nn.  73-79. 

In  Dougherty  v.  Catlett,  129  Ills.  431,  it  was  held:  "That  the  Statute  of 
Frauds  embraces  equitable  as  well  as  legal  interests  in  land  is  well  settled. 
Browne  on  Statute  of  Frauds,  sec.  229.  As  said  by  Mr.  Justice  Story  in 
Smith  v.  Burnham,  3  Sumner,  435,  'a  contract  for  the  conveyance  of  lands  is  a 
contract  respecting  an  interest  in  lands.  It  creates  an  equitable  estate  in  the 
vendee  in  the  very  lands,  and  makes  the  vendor  a  trustee  for  him.  A  contract 
for  the  sale  of  an  equitable  estate  in  lands,  whether  it  be  under  a  contract 
for  the  conveyance  by  a  third  party,  or  otherwise,  is  clearly  a  sale  of  an  in- 
terest in  lands,  within  the  Statute  of  Frauds.'  See  also  Richards  v.  Richards, 
9  Gray,  313;  Hughes  v.  Moore,  7  Cranch,  176;  Simms  v.  Killian,  12  Ired.  252  •, 
Dial  v.  Grain,  10  Texas,  444;  Catlett  v.  Dougherty,  21  111.  App.  116;  Jevne  v. 
Osgood,  57  111.  340." 

In  Parsons  v.  Phelan,  134  Mass.  109,  the  court  held:  "By  the  Statute  of 
Frauds,  no  action  can  be  brought  upon  a  contract  for  the  sale  of  lands,  or 
of  any  interest  in  or  concerning  lands,  unless  the  contract,  or  some  memoran- 
dum thereof,  is  in  writing.  Gen.  Sts.  c.  105,  sec.  1.  And  no  trust  concerning 
lands,  except  such  as  may  arise  or  result  by  implication  of  law,  can  be  created 
or  declared,  unless  by  an  instrument  in  writing.  Gen.  Sts.  c.  100,  sec.  19. 
In  the  case  before  us,  the  evidence  tended  to  show  that,  in  1880,  a  parcel  of 


142  FORMATION    OF    CONTRACT. 

for  a  switch,  and  put  on  the  ties,  at  a  certain  point  on  the  defendant's 
railroad,  the  defendant  would  put  down  the  rails,  and  maintain  the 
switch  for  the  plaintiff's  benefit  for  shipping  purposes  as  long  as  he 
needed  it.  The  defendant  pleaded  that  the  contract  was  oral  and 
within  the  statute  of  frauds,  because  it  was  "not  to  be  performed 
within  one  year  from  the  making  thereof,"  and  because  it  was  "a 
grant  or  conveyance  by  this  defendant  of  an  estate  of  inheritance,  and 
for  a  term  of  more  than  one  year,  in  lands." 

At  the  trial,  the  plaintiff,  being  called  as  a  witness  in  his  own  behalf, 
testified  that  in  1874  the  defendant's  agent  made  an  oral  contract 
with  him,  by  which  it  was  agreed  that,  if  he  would  furnish  the  ties 
and  grade  the  ground  for  the  switch,  the  defendant  would  put  down 
the  iron  rails  and  maintain  the  switch  for  the  plaintiff's  benefit  for 
shipping  purposes,  as  long  as  he  needed  it;  that  the  plaintiff  im- 
mediately graded  the  ground  for  the  switch,  and  got  out  and  put 
down  the  ties,  and  the  defendant  put  down  the  iron  rails,  and  es- 
tablished the  switch;  and  that  the  plaintiff,  on  the  faith  of  the  con- 
tinuance of  transportation  facilities  at  the  switch,  put  up  a  large 
sawmill,  bought  many  thousand  acres  of  land  and  timber  rights  and 
the  water  privileges  of  Big  Sandy  creek,  made  a  tram  road  three 
miles  long  from  the  switch  to  the  creek,  and  otherwise  expended  large 
sums  of  money,  and  sawed  and  shipped  large  quantities  of  lumber, 
until  the  defendant,  on  May  19,  1887,  while  its  road  was  operated 
by  receivers,  tore  up  the  switch  and  ties,  and  destroyed  his  trans- 
portation facilities,  leaving  his  lands  and  other  property  without  any 
connection  with  the  railroad.  His  testimony  also  tended  to  prove 
that  he  had  thereby  been  injured  to  the  amount  of  more  than  $50,000, 
for  which  the  defendant  was  liable,  if  the  contract  sued  on  was  not 
within  the  statute  of  frauds. 

On  cross-examination,  the  plaintiff  testified  that  when  he  made 
the  contract  he  expected  to  engage  in  the  manufacture  of  lumber  at 
this  place  for  more  than  one  year,  and  to  stay  there,  and  to  have  a 
site  for  lumber  there,  as  long  as  he  lived;  and  that  he  told  the  de- 
fendant's agent,  in  the  conversation  between  them  at  the  time  of 
making  the  contract,  that  there  was  lumber  enough  in  sight  on  the 
railroad  to  run  a  mill  for  ten  years,  and  by  moving  back  to  the  creek 
there  would  be  enough  to  run  a  mill  for  twenty  years  longer. 

land  in  Lynn  was  about  to  be  sold  by  auction;  and  that  the  plaintiff  and  de- 
fendant made  an  oral  contract  that  the  defendant  should  bid  off  and  buy  the 
estate  upon  the  joint  account  of  both  parties,  in  equal  shares.  It  is  clear 
upon  the  authorities  that  such  a  contract  is  within  the  statutes  above  cited; 
and  that  the  plaintiff  cannot  enforce  a  trust  in  his  favor  in  land  after  it  was 
conveyed  to  the  defendant,  or  maintain  an  action  at  law  for  a  breach  of  the 
contract.  Fickett  v.  Durham,  109  Mass.  419;  Wetherbee  v.  Potter,  99  Mass. 
354;  Smith  v.  Burnham,  3  Sumner,  435." 


FORM:  STATUTE  OP  FRAUDS.  143 

No  other  testimony  being  offered  by  either  party  bearing  upon  the 
question  whether  the  contract  sued  on  was  within  the  statute  of 
frauds,  the  Circuit  Court,  against  the  plaintiff's  objection  and  ex- 
ception, ruled  that  the  contract  was  within  the  statute,  instructed  the 
jury  to  find  a  verdict  for  the  defendant,  and  rendered  judgment 
thereon,  which  was  affirmed  by  the  Circuit  Court  of  Appeals,  upon 
the  ground  that  the  contract  was  within  the  statute  of  frauds,  as  one 
not  to  be  performed  within  a  year.  (13  U.  S.  App.  236,  54  Fed.  922.) 
The  plaintiff  sued  out  his  writ  of  error. 

MR.  JUSTICE  GRAY,  after  stating  the  case,  delivered  the  opinion  of 
the  court. 

The  statute  of  frauds  of  the  State  of  Texas,  re-enacting,  in  this 
particular,  the  English  statute  of  29  Car.  II.  c.  3,  §  4  (1677),  pro- 
vides that  no  action  shall  be  brought  "upon  any  agreement  which  is 
not  to  be  performed  within  the  space  of  one  year  from  the  making 
thereof,"  unless  the  "agreement  upon  which  such  action  shall  be 
brought,  or  some  memorandum  or  note  thereof,  shall  be  in  writing, 
and  signed  by  the  party  to  be  charged  therewith,  or  by  some  person 
by  him  thereunto  lawfully  authorized."  Tex.  St.  January  18,  1840 ; 
1  Pasch.  Dig.  (4th  ed.)  art.  3875;  Eev.  St.  1879,  art.  2464;  Bason  v. 
Hughart,  2  Tex.  476,  480. 

This  case  has  been  so  fully  and  ably  argued,  and  the  construction 
of  this  clause  of  the  statute  of  frauds  has  so  seldom  come  before  this 
court,  that  it  will  be  useful,  before  considering  the  particular  con- 
tract now  in  question,  to  refer  to  some  of  the  principal  decisions  upon 
the  subject  in  the  courts  of  England,  and  of  the  several  States. 

In  the  earliest  reported  case  in  England  upon  this  clause  of  the 
statute  regard  seems  to  have  been  had  to  the  time  of  actual  per- 
formance in  deciding  that  an  oral  agreement  that,  if  the  plaintiff 
would  procure  a  marriage  between  the  defendant  and  a  certain  lady, 
the  defendant  would  pay  him  fifty  guineas,  was  not  within  the  statute ; 
Lord  Holt  saying :  "Though  the  promise  depends  upon  a  contingent, 
the  which  may  not  happen  in  a  long  time,  yet,  if  the  contingent 
happen  within  a  year,  the  action  shall  be  maintainable,  and  is  not 
within  the  statute."  Francam  v.  Foster,  (1692)  Skin.  326;  S.  C., 
Holt,  25. 

A  year  later,  another  case  before  Lord  Holt  presented  the  question 
whether  the  words,  "agreement  not  to  be  performed  within  one  year," 
should  be  construed  as  meaning  every  agreement  which  need  not  be 
performed  within  the  year,  or  as  meaning  only  an  agreement  which 
could  not  be  performed  within  the  year,  and  thus,  according  as  the 
one  or  the  other  construction  should  be  adopted,  including  or  exclud- 
ing an  agreement  which  might  or  might  not  be  performed  within  the 
year,  without  regard  to  the  time  of  actual  performance.  The  latter 
was  decided  to  be  the  true  construction. 


144  FORMATION    Oif    CONTUAC  T. 

That  was  an  action  upon  an  oral  agreement,  by  which  the  de- 
fendant promised,  for  one  guinea  paid,  to  pay  the  plaintiff  so  many 
at  the  day  of  his  marriage;  and  the  marriage  did  not  happen  within 
the  year.  The  case  was  considered  by  all  the  judges.  Lord  Holt 
"was  of  opinion  that  it  ought  to  have  been  in  writing,  because  the 
design  of  the  statute  was,  not  to  trust  to  the  memory  of  witnesses  for 
a  longer  time  than  one  year."  But  the  great  majority  of  the  judges 
were  of  opinion  that  the  statute  included  those  agreements  only  that 
were  impossible  to  be  performed  within  the  year,  and  that  the  case 
was  not  within  the  statute,  because  the  marriage  might  have  hap- 
pened within  a  year  after  the  agreement;  and  laid  down  this  rule: 
"Where  the  agreement  is  to  be  performed  upon  a  contingent,  and  it 
does  not  appear  within  the  agreement  that  it  is  to  be  performed  after 
the  year,  then  a  note  in  writing  is  not  necessary,  for  the  contingent 
might  happen  within  the  year;  but  where  it  appears  by  the  whole 
tenor  of  the  agreement  that  it  is  to  be  performed  after  the  year,  there 
a  note  is  necessary."  Peter  v.  Compton,  (1693)  Skin.  353;  S.  C., 
Holt,  326,  cited  by  Lord  Holt  in  Smith  v.  Westall,  I  Ld.  Raym.  316, 
317;  Anon.,  Comyn,  49,  50;  Comb.  463. 

Accordingly,  about  the  same  time,  all  the  judges  held  that  a 
promise  to  pay  so  much  money  upon  the  return  of  a  certain  ship, 
which  ship  happened  not  to  return  within  two  years  after  the  promise 
made,  was  not  within  the  statute,  "for  that  by  possibility  the  ship 
might  have  returned  within  a  year;  and  although  by  accident  it  hap- 
pened not  to  return  so  soon,  yet,  they  said,  that  clause  of  the  statute 
extends  only  to  such  promises  where,  by  the  express  appointment  of 
the  party,  the  thing  is  not  to  be  performed  within  a  year/'  Anon.,  1 
Salk.  280. 

Again,  in  a  case  in  the  king's  bench  in  1762,  an  agreement  to  leave 
money  by  will  was  held  not  to  be  within  the  statute,  although  un- 
certain as  to  the  time  of  performance.  Lord  Mansfield  said  that  the 
law  was  settled  by  the  earlier  cases.  Mr.  Justice  Denison  said: 
"The  statute  of  frauds  plainly  means  an  agreement  not  to  be  per- 
formed within  the  space  of  a  year,  and  expressly  and  specifically  so 
agreed.  A  contingency  is  not  within  it;  nor  any  case  that  depends 
upon  contingency.  It  does  not  extend  to  cases  where  the  thing  only 
may  be  performed  within  the  year ;  and  the  act'  cannot  be  extended 
further  than  the  words  of  it."  And  Mr.  Justice  Wilmot  said  that  the 
rule  laid  down  in  1  Salk.  280,  above  quoted,  was  the  true  rule.  Fen- 
ton  v.  Emblers,  3  Burrows,  1278 ;  S.  C.,  1  W.  Bl.  353. 

It  thus  appears  to  have  been  the  settled  construction  of  this  clause 
of  the  statute  in  England,  before  the  Declaration  of  Independence, 
that  an  oral  agreement  which,  according  to  the  intention  of  the 
parties,  as  shown  by  the  terms  of  the  contract,  might  be  fully  per- 
formed within  a  year  from  the  time  it  was  made,  was  not  within  the 


FOBM:  STATUTE  OF  FRAUDS.  145 

statute,  although  the  time  of  its  performance  was  uncertain,  and 
might  probably  extend,  and  be  expected  by  the  parties  to  extend,  and 
did  in  fact  extend,  beyond  the  year. 

The  several  States  of  the  Union,  in  re-enacting  this  provision  of  the 
statute  of  frauds  in  its  original  words,  must  be  taken  to  have  adopted 
the  known  and  settled  construction  which  it  had  received  by  judicial 
decisions  in  England.  Tucker  v.  Oxley,  5  Cranch,  34,  42;  Pennock 
v.  Dialogue,  2  Pet.  1,  18;  McDonald  v.  Hovey,  110  U.  S.  619,  628. 
And  the  rule  established  in  England  by  those  decisions  has  ever  since 
been  generally  recognized  in  England  and  America,  although  it  may, 
in  a  few  instances,  have  been  warped  or  misapplied. 

The  decision  in  Boydell  v.  Drummond  (1809)  11  East,  142,  which 
has  been  sometimes  supposed  to  have  modified  the  rule,  was  really 
in  exact  accordance  with  it.  In  that  case  the  declaration  alleged  that 
the  Boydells  had  proposed  to  publish  by  subscription  a  series  of  large 
prints  from  some  of  the  scenes  of  Shakespeare's  plays,  in  eighteen 
numbers  containing  four  plates  each,  at  the  price  of  three  guineas 
a  number,  payable  as  each  was  issued,  and  one  number,  at  least,  to  be 
annually  published  after  the  delivery  of  the  first ;  and  that  the  defend- 
ant became  a  subscriber  for  one  set  of  prints,  and  accepted  and  paid 
for  two  numbers,  but  refused  to  accept  or  pay  for  the  rest.  The  first 
prospectus  issued  by  the  publishers  stated  certain  conditions,  in  sub- 
stance as  set  out  in  the  declaration,  and  others  showing  the  magnitude 
of  the  undertaking,  and  that  its  completion  would  unavoidably  take  a 
considerable  time.  A  second  prospectus  stated  that  one  number,  at 
least,  should  be  published  annually,  and  the  proprietors  were  con- 
fident that  they  should  be  enabled  to  produce  two  numbers  within 
the  course  of  every  year.  The  book  in  which  the  defendant  subscribed 
his  name  had  only,  for  its  title,  "Shakespeare  Subscribers.  Their 
signatures,"  without  any  reference  to  either  prospectus.  The  contract 
was  held  to  be  within  the  statute  of  frauds,  as  one  not  to  be  performed 
within  a  year,  because,  as  was  demonstrated  in  concurring  opinions 
of  Lord  Ellenborough  and  Justices  Grose,  LeBlanc,  and  Bayley,  the 
contract,  according  to  the  understanding  and  contemplation  of  the 
parties,  as  manifested  by  the  terms  of  the  contract,  was  not  to  be  fully 
performed  (by  the  completion  of  the  whole  work)  within  the  year; 
and  consequently,  a  full  completion  within  the  year,  even  i'f  physi- 
cally possible,  would  not  have  been  according  to  the  terms  or  the  in- 
tent of  the  contract,  and  could  not  have  entitled  the  publishers  to 
demand  immediate  payment  of  the  whole  subscription. 

[The  court  then  discusses  Wells  v.  Horton,  4  Bing.  40;  Souch  v. 
Strawbridge,  2  C.  B.  808 ;  Murphy  v.  O'Sullivan,  11  Ir.  Jur.  (N.  s.) 
Ill;  McGregor  v.  McGregor,  21  Q.  B.  D.  124.] 

The  cases  on  this  subject  in  the  courts  of  the  several  States  are 
generally  in  accord  with  the  English  cases  above  cited.  They  are  so 


146  FORMATION    OF    CONTRACT. 

numerous,  and  have  been  so  fully  collected  in  Browne  on  the  Statute 
of  Frauds  (5th  ed.  c.  13),  that  we  shall  refer  to  but  few  of  them, 
beyond  those  cited  by  counsel  in  the  case  at  bar.  . 

[The  court  then  states  Peters  v.  Westborough,  19  Pick.  364.] 

In  many  other  States,  agreements  to  support  a  person  for  life  have 
been  held  not  to  be  within  the  statute.  Browne,  St.  Frauds,  c.  13, 
§  276.  The  decision  of  the  Supreme  Court  of  Tennessee  in  Beaton 
v.  Coal  Co.  (12  Heisk,  650),  cited  by  the  defendant  in  error,  is  op- 
posed to  the  weight  of  authority. 

[The  court  then  discusses  Eoberts  v.  Kockbottom  Co.,  7  Met. 
(Mass.)  46;  Blanding  v.  Sargent,  33  N.  H.  239;  Hinckley  v.  South- 
gate,  11  Vt.  428;  Linscott  v.  Mclntire,  15  Me.  201;  Herrin  v.  Butters, 
20  Me.  119;  Broadwell  v.  Getman,  2  Denio  (1ST.  Y.)  87;  Pitkin  v. 
Long  Island  Railroad  Co.,  2  Barb.  Ch.  (N.  Y.)  221;  Kent  v.  Kent, 
62  X.  Y.  560;  Saunders  v.  Kastenbine,  6  B.  Mon.  (Ky.)  17;  Rail- 
way Co.  v.  Whitley,  54  Ark.  199;  Sweet  v.  Lumber  Co.,  56  Ark.  629] 

The  construction  and  application  of  this  clause  of  the  statute  of 
frauds  first  came  before  this  court  at  December  term,  1866,  in  Packet 
Co.  v.  Sickles  (5  Wall.  580),  which  arose  in  this  District  of  Columbia 
under  the  statute  of  29  Car.  II.  c.  3,  §  4,  in  force  in  the  state  of  Mary- 
land and  in  the  District  of  Columbia.  Alex.  Br.  St.  Md.  509;  Elli- 
cott  v.  Peterson,  13  Md.  476,  487 ;  Comp.  St.  D.  C.  c.  23,  §  7. 

That  was  an  action  upon  an  oral  contract,  by  which  a  steam- 
boat company  agreed  to  attach  a  patented  contrivance,  known  as  the 
"Sickles  Cut-off,"  to  one  of  its  steamboats,  and,  if  it  should  effect  a 
saving  in  the  consumption  of  fuel,  to  use  it  on  that  boat  during  the 
continuance  of  the  patent,  if  the  boat  should  last  so  long;  and  to  pay 
the  plaintiffs  weekly,  for  the  use  of  the  cut-off,  three-fourths  of  the 
value  of  the  fuel  saved,  to  be  ascertained  in  a  specified  manner.  At 
the  date  of  the  contract  the  patent  had  twelve  years  to  run.  The 
court,  in  an  opinion  delivered  by  Mr.  Justice  Nelson,  held  the  contract 
to  be  within  the  statute,  and  said :  "The  substance  of  the  contract  is 
that  the  defendants  are  to  pay  in  money  a  certain  proportion  of  the 
ascertained  value  of  the  fuel  saved  at  stated  intervals  throughout  the 
period  of  twelve  years,  if  the  boat  to  which  the  cut-off  is  attached 
should  last  so  long."  "It  is  a  contract  not  to  be  performed  within 
the  year,  subject  to  a  defeasance  by  the  happening  of  a  certain  event, 
which  might  or  might  not  occur  within  that  time."  (5  Wall.  594- 
596.)  And  reference  was  made  to  Birch  v.  Liverpool  (9  Barn.  & 
C.  392)  and  Dobson  v.  Collis  (1  Hurl.  &  N.  81),  in  each  of  which  the 
agreement  was  for  the  hire  of  a  thing,  or  of  a  person,  for  a  term 
specified  of  more  than  a  year,  determinable  by  notice  within  the  year, 
and  therefore  within  the  statute,  because  it  was  not  to  be  performed 
within  a  year,  although  it  was  defeasible  within  that  period. 

In  Packet  Co.  v.  Sickles  it  appears  to  have  been  assumed,  almost 


FORM:  STATUTE  OF  FRAUDS.  147 

without  discussion,  that  the  contract,  according  to  its  true  construc- 
tion, was  not  to  be  performed  in  less  than  twelve  years,  but  defeasible 
by  an  event  which  might  or  might  not  happen  within  that  time.  It 
may  well  be  doubted  whether  that  view  can  be  reconciled  with  the 
terms  of  the  contract  itself,  or  with  the  general  current  of  the  authori- 
ties. The  contract,  as  stated  in  the  forepart  of  the  opinion,  was  to 
use  and  pay  for  the  cut-off  upon  the  boat  "during  the  continuance  of 
the  said  patent,  if  the  said  boat  should  last  so  long."  (5  Wall.  581, 
594.)  The  terms  "during  the  continuance  of"  and  "last  so  long" 
would  seem  to  be  precisely  equivalent,  and  the  full  performance 
of  the  contract  to  be  limited  alike  by  the  life  of  the  patent 
and  by  the  life  of  the  boat.  It  is  difficult  to  understand  how 
the  duration  of  the  patent  and  the  duration  of  the  boat  differed 
from  one  another  in  their  relation  to  the  performance  or  the  deter- 
mination of  the  contract;  or  how  a  contract  to  use  an  aid  to  naviga- 
tion upon  a  boat  so  long  as  she  shall  last  can  be  distinguished  in 
principle  from  a  contract  to  support  a  man  so  long  as  he  shall  live, 
which  has  been  often  decided,  and  is  generally  admitted,  not  to  be 
within  the  statute  of  frauds. 

At  October  term,  1877,  this  court,  speaking  by  Mr.  Justice  Miller, 
said:  "The  statute  of  frauds  applies  only  to  contracts  which,  by 
their  terms,  are  not  to  be  performed  within  a  year,  and  does  not  apply 
because  they  may  not  be  performed  within  that  time.  In  other  words, 
to  make  a  parol  contract  void,  it  must  be  apparent  that  it  was  the  un- 
derstanding of  the  parties  that  it  was  not  to  be  performed  within  a 
year  from  the  time  it  was  made."  And  it  was  therefore  held,  in  one 
case,  that  a  contract  by  the  owner  of  a  valuable  estate,  employing 
lawyers  to  avoid  a  lease  therof,  and  to  recover  the  property,  and  prom- 
ising to  pay  them  a  certain  sum  out  of  the  proceeds  of  the  land  when 
recovered  and  sold,  was  not  within  the  statute,  because  all  this  might 
have  been  done  within  a  year;  and,  in  another  case,  that  a  contract, 
made  early  in  November,  1869,  to  furnish  all  the  stone  required  to- 
build  and  complete  a  lock  and  dam  which  the  contractor  with  the 
State  had  agreed  to  complete  by  September  1,  1871,  was  not  within 
the  statute,  because  the  contractor,  by  pushing  the  work,  might  have 
fully  completed  it  before  November,  1870.  McPherson  v.  Cox,  96 
U.  S.  404,  416,  417 ;  Walker  v.  Johnson,  Id.  424,  427. 

In  Texas,  where  the  contract  now  in  question  was  made,  and  this 
action  upon  it  was  tried,  the  decisions  of  the  Supreme  Court  of  the 
State  are  in  accord  with  the  current  of  decisions  elsewhere. 

[The  court  then  discusses  Thouvenin  v.  Lea,  26  Tex.  612;  Thomas 
v.  Hammond,  47  Tex.  42 ;  Weatherf ord,  &c.  Eailway  Co.  v.  Wood,  88 
Tex.  191.] 

In  the  case  at  bar,  the  contract  between  the  railroad  company  and 
the  plaintiff,  as  testified  to  by  the  plaintiff  himself,  who  was  the  only 


148  FORMATION   OF   CONTRACT. 

witness  upon  the  point,  was  that,  if  he  would  furnish  the  ties  and 
grade  the  ground  for  the  switch  at  the  place  where  he  proposed  to 
erect  a  sawmill,  the  railroad  company  would  "put  down  the  iron  rails 
and  maintain  the  switch  for  the  plaintiff's  benefit  for  shipping  pur- 
poses as  long  as  he  needed  it." 

The  parties  may  well  have  expected  that  the  contract  would  con- 
tinue in  force  for  more  than  one  year.  It  may  have  been  very  im- 
probable that  it  would  not  do  so ;  and  it  did  in  fact  continue  in  force 
for  a  much  longer  time.  But  they  made  no  stipulation  which,  in 
terms,  or  by  reasonable  inference,  required  that  result.  The  ques- 
tion is  not  what  the  probable,  or  expected,  or  actual  performance  of 
the  contract  was,  but  whether  the  contract,  according  to  the  reasonable 
interpretation  of  its  terms,  required  that  it  should  not  be  performed 
within  the  year.  No  definite  term  of  time  for  the  performance  of 
the  contract  appears  to  have  been  mentioned  or  contemplated  by  the 
parties,  nor  was  there  any  agreement  as  to  the  amount  of  lumber  to 
be  sawed  or  shipped  by  the  plaintiff,  or  as  to  the  time  during  which  he 
should  keep  up  his  mill. 

The  contract  of  the  railroad  company  was  with,  and  for  the  benefit 
of,  the  plaintiff  personally.  The  plaintiff's  own  testimony  shows 
(although  that  is  not  essential)  that  he  understood  that  the  per- 
formance of  the  contract  would  end  with  his  own  life.  The  obliga- 
tion of  the  railroad  company  to  maintain  the  switch  was  in  terms 
limited  and  restricted  by  the  qualification  "for  the  plaintiff's  benefit 
for  shipping  purposes  as  long  as  he  needed  it,"  and  no  contingency 
which  should  put  an  end  to  the  performance  of  the  contract,  other 
than  his  not  needing  the  switch  for  the  purpose  of  his  business,  ap- 
pears to  have  been  in  the  mouth  or  in  the  mind  of  either  party.  If 
within  a  year  after  the  making  of  the  contract,  the  plaintiff  had  died, 
or  had  abandoned  his  whole  business  at  this  place,  or  for  any  other 
reason  had  ceased  to  need  the  switch  for  the  shipping  of  lumbgr,  the 
railroad  company  would  have  been  no  longer  under  any  obligation 
to  maintain  the  switch,  and  the  contract  would*  have  been  brought  to 
an  end  by  having  been  fully  performed. 

The  complete  performance  of  the  contract  depending  upon  a  con- 
tingency which  might  happen  within  the  year,  the  contract  is  not 
within  the  statute  of  frauds  as  an  "agreement  which  is  not  to  be  per- 
formed within  the  space  of  one  year  from  the  making  thereof." 

Nor  is  it  within  the  other  clause  of  the  statute  of  frauds,  relied  on 
in  the  answer,  which  requires  certain  conveyances  of  real  estate  to 
be  in  writing.  The  suggestion  made  in  the  argument  for  the  de- 
fendant in  error,  that  the  contract  was,  in  substance,  a  grant  of  an 
easement  in  real  estate,  and  as  such  within  the  statute,  overlooks  the 
difference  between  the  English  and  the  Texan  statutes  in  this  particu- 
lar. The  existing  statutes  of  Texas,  while  they  substantially  follow 


FORM:  STATUTE  or  FRAUDS.  149 

the  English  statute  of  frauds,  so  far  as  to  require  a  conveyance  of  any 
"estate  of  inheritance  or  freehold,  or  for  a  term  of  more  than  one 
year,  in  lands  and  tenements,"  as  well  as  "any  contract  for  the  sale  of 
real  estate,  or  the  lease  thereof  for  a  longer  term  than  one  year,"  to 
be  in  writing,  omit  to  re-enact  the  additional  words  of  the  English 
statute,  in  the  clause  concerning  conveyances,  "or  any  uncertain  in- 
terest of,  in,  to,  or  out  of"  lands  or  tenements,  and,  in  the  other  clause, 
"or  any  interest  in  or  concerning  them."  St.  29  Car.  II.  c.  3,  §§  1,  4; 
Rev.  St.  Tex.  1879,  arts.  548,  2464;  Pasch.  Dig.  arts.  997,  3875; 
James  v.  Fulcrod,  5  Tex.  512,  516;  Stuart  v.  Baker,  17  Tex.  417, 
420 ;  Anderson  v.  Powers,  59  Tex.  213. 

Judgment  reversed,  and  case  remanded  to  the  Circuit  Court,  with 
directions  to  set  aside  the  verdict,  and  to  order  a  new  trial.1 

20  Cyc.  203  (19)  ;  15  L.  R.  A.  (N.S.)  313;  W.  P.  176-177   (17-18)  ;  24  H. 
L.  R.  160;  10  Mich.  L.  R.  561. 


DOYLE  v.  DIXON. 
97  MASSACHUSETTS,  208.— 1867. 

Contract  for  breach  of  an  agreement  by  the  defendant  not  to  go 
into  the  grocery  business  in  Chicopee  for  five  years.  Defendant  did 
enter  into  the  grocery  business  in  Chicopee,  and  continued  in  it  to  the 

i  A  contract  originally  within  the  one  year  clause  of  the  Statute  is  not 
removed  from  the  operation  of  the  Statute  where  the  parties,  in  order  to 
prevent  a  misunderstanding,  merely  restate  the  terms  orally  subsequently  and 
performance  may  be  within  a  year  from  such  restatement;  but  it  would  be 
otherwise  if  the  contract  were  to  be  expressly  renewed  at  such  later  time. — • 
Odell  v.  Webendorfer,  60  N.  Y.  App.  Div.  460. 

In  Billington  v.  Cahill,  51  Hun  (N.  Y.),  132,  the  court  said:  "To  hold  that 
a  contract  made  on  the  31st  day  of  March  for  service  for  one  year,  to  commence 
on  the  first  day  of  April,  was  not  within  the  statute  of  frauds,  would  be  to 
evade  and  not  to  execute  that  statute.  The  mandate  of  the  statute  is  posi- 
tive that  an  agreement  that,  by  its  terms,  is  not  to  be  performed  within  one 
year  from  the  making  thereof  shall  be  void,  unless  it  is  evidenced  by  some 
writing  signed  by  the  party  to  be  charged  therewith.  It  is  not  apparent  to  us 
how  it  can  fairly  be  held  that  a  contract  for  a  full  year's  service  can  be  per- 
formed within  one  year  from  the  making  thereof,  when  it  was  made  on  a  day 
previous  to  the  commencement  of  the  year.  If  this  statute  can  be  thus  ex- 
tended for  one  day,  why  may  it  not  be  extended  indefinitely?  The  agreement 
in  this  case  was  within  the  letter  and  intent  of  the  statute,  even  if  made  when 
claimed  by  the  respondent.  The  weight  of  the  authorities  is  to  that  effect." 
But  in  Smith  v.  Gold  Coast  Explorers,  [1903]  IK.  B.  285,  the  court  said:  "If 
the  contract  in  this  case  was  for  a  year's  service  commencing  on  December  7, 
1901 — that  is,  on  the  day  next  after  that  on  which  the  contract  was  made — 
and  terminating  on  December  6,  1902,  there  is  authority  for  holding  that 
such  a  contract  is  not  within  the  statute." 

The  clause  relating  to  contracts  not  to  be  performed  within  one  year  ap- 
plies to  contracts  to  sell  goods.  Prested  Miners  Co.  v.  Gardner,  [1911]  1 
IL  B.  425. 


150  FORMATION    OF    CONTRACT. 

time  of  the  commencement  of  this  action.  The  defendant  requested 
the  judge  to  rule  that  the  plaintiff  could  not  recover  upon  an  oral 
agreement  not  to  go  into  the  grocery  business  in  Chicopee  within  five 
years,  because  such  agreement  was  not  to  be  performed  within  one 
year  from  the  making  thereof  and  was  within  the  statute  of  frauds ; 
but  the  judge  ruled  the  contrary.  The  defendant  alleged  exceptions. 
GRAY,  J.  It  is  well  settled  that  an  oral  agreement  which  according 
to  the  expression  and  contemplation  of  the  parties  may  or  may  not  be 
fully  performed  within  a  year  is  not  within  that  clause  of  the  statute 
of  frauds  which  requires  any  "agreement  not  to  be  performed  within 
one  year  from  the  making  thereof"  to  be  in  writing  in  order  to  main- 
tain an  action.  An  agreement  therefore  which  will  be  completely 
performed  according  to  its  terms  and  intention  if  either  party  should 
die  within  the  year  is  not  within  the  statute.  Thus  in  Peters  v. 
Westborough,  19  Pick.  364,  it  was  held  that  an  agreement  to  support 
a  child  until  a  certain  age  at  which  the  child  would  not  arrive  for 
several  years  was  not  within  the  statute,  because  it  depended  upon  the 
contingency  of  the  child's  life,  and,  if  the  child  should  die  within 
one  year,  would  be  fully  performed.  On  the  other  hand,  if  the  agree- 
ment cannot  be  completely  performed  within  a  year,  the  fact  that  it 
may  be  terminated  or  further  performance  excused  or  rendered  im- 
possible, by  the  death  of  the  promisee  or  of  another  person  within  a 
year,  is  not  sufficient  to  take  it  out  of  the  statute.  It  was  therefore 
held  in  Hill  v.  Hooper,  1  Gray,  131,  that  an  agreement  to  employ  a 
boy  for  five  years  and  pay  his  father  certain  sums  at  stated  periods 
during  that  time  was  within  the  statute;  for  although  by  the  death 
of  the  boy  the  services  which  were  the  consideration  of  the  promise 
would  cease,  and  the  promise  therefore  be  determined,  it  would  cer- 
tainly not  be  completely  performed.  So  if  the  death  of  the  promisor 
within  the  year  would  merely  prevent  full  performance  of  the  agree- 
ment, it  is  within  the  statute ;  but  if  his  death  would  leave  the  agree- 
ment completely  performed  and  its  purpose  fully  carried  out,  it  is 
not.  It  has  accordingly  been  repeatedly  held  by  this  court  that  an 
agreement  not  hereafter  to  carry  on  a  certain  business  at  a  particular 
place  was  not  within  the  statute,  because,  being  only  a  personal  en- 
gagement to  forbear  doing  certain  acts,  not  stipulating  for  anything 
beyond  the  promisor's  life,  and  imposing  no  duties  upon  his  legal 
representatives,  it  would  be  fully  performed  if  he  died  within  the 
year.  Lyon  v.  King,  11  Met.  411;  Worthy  v.  Jones,  11  Gray,  168. 
An  agreement  not  to  engage  in  a  certain  kind,  of  business  at  a  par- 
ticular place  for  a  specified  number  of  years  is  within  the  same  prin- 
ciple ;  for  whether  a  man  agrees  not  to  do  a  thing  for  his  life,  or  never 
to  do  it,  or  only  not  to  do  it  for  a  certain  number  of  years,  it  is  in 
either  form  an  agreement  by  which  he  does  not  promise  that  anything 
shall  be  done  after  his  death,  and  the  performance  of  which  is  there- 


FORM:  STATUTE  OF  FRAUDS.  151 

fore  completed  with  his  life.  An  agreement  to  do  a  thing  for 
a  certain  time  may  perhaps  bind  the  promisor's  representatives,  and 
at  any  rate  is  not  performed  if  he  dies  within  that  time.  But  a  mere 
agreement  that  he  will  himself  refrain  from  doing  a  certain  thing 
is  fully  performed  if  he  keeps  it  so  long  as  he  is  capable  of  doing 
or  refraining.  The  agreement  of  the  defendant  not  to  go  into  busi- 
ness again  at  Chicopee  for  five  years  was  therefore  not  within  the 
statute  of  frauds.  .  .  . 

Exceptions  overruled.1 
20  Cyc.  204-205  (30-33)  ;  W.  P.  177  (10). 


GREAT  WESTERN  TURNPIKE  CO.  v.  SHAFER.2 

57  N.  Y.  APPELLATE  DIVISION,  331.— 1901. 

KELLOGG,  J.  This  action  was  brought  to  collect  tolls  for  passage 
through  the  plaintiff's  tollgate,  situated  at  the  easterly  end  of  its 
present  turnpike,  and  near  the  Albany  city  limits.  The  defendant 
admits  to  have  passed  in  1895  with  teams  hauling  ice  from  the  so- 
called  Buell  farm,  occupied  by  him,  and  that  he  paid  no  tolls.  The 
Buell  farm  is  near  the  tollgate,  the  dwelling  house  thereon  being 
within  100  feet  of  the  gate,  and  the  gate  stands  between  it  and  the 
city.  The  ice  was  gathered  from  a  pond  on  this  farm,  and  was 
stored  in  a  house  thereon,  and  within  400  feet  of  the  gate.  The  de- 
fendant claims  that  in  1853  an  oral  agreement  was  made  between 
"William  P.  Buell,  owner  of  a  life  interest  in  the  farm,  and  the  plain- 
tiff, whereby  Buell  was  to  close  up  a  private  road  which  gave  con- 
venient access  to  him  and  others  to  the  city  of  Albany  without  passing 
along  the  toll  road,  and  as  a  consideration  he  and  the  tenants  of  the 
Buell  farm  should  for  all  time  be  exempt  from  the  burden  of  toll ; 
that  he  closed  the  road,  and  has  always  since  kept  it  closed,  and  has, 
up  to  a  short  time  before  the  bringing  this  action  in  1895 — 40  years 
and  more — passed  the  tollgate  without  payment  of  any  toll,  and  up 
to  that  date  the  plaintiff  has  strictly  observed  the  terms  of  its  agree- 
ment, and  thereby  ratified  and  confirmed  it,  and  should  now  be  held 
to  it.  ... 

It  appears  from  the  evidence  that  some  one  in  the  employ  of  plain- 
tiff, in  about  1853,  professing  to  be  authorized  so  to  do,  did  agree 
with  Buell,  the  occupant  of  the  Buell  farm,  and  having  therein  a  life 
interest,  that,  if  he  would  close  up  a  road  which  diminished  the  travel 
over  plaintiff's  turnpike,  the  Buell  farm  and  its  occupants  should  be 
forever  relieved  of  tolls  at  the  gate  near  the  Buell  farm.  It  also  ap- 

1  Contra,  McGirr  v.  Campbell,  71  N.  Y.  Appellate  Division,  83;   Reeve  v. 
Jennings,  [1910]  2  K.  B.  522. 

2  Affirmed,  172  N.  Y.  662. 


152  FORMATION   OF   CONTRACT. 

pears  that  Buell,  acting  upon  that  promise,  did  close  the  road,  and 
it  never  was  thereafter  used.  It  also  appears  that  at  no  time  since — 
over  40  years — has  the  plaintiff  demanded  tolls  at  this  gate  of  Buell, 
or  from  any  tenant  or  occupant  of  the  Buell  farm.  It  is  well-recog- 
nized law  that  if  a  person  assumes  to  act  as  the  agent  of  a  corporation, 
and  the  corporation  afterwards  adopts  his  acts,  that  is  sufficient  proof 
of  authority.  It  is  wholly  inconsistent  that  after  40  years'  recognition 
of  this  agreement  the  plaintiff  should  now  raise  any  question  as  to  the 
authority  of  the  person  making  the  agreement. 

We  may  safely  conclude  that  the  agreement  was  made  and  was  well 
supported  by  ample  consideration,  and  by  its  terms  the  defendant  had 
the  right  to  haul  the  ice  in  1895  free  of  tolls.  The  only  remaining 
question  is  as  to  the  legal  force  of  the  agreement.  In  other  words, 
was  it  valid  at  law?  Except  for  the  statute  of  frauds,  I  think  there 
would  be  no  room  for  argument.  It  is  an  oral  agreement — Is  it  an 
agreement  not  to  be  performed  within  one  year?  Is  it  a  grant  of  an 
interest  in  lands, — an  easement?  The  pleadings  seem  to  have  also 
been  oral.  "Whether  the  statute  of  frauds  was  pleaded  so  as  to  be 
available  to  plaintiff  does  not  appear.  The  subject-matter  does  not 
seem  to  me  to  be  of  the  nature  of  an  easement  or  any  interest  in  land. 
Buell  was  not  negotiating  for  any  right  of  way.  The  right  to  pass 
and  repass  was  already  secured  to  him  by  the  law.  A  burden  was  at- 
tached to  that  right,  not  in  itself  in  any  way  a  limitation  on  the  right, 
nor  was  the  burden  in  the  nature  of  realty.  The  franchise  of  the 
plaintiff  empowered  it  to  exact  money;  to  fix  a  tax  upon  the  enjoy- 
ment of  the  right  of  way, — the  right  to  impose  an  obstruction  to  the 
freedom  of  the  use  which  the  law  conferred.  I  cannot  understand 
that  this  was  in  its  nature  such  an  interest  as  the  statute  of  frauds 
contemplates  when  it  requires  that  dealings  in  respect  to  it  must,  to 
be  valid,  be  evidenced  by  a  writing.  If  one  were  to  pay  a  return 
toll,  could  he  not  return  without  payment  of  another  toll  unless  he 
had  the  agreement  to  return  free  of  toll  in  writing  ?  What  Buell  ac- 
tually did  was  to  pay  his  toll  for  all  time  in  advance.  He  extin- 
guished a  burden  thereby,  and  plaintiff  had  no  right  afterwards  to 
impose  it.  The  tolls  had  been  paid.  That  is  the  sole  reason  that 
tolls  were  not  collectible.  The  amount  paid,  it  was  agreed,  should 
be,  and  was,  sufficient  to  cover  all  future  tolls  which  otherwise  might 
have  been  exacted  from  Buell  and  the  occupants  of  his  farm.  I  do 
not  think  plaintiff  can  repudiate  the  agreement  now  because  there  is 
no  writing  to  prove  it.  As  to  the  other  claim,  that  it  was  an  agree- 
ment not  to  be  performed  within  a  year,  and  therefore  void,  there 
seems  to  me  to  be  very  little  to  sustain  it,  and  what  argument  there 
may  be  is  specious.  It  was  not  an  agreement  to  do  anything.  If 
plaintiff  had  agreed  to  carry  Buell  for  a  number  of  years,  or 
had  agreed  to  do  any  continuous  labor  for  years,  or  to  maintain  its 


FORM:  STATUTE  OF  FRAUDS.  153 

turnpike  for  years,  a  ground  for  argument  would  be  apparent.  No 
time  here  is  fixed.  The  plaintiff  might  abolish  its  gate  within  a 
year,  but  time  was  not  involved.  The  agreement  at  once  and  forever 
eliminated  a  burden.  It  made  an  end  of  it  then.  There  was  no  future 
for  it, — no  year  or  succession  of  years.  The  plaintiff  sold  its  power 
to  vex  the  occupants  of  the  farm,  and  that  was  all  there  was  of  it. 

I  do  not  find  that  there  are  any  exceptions  taken  on  the  trial  which 
require  a  reversal,  nor  was  there  serious  error  committed  in  the  ad- 
mission or  exclusion  of  testimony.  I  think  the  judgment  should 
be  affirmed,  with  costs.  All  concur,  except  Parker,  P.  J.,  and  Smith, 
J.,  dissenting. 

15  H.  L.  R.  154. 


DURFEE  v.  O'BRIEN. 

16  RHODE  ISLAND,  213.— 1888. 

Defendant's  petition  for  a  new  trial. 

STINESS,  J.  The  record  in  this  case  shows  that  Philip  H.  Durfee, 
the  plaintiff's  intestate,  built  a  house  for  the  defendant  in  1874.  An 
agreement,  signed  by  said  Durfee  but  not  signed  by  the  defendant,  was 
put  in  evidence,  from  which  it  appeared  that  the  price  was  to  be 
$2,400 ;  of  which  sum  $500  was  to  be  paid  when  the  house  was  begun, 
$500  when  it  was  finished,  and  the  balance  in  five  yearly  payments, 
with  interest,  payable  semi-annually.  Payments  having  been  made 
from  time  to  time,  as  shown  by  receipts  and  an  account  entered  by 
said  Durfee  in  a  book  in  the  possession  of  the  defendant,  the  cost  of 
the  house  being  entered  as  $2,416.67,  the  plaintiff  sues  for  the  bal- 
ance due  on  the  contract,  with  interest.  The  defendant  asked  the 
court  to  charge  the  jury:  "That,  as  the  contract  sued  upon  was  not 
to  be  performed  by  both  parties  within  one  year  from  the  making 
thereof,  and  was  not  signed  by  the  defendant  or  by  some  one  authorized 
by  her  to  sign  it,  that  all  the  provisions  of  the  contract  are  void,  and 
the  plaintiff  can  recover  only  upon  the  quantum  meruit  counts  the 
reasonable  value  of  the  services  rendered  and  materials  furnished." 
The  presiding  justice  refused  this  request,  and  charged  the  jury: 
"That,  if  the  house  was  built  under  the  contract,  if  one  has  been 
proved,  and  accepted  by  the  defendant,  the  plaintiff  can  recover  the 
contract  price;  that,  if  there  was  a  contract  for  the  building  of  the 
house  for  a  stipulated  price,  and  the  house  was  built  according  to 
contract,  and  all  the  stipulations  on  the  part  of  Durfee  were  performed 
within  one  year,  according  to  the  intent  of  the  contract,  the  mere  fact 
that  payment  for  the  house  was  not,  according  to  the  agreement,  to 
be  completed  within  one  year,  would  not  relieve  the  defendant  from 
liability  to  pay  the  agreed  price,  even  if  the  agreement  was  not  signed 


154  FORMATION    OF    CONTRACT. 

by  the  defendant  or  her  agent."  The  defendant  sought  to  show  that 
it  was  not  worth  $2,400  to  build  the  house. 

We  must  assume  that  the  jury  found  there  was  a  contract  to  pay 
$2,400;  and  the  question  to  be  determined,  therefore,  is,  whether  the 
instruction  was  correct;  that  the  statute  of  frauds  does  not  extend 
to  actions  for  payment  upon  contracts  which  are  wholly  executed  on 
one  side  within  a  year. 

In  England  this  doctrine  was  first  decisively  laid  down  in  Donnel- 
lan  v.  Read,  3  B.  &  Ad.  899,  in  1832.  In  Souch  v.  Strawbridge,  2 
C.  B.  808,  it  was  approved  by  Tindal,  C.  J.,  but  the  decision  of  the 
case  did  not  turn  on  that  point.  In  Cherry  v.  Heming,  4  Exch.  Eep. 
631,  it  was  again  sustained;  again  in  Smith  v.  Neale,  2  C.  B.  N.  S. 
67 ;  and  in  the  recent  case  of  Miles  v.  New  Zealand  Alford  Estate  Co. 
54  L.  J.  Rep.  Eq.  1035,  North,  J.,  p.  1040,  citing  Donellan  v.  Read  and 
Cherry  v.  Heming,  says:  "I  think  there  is  a  great  deal  of  force  in 
the  observation  that  what  is  required  by  the  statute  is,  that  the  agree- 
ment should  be  performed  and  not  that  it  should  be  partly  per- 
formed, and  that  performance  means  performance  by  both  parties. 
But  that  has  been  settled;  and  it  has  been  decided  that  all  that  is 
required  is  performance  by  one  party  within  the  year,  however  many 
years  may  have  to  elapse  before  the  agreement  is  performed  by  the 
other  party."  In  this  country,  however,  there  has  been  consider- 
able conflict  of  opinion.  In  Alabama,  Georgia,  Maine,  South  Carolina, 
Maryland,  Illinois,  Ohio,  Indiana,  Arkansas,  Missouri,  and  Wisconsin, 
the  English  rule  has  been  followed.  See  Rake  v.  Pope,  7  Ala.  161 ; 
Johnson  v.  Watson,  1  Ga.  348 ;  Holbrook  v.  Armstrong,  10  Me.  31 ; 
Compton  v.  Martin,  5  Rich.  14 ;  Ellicott  v.  Turner,  4  Md.  476 ;  Cur- 
tis v.  Sage,  35  111.  22 ;  Randall  v.  Turner,  17  Ohio  St.  262 ;  Haigh 
and  others  v.  Blythe's  Executors,  20  Ind.  24;  Pledger  v.  Garrison, 
42  Ark.  246;  Suggett's  Adm'r  v.  Cason's  Adm'r,  26  Mo.  221;  Mc- 
Clellan  v.  Sanford,  26  Wise.  595.  In  New  Hampshire  the  decisions 
are  conflicting;  the  earliest  and  latest  sustaining  the  English  rule. 
See  Blanding  v.  Sargent,  33  N.  H.  239 ;  Emery  v.  Smith,  46  N.  H. 
151 ;  Perkins  v.  Clay,  54  N.  H.  518.  The  contrary  doctrine  has  been 
held  in  Vermont,  Massachusetts,  and  New  York.  See  Pierce  v. 
Estate  of  Paine,  28  Vt.  34 ;  Marcy  v.  Marcy,  9  Allen,  8 ;  Lockwood  v. 
Barnes,  3  Hill,  N.  Y.  128;  Broadwell  v.  Getman,  2  Denio,  87;  Kel- 
logg v.  Clark,  23  Hun,  393. 

In  the  former  class  of  cases  it  is  held  that  the  statute  does  not  ex- 
tend to  contracts  which  are  wholly  executed  on  one  side,  or  which  may 
be  executed  by  one  side  within  a  year,  but  only  to  contracts  which,  as 
a  whole,  are  not  to  be  executed  within  a  year.  These  cases  construe 
the  words,  "not  to  be  performed,"  to  mean  not  to  be  performed  on 
either  side  within  a  year.  The  other  class  of  cases  hold  that  per- 
formance by  one  party  is  not  performance  of  the  agreement,  and  that, 


FORM:  STATUTE  OF  FRAUDS.  155 

in  any  view,  the  part  of  the  contract  sued  upon  comes  within  the 
statute,  for  which  the  part  performed  is  only  the  consideration.  As 
to  the  question  which  is  involved  in  this  case,  viz.,  the  payment  for 
property  delivered  and  accepted  under  a  promise  to  pay,  we  think 
the  weight  of  authority  is  in  favor  of  the  English  rule.  Mr.  Browne, 
in  his  work  on  the  Statute  of  Frauds,  suggests  a  reason  for  the 
apparent  contrariety  of  the  rule  and  the  statute.  He  says,  4th  ed., 
§  290 :  "It  may  well  be  doubted,  indeed,  whether  this  doctrine  would 
ever  have  been  accepted  in  England,  if  the  question  had  not  uniformly 
arisen  on  cases  where  the  stipulation  sought  to  be  enforced  related 
solely  to  the  payment  of  the  money  consideration.  In  such  cases  it  is 
a  mere  matter  of  form  in  bringing  the  action,  the  plaintiff's  right 
to  recover  on  the  indebitatus  assumpsit,  which  count  is  uniformly 
found  to  have  been  inserted  in  the  declaration,  being  clear."  In 
Pierce  v.  Estate  of  Paine,  28  Vt.  34,  Eedfield,  C.  J.,  says :  "If  the 
contract  has  been  performed  on  one  side  in  such  a  manner  that  the 
performance  goes  to  the  benefit  of  the  other  party,  whether  this  was 
done  within  the  year  or  not,  it  undoubtedly  lays  the  foundation  of  a 
recovery  against  the  party  benefited  by  such  performance.  But  when 
the  contract  on  the  part  of  this  party  was  not  to  be  performed  within 
one  year  from  the  time  it  was  made,  the  recovery  is  not  upon  the 
contract  but  upon  the  quantum  meruit  or  valebat,  or  upon  money 
counts.  It  is  a  recovery  back  of  the  consideration  of  a  contract  upon 
which  no  action  will  lie,  and  which  has  been  repudiated  by  the  other 
party."  While  this  statement  is  logical,  and,  aside  from  the  con- 
sideration of  authority,  might  be  satisfactory,  it  is  evident  that  the 
real  difference  between  this  case  and  those  opposed  to  it  is  the  form 
of  pleading.  If  the  recovery  be  upon  a  quantum  meruit  count,  still 
the  contract  is  admissible  as  evidence  to  show  what  the  defendant  ad- 
mitted and  declared  the  consideration  to  be  worth,  and  to  show  the 
nature  and  extent  of  the  benefit  conferred.  1  Smith's  Lead.  Gas. 
7th  Amer.  ed.  588.  Now  under  the  English  rule  that  amount  is  fixed 
and  determined  by  the  contract,  and  under  a  quantum  meruit  it  may 
also  be  the  same  amount ;  but  in  the  latter  case  it  is  possible  that  one 
may  use  the  statute  as  a  means  of  depriving  another  of  the  stipulated 
price  for  which  he  let  his  property  go ;  or,  on  the  other  hand,  he  may 
be  compelled  to  pay  for  it  more  than  he  agreed  to  give.  The  inequity 
of  either  result  is  a  strong  reason  against  the  adoption  of  a  rule 
which  might  lead  to  it.  Another  reason  given  in  support  of  the  Eng- 
lish rule  in  these  cases  is,  that  inasmuch  as  the  contract  is  not  execu- 
tory except  as  to  the  matter  of  payment,  or  recovery  back  of  the  con- 
sideration, as  to  which  a  clear  right  of  action  exists,  such  cases  are 
not  within  the  mischief  which  the  statute  is  designed  to  prevent,  and 
therefore  not  to  be  construed  as  within  the  operation  of  the  statute. 
While  such  a  proposition  is  by  no  means  unanswerable,  there  is, 


156  FORMATION    OF    CONTRACT. 

nevertheless,  a  wide  distinction  between  a  case  where  one  seeks  to 
enforce  a  verbal  contract  more  than  a  year  after  it  was  made,  when 
witnesses  to  its  terms  may  have  died,  or  from  lapse  of  time  have 
lost  their  clear  recollection  of  executory  stipulations,  and  a  case  where 
one  simply  seeks  to  recover  payment  for  a  benefit  received.  In  the 
latter  case  the  question  comes  down  to  a  recovery  upon  a  count  on 
the  contract,  or  upon  quantum  meruit  with  the  contract  admissible  as 
evidence.  Since  recovery  on  the  contract  may,  as  we  have  seen,  be 
sustained  upon  reason,  and  is  supported  by  the  weight  of  authority, 
we  think  it  is  the  better  rule  to  follow.  We  decide  therefore,  that 
there  was  no  error  in  the  instruction  given  to  the  jury. 

It  is  also  claimed  by  the  defendant  that  there  is  no  liability  to  pay 
interest  except  from  the  date  of  a  demand  for  payment.  The  con- 
tract, as  claimed  by  the  plaintiff  and  found  by  the  jury,  was  to  pay 
the  balance  due  in  five  yearly  payments,  with  interest  at  eight  per 
cent  semi-annually.  The  plaintiff  claims  interest  only  at  the  rate 
of  six  per  cent.  The  time  when  the  payments  are  due  and  the 
agreement  to  pay  interest  being  definite,  the  charge  for  interest  was 
properly  allowed.  It  is  said  in  Spencer  v.  Pierce,  5  E.  I.  63,  that 
the  well  settled  American  rule  gives  interest  "as  an  invariable  legal 
incident  of  the  principal  debt,  from  the  day  of  default,  whenever  the 
debtor  knows  precisely  what  he  is  to  pay  and  when  he  is  to  pay  it." 

Petition  dismissed. 

20  Cyc.  291   (88);  292   (91);  W.  P.  177  (18);  789   (29). 


(Hi.)     Provisions  of  seventeenth  section. 

NORTHERN  et  al.  v.  THE  STATE  on  the  Relation  of 
LATHROP. 

1  INDIANA,  113.— 1848. 

PERKINS,  J.  .  .  .  The  finding  of  the  court  upon  the  issue  on  the 
replication  to  the  third  plea  was  wrong.  The  defendants  had  no  prop- 
erty subject  to  execution.  It  is  admitted  they  had  not,  unless  the  corn 
mentioned  below  was  so.  A  witness,  "James  H.  Goff,  testified  that, 
about  the  last  of  May  or  first  of  June,  1844,  after  the  corn  which 
David  Griffin  had  planted  on  the  farm  of  George  Cheek  was  two  or 
three  inches  high,  said  Griffin  called  and  told  him  the  weeds  were 
about  taking  his  corn;  that  he  was  poor  and  sick,  and  should  not  be 
able  to  raise  his  crop  unless,"  etc.  Goff  then  bought  the  corn  of 
Griffin,  paid  a  part  of  the  consideration  in  hand,  etc.  The  execution 
against  Griffin,  for  failing  to  make  the  money  on  which  the  defendants 
are  sued,  did  not  issue  till  the  August  succeeding  this  sale,  and  it  is 
not  pretended  there  was  any  fraud;  but  it  is  insisted  that  the  corn 


FORM:  STATUTE  OF  FRAUDS.  157 

was  not  so  in  esse  at  the  time  as  to  be  the  subject  of  sale,  and  that 
the  contract  was  for  an  interest  in  land  and  within  the  statute  re- 
quiring a  memorandum  in  writing.  The  cases  of  Whipple  v.  Foot 
(2  John.  418),  Austin  v.  Sawyer  (9  Cow.  39),  Ctaddock  v.  Riddles- 
barger  (2  Dana,  205),  and  Jones  v.  Flint  (10  Ad.  &  Ell.  753), 
among  others,  decide  that  growing  crops,  raised  annually,  by  labor, 
are  the  subject  of  sale  as  personal  property,  before  maturity,  and 
that  their  sale  does  not  necessarily  involve  an  interest  in  the  realty 
requiring  a  written  agreement.  See  also  Chit,  on  Con.  301;  1  Hill 
Ab.  58.  We  think  this  case  comes  within  those  cited.  No  other 
point  requires  an  opinion. 

It  is  only  necessary  to  add,  that  we  are  not  satisfied,  upon  a  full 
examination  of  this  case,  that  the  plaintiff  in  error  was  not  injured 
by  the  erroneous  decision  of  the  court  below,  and  shall,  therefore,  re- 
verse the  final  judgment  there  rendered. 

Per  Curiam.  The  judgment  is  reversed  with  costs.  Cause  re- 
manded, etc. 

20  Cyc.  244  (88)  ;  W.  P.  173  (14). 


HIETH  v.  GRAHAM. 

50  OHIO  STATE,  57.— 1893. 

The  plaintiff  in  error  brought  an  action  before  a  justice  of  the 
peace  to  recover  of  the  defendant  in  error  damages  alleged'  to  have 
been  sustained  on  account  of  the  refusal  of  the  latter  to  perform  a 
contract  by  which  he  had  sold  to  the  plaintiff  in  error  certain  grow- 
ing timber.  Plaintiff  had  judgment  before  the  justice  of  the  peace 
which  was  affirmed  by  the  Court  of  Common  Pleas,  but  reversed  by  the 
Circuit  Court.  Error  to  Circuit  Court. 

BRADBURY,  J.  .  .  .  Whether  a  sale  of  growing  trees  is  the  sale  of  an 
interest  in  or  concerning  land  has  long  been  a  much  controverted 
subject  in  the  courts  of  England,  as  well  as  in  the  courts  of  the  several 
States  of  the  Union.  The  question  has  been  differently  decided  in 
different  jurisdictions,  and  by  different  courts,  or  at  different  times 
by  the  same  court  within  the  same  jurisdiction.  The  courts  of  Eng- 
land, particularly,  have  varied  widely  in  their  holdings  on  the  subject. 
Lord  Mansfield  held  that  the  sale  of  a  crop  of  growing  turnips  was 
within  this  clause  of  the  statute.  Emmerson  v.  Heelis,  2  Taunt.  38, 
following  the  case  of  Waddington  v.  Bristow,  2  Bos.  &  P.  452,  where 
the  sale  of  a  crop  of  growing  hops  was  adjudged  not  to  have  been  a 
sale  of  goods  and  chattels  merely.  And  in  Crosby  v.  Wadsworth  (6 
East.  602)  the  sale  of  growing  grass  was  held  to  be  a  contract  for  the 
sale  of  an  interest  in  or  concerning  land,  Lord  Ellenborough  saying, 


158  FORMATION  OF  CONTRACT. 

"Upon  the  first  of  these  questions"  (whether  this  purchase  of  the 
growing  crop  be  a  contract  or  sale  of  lands,  tenements,  or  heredita- 
ments, or  any  interest  in  or  concerning  them)  "I  think  that  the 
agreement  stated,  conferring,  as  it  professes  to  do,  an  exclusive  right 
to  the  vesture  of  the  land  during  a  limited  time  and  for  given  pur- 
poses, is  a  contract  or  sale  of  an  interest  in,  or  at  least  an  interest 
concerning,  lands."  Id.  610.  Afterwards,  in  Teal  v.  Auty  (2  Brod. 
&  B.  99),  the  Court  of  Common  Pleas  held  a  contract  for  the  sale 
of  growing  poles  was  a  sale  of  an  interest  in  or  concerning  lands. 
Many  decisions  have  been  announced  by  the  English  courts  since  the 
cases  above  noted  were  decided,  the  tendency  of  which  have  been  to 
greatly  narrow  the  application  of  the  fourth  section  of  the  statute  of 
frauds  to  crops,  or  timber,  growing  upon  land.  Crops  planted  and 
raised  annually  by  the  hand  of  man  are  practically  withdrawn  from 
its  operation,  while  the  sale  of  other  crops,  and  in  some  instances 
growing  timber  also,  are  withdrawn  from  the  statute,  where,  in  the 
contemplation  of  the  contracting  parties,  the  subject  of  the  contract 
is  to  be  treated  as  a  chattel.  The  latest  declaration  of  the  English 
courts  upon  this  question  is  that  of  the  common  pleas  division  of  the 
high  court  of  justice  in  Marshall  v.  Green  (1  C.  P.  Div.  35),  decided 
in  1875.  The  syllabus  reads :  "A  sale  of  growing  timber  to  be  taken 
away  as  soon  as  possible  by  the  purchaser  is  not  a  contract  or  sale  of 
land,  or  any  interest  therein,  within  the  fourth  section  of  the  statute 
of  frauds."  This  decision  was  rendered  by  the  three  justices  who 
constituted  the  common  pleas  division  of  the  high  court  of  justice, 
Coleridge,  C.  J.,  Brett  and  Grove,  JJ.,  whose  characters  and  attain- 
ments entitle  it  to  great  weight ;  yet,  in  view  of  the  prior  long  period 
of  unsettled  professional  and  judicial  opinion  in  England  upon  the 
question,  that  the  court  was  not  one  of  final  resort,  and  that  the  de- 
cision has  encountered  adverse  criticism  from  high  authority  (Benj. 
Sales  [ed.  1892],  §  126),  it  cannot  be  considered  as  finally  settling 
the  law  of  England  on  this  subject.  The  conflict  among  the  Ameri- 
can cases  on  the  subject  cannot  be  wholly  reconciled.  In  Massa- 
chusetts, Maine,  Maryland,  Kentucky,  and  Connecticut,  sales  of 
growing  trees  to  be  presently  cut  and  removed  by  the  vendee,  are  held 
not  to  be  within  the  operation  of  the  fourth  section  of  the  statute  of 
frauds.  Claflin  v.  Carpenter,  4  Mete.  (Mass.)  580;  Nettleton  v. 
Sikes,  8  Mete.  (Mass.)  34;  Bostwick  v.  Leach,  3  Day,  476;  Erskine 
v.  Plummer,  7  Me.  447;  Cutler  v.  Pope,  13  Me.  377;  Cain  v.  McGuire, 
13  B.  Mon.  340 ;  Byassee  v.  Keese,  4  Mete.  (Ky.)  372 ;  Smith  v.  Bryan, 
5  Md.  141.  In  none  of  these  cases,  except  4  Mete.  (Ky.)  372,  and 
in  13  B.  Mon.  340,  had  the  vendor  attempted  to  repudiate  the  con- 
tract before  the  vendee  had  entered  upon  its  execution,  and  the  state- 
ment of  facts  in  those  two  cases  do  not  speak  clearly  upon  this  point. 
In  the  leading  English  case  before  cited  (Marshall  v.  Green,  1  C.  P. 


FORM:  STATUTE  OF  FRAUDS.  159 

Div.  35)  the  vendee  had  also  entered  upon  the  work  of  felling  the 
trees,  and  had  sold  some  of  their  tops  before  the  vendor  counter- 
manded the  sale.  These  cases,  therefore,  cannot  be  regarded  as  di- 
rectly holding  that  a  vendee,  by  parol,  of  growing  timber  to  be  pres- 
ently felled  and  removed,  may  not  repudiate  the  contract  before 
anything  is  done  under  it;  and  this  was  the  situation  in  which  the 
parties  to  the  case  now  under  consideration  stood  when  the  contract 
was  repudiated.  Indeed,  a  late  case  in  Massachusetts  (Giles  v. 
Simonds,  15  Gray,  441)  holds  that  "the  owner  of  land,  who  has  made 
a  verbal  contract  for  the  sale  of  standing  wood  to  be  cut  and  severed 
from  the  freehold  by  the  purchaser,  may  at  any  time  revoke  the  license 
which  he  thereby  gives  to  the  purchaser  to  enter  his  land  to  cut  and 
carry  away  the  wood,  so  far  as  it  relates  to  any  wood  not  cut  at  the 
time  of  the  revocation/'  The  courts  of  most  of  the  American  States, 
however,  that  have  considered  the  question,  hold  expressly  that'  a  sale 
of  growing  or  standing  timber  is  a  contract  concerning  an  interest  in 
lands,  and  within  the  fourth  section  of  the  statute  of  frauds.  Green 
v.  Armstrong,  1  Denio,  550;  Bishop  v.  Bishop,  11  N.  Y.  123;  West- 
brook  v.  Eager,  16  N.  J.  Law,  81;  Buck  v.  Pickwell,  27  Vt.  157;' 
Cool  v.  Lumber  Co.,  87  Ind.  531;  Terrell  v.  Frazier,  79  Ind.  473; 
Owens  v.  Lewis,  46  Ind.  488;  Armstrong  v.  Lawson,  73  Ind.  498; 
Jackson  v.  Evans,  44  Mich.  510,  7  N.  W.  Eep.  79;  Lyle  v.  Shinne- 
barger,  17  Mo.  App.  66;  Howe  v.  Batchelder,  49  N.  H.  204;  Putney 
v.  Day,  6  N.  H.  430;  Bowers  v.  Bowers,  95  Pa.  St.  477;  Daniels  v. 
Bailey,  43  Wis.  566;  Lillie  v.  Dunbar,  62  Wis.  198,  22  N.  W.  Eep. 
467;  Knox  v.  Haralson,  2  Tenn.  Ch.  232.  The  question  is  now,  for 
the  first  time,  before  this  court  for  determination;  and  we  are  at 
liberty  to  adopt  that  rule  on  the  subject  most  conformable  to  sound 
reason.  In  all  its  other  relations  to  the  affairs  of  men,  growing  tim- 
ber is  regarded  as  an  integral  part  of  the  land  upon  which  it  stands ; 
it  is  not  subject  to  levy  and  sale  upon  execution  as  chattel  property ; 
it  descends  with  the  land  to  the  heir,  and  passes  to  the  vendor  with 
the  soil.  Jones  v.  Timmons,  21  Ohio  St.  596.  Coal,  petroleum, 
building  stone,  and  many  other  substances  constituting  integral  parts 
of  the  land,  have  become  articles  of  commerce,  and  easily  detached 
and  removed,  and,  when  detached  and  removed,  become  personal 
property,  as  well  as  fallen  timber;  but  no  case  is  found  in  which  it 
is  suggested  that  sales  of  such  substances,  with  a  view  to  their  imme- 
diate removal,  would  not  be  within  the  statute.  Sales  of  growing 
timber  are  as  likely  to  become  the  subjects  of  fraud  and  perjury  as 
are  the  other  integral  parts  of  the  land,  and  the  question  whether 
such  sale  is  a  sale  of  an  interest  in  or  concerning  lands  should  depend 
not  upon  the  intention  of  the  parties,  but  upon  the  legal  character 
of  the  subject  of  the  contract,  which,  in  the  case  of  growing  timber, 
is  that  of  realty.  This  rule  has  the  additional  merit  of  being  clear, 


160  FORMATION    OF    CONTRACT. 

simple,  and  of  easy  application, — qualities  entitled  to  substantial 
weight  in  choosing  between  conflicting  principles.  Whether  circum- 
stances of  part  performance  might  require  a  modification  of  this  rule 
is  not  before  the  court,  and  has  not  been  considered.  Judgment 
affirmed.1 

20  Cyc.  245  (89)  ;  228-229  (84-87)  ;  19  L.  R.  A.  721;  W.  P.  173  (14) ;  783 
(19). 


GODDAED  v.  BIKNEY. 
115  MASSACHUSETTS,  450.— 1874. 

Contract  to  recover  the  price  of  a  buggy  built  by  plaintiff  for  de- 
fendant. Defense,  the  statute  of  frauds. 

Defendant  ordered  plaintiff,  a  carriage  manufacturer,  to  build  him 
a  buggy,  with  a  drab  lining,  outside  seat  of  cane,  painted  in  a  specified 
style,  and  with  defendant's  monogram  on  the  sides.  Defendant  called 
on  plaintiff  afterward,  and  on  being  asked  if  he  would  consent  that 
plaintiff  should  sell  the  buggy,  replied  no,  that  he  would  keep  it. 
After  it  was  finished  according  to  directions,  plaintiff  sent  a  bill  to 
defendant,  and  sent  twice  afterward  for  payment,  and  each  time 
defendant  promised  to  call  and  see  plaintiff  about  it.  Before  the 
buggy  was  paid  for  or  delivered,  it  was  burned. 

Verdict  was  directed  for  defendant,  and  it  was  agreed  that  if  the 
court  is  of  opinion  that  the  buggy  was  on  the  premises  of  plaintiff  at 
risk  of  defendant,  the  verdict  should  be  set  aside  and  judgment  en- 
tered for  plaintiff  for  $675  and  interest;  otherwise  judgment  on  the 
verdict. 

AMES,  J.  "Whether  an  agreement  like  that  described  in  this  report 
should  be  considered  as  a  contract  for  the  sale  of  goods,  within  the 
meaning  of  the  statute  of  frauds,  or  a  contract  for  labor,  services, 
and  materials,  and  therefore  not  within  that  statute,  is  a  question  upon 
which  there  is  a  conflict  of  authority.  According  to  a  long  course 
of  decisions  in  New  York,  and  in  some  other  States  of  the  Union, 
an  agreement  for  the  sale  of  any  commodity  not  in  existence  at  the 
time,  but  which  the  vendor  is  to  manufacture  or  put  in  a  condition 
to  be  delivered  (such  as  flour  from  wheat  not  yet  ground,  or  nails  to 

i  In  Long  v.  White,  42  Oh.  St.  59,  the  court  held:  "In  applying  the  Statute 
of  Frauds,  buildings  are  not  classed  with  forest  trees,  but  with  growing 
crops,  nursery  trees,  and  fixtures  attached  to  realty.  And  buildings  are  realty 
or  personalty,  according  to  the  intention  of  the  parties.  And  when  the  parties 
in  interest  agree  that  they  way  be  severed  and  moved  from  the  realty,  build- 
ings are  held  and  treated  as  personalty.  Bostwick  v.  Leach,  3  Day,  476; 
Hollen  v.  Runder,  Cromp.  M.  &  R.  266:  Curtis  v.  Hoyt,  19  Conn.  154;  Shaw 
v.  Carbrey,  13  Allen,  462;  Hartwell  v.  Kelly,  117  Mass.  235,  237;  Keyser  v. 
District  No.  8,  35  N.  H.  477;  Fortman  v.  Goepper,  14  Ohio  St.  558;  Wagner 
v.  C.  and  T.  R.  Co.,  22  Ohio  St.  563,  576." 


FORM:  STATUTE  OF  FRAUDS.  161 

be  made  from  iron  in  the  vendor's  hands),  is  not  a  contract  of  sale 
within  the  meaning  of  the  statute.  Crookshank  v.  Burrell,  18  Johns. 
58;  Sewall  v.  Fitch,  8  Cow.  215;  Eobertson  v.  Vaughn,  5  Sandf.  1; 
Downs  v.  Ross,  23  Wend.  270 ;  Eichelberger  v.  M'Cauley,  5  Har.  &  J. 
213.  In  England,  on  the  other  hand,  the  tendency  of  the  recent  de- 
cisions is  to  treat  all  contracts  of  such  a  kind  intended  to  result  in  a 
sale,  as  substantially  contracts  for  the  sale  of  chattels;  and  the  de- 
cision in  Lee  v.  Griffin  (1  B.  &  S.  272)  goes  so  far  as  to  hold  that 
a  contract  to  make  and  fit  a  set  of  artificial  teeth  for  a  patient  is 
essentially  a  contract  for  the  sale  of  goods,  and  therefore  is  subject 
to  the  provisions  of  the  statute.  See  Maberley  v.  Sheppard,  10  Bing. 
99;  Howe  v.  Palmer,  3  B.  &  Aid.  321;  Baldey  v.  Parker,  2  B.  &  C. 
37;  Atkinson  v.  Bell,  8  B.  &  C.  277. 

In  this  commonwealth,  a  rule  avoiding  both  of  these  extremes  was 
established  in  Mixer  v.  Howarth  (21  Pick.  205),  and  has  been  recog- 
nized and  affirmed  in  repeated  decisions  of  more  recent  date.  The 
effect  of  these  decisions  we  understand  to  be  this,  namely,  that  a 
contract  for  the  sale  of  articles  then  existing  or  such  as  the  vendor  in 
the  ordinary  course  of  his  business  manufactures  or  procures  for  the 
general  market,  whether  on  hand  at  the  time  or  not,  is  a  contract 
for  the  sale  of  goods,  to  which  the  statute  applies.  But  on  the  other 
hand,  if  the  goods  are  to  be  manufactured  especially  for  the  pur- 
chaser, and  upon  his  special  order,  and  not  for  the  general  market, 
the  case  is  not  within  the  statute.  Spencer  v.  Cone,  1  Met.  283. 
"The  distinction/'  says  Chief  Justice  Shaw,  in  Lamb  v.  Crafts  (12 
Met.  353),  "we  believe  is  now  well  understood.  When  a  person  stipu- 
lates for  the  future  sale  of  articles,  which  he  is  habitually  making, 
and  which,  at  the  time,  are  not  made  or  finished,  it  is  essentially  a 
contract  of  sale,  and  not  a  contract  for  labor;  otherwise,  when  the 
article  is  made  pursuant  to  the  agreement."  In  Gardner  v.  Joy  (9 
Met.  177)  a  contract  to  buy  a  certain  number  of  boxes  of  candles  at 
a  fixed  rate  per  pound,  which  the  vendor  said  he  would  manufacture 
and  deliver  in  about  three  months,  was  held  to  be  a  contract  of  sale 
and  within  the  statute.  To  the  same  general  effect  are  Waterman 
v.  Meigs,  4  Gush.  497,  and  Clark  v.  Nichols,  107  Mass.  547.  It  is 
true  that  in  "the  infinitely  various  shades  of  different  contracts," 
there  is  some  practical  difficulty  in  disposing  of  the  questions  that 
arise  under  that  section  of  the  statute.  Gen.  Sts.  c.  105,  §  5.  But 
we  see  no  ground  for  holding  that  there  is  any  uncertainty  in  the 
rule  itself.  On  the  contrary,  its  correctness  and  justice  are  clearly 
implied  or  expressly  affirmed  in  all  of  our  decisions  upon  the  subject- 
matter.  It  is  proper  to  say  also  that  the  present  case  is  a  much 
stronger  one  than  Mixer  v.  Howarth.  In  this  case,  the  carriage  was 
not  only  built  for  the  defendant,  but  in  conformity  in  some  respects 
with  his  directions,  and  at  his  request  was  marked  with  his  initials. 


162  FORMATION    OF    CONTRACT. 

It  was  neither  intended  nor  adapted  for  the  general  market.  As  we 
are  by  no  means  prepared  to  overrule  the  decision  in  that  case,  we 
must  therefore  hold  that  the  statute  of  frauds  does  not  apply  to  the 
contract  which  the  plaintiff  is  seeking  to  enforce  in  this  action. 

Independently  of  that  statute,  and  in  cases  to  which  it  does  not 
apply,  it  is  well  settled  that  as  between  the  immediate  parties,  property 
in  personal  chattels  may  pass  by  bargain  and  sale  without  actual  de- 
livery. If  the  parties  have  agreed  upon  the  specific  thing  that  is 
sold  and  the  price  that  the  buyer  is  to  pay  for  it,  and  nothing  remains 
to  be  done  but  that  the  buyer  should  pay  the  price  and  take  the  same 
thing,  the  property  passes  to  the  buyer,  and  with  it  the  risk  of  loss 
by  fire  or  any  other  accident.  The  appropriation  of  the  chattel  to 
the  buyer  is  equivalent,  for  that  purpose,  to  delivery  by  the  seller. 
The  assent  of  the  buyer  to  take  the  specific  chattel  is  equivalent  for 
the  same  purpose  to  his  acceptance  of  possession.  Dixon  v.  Yates, 
5  B.  &  Ad.  313,  340.  The  property  may  well  be  in  the  buyer,  though 
the  right  of  possession,  or  lien  for  the  price,  is  in  the  seller.  There 
could  in  fact  be  no  such  lien  without  a  change  of  ownership.  No 
man  can  be  said  to  have  a  lien,  in  the  proper  sense  of  the  term,  upon 
his  own  property,  and  the  seller's  lien  can  only  be  upon  the  buyer's 
property.  It  has  often  been  decided  that  assumpsit  for  the  price  of 
goods  bargained  and  sold  can  be  maintained  where  the  goods  have 
been  selected  by  the  buyer,  and  set  apart  for  him  by  the  seller,  though 
not  actually  delivered  to  him,  and  where  nothing  remains  to  be  done 
except  that  the  buyer  should  pay  the  agreed  price.  In  such  a  state 
of  things  the  property  vests  in  him,  and  with  it  the  risk  of  any  acci- 
dent that  may  happen  to  the  goods  in  the  meantime.  Noy's  Maxims, 
89;  2  Kent.  Com.  (12th  ed.)  492;  Bloxam  v.  Sanders,  4  B.  &  C.  941; 
Tarling  v.  Baxter,  6  B.  &  C.  360;  Hinde  v.  Whitehouse,  7  East,  571; 
Macomber  v.  Parker,  13  Pick.  175,  183;  Morse  v.  Sherman,  106 
Mass.  430. 

In  the  present  case,  nothing  remained  to  be  done  on  the  part  of 
the  plaintiff.  The  price  had  been  agreed  upon;  the  specific  chattel 
had  been  finished  according  to  order,  set  apart  and  appropriated  for 
the  defendant,  and  marked  with  his  initials.  The  plaintiff  had  not 
undertaken  to  deliver  it  elsewhere  than  on  his  own  premises.  He 
gave  notice  that  it  was  finished,  and  presented  his  bill  to  the  de- 
fendant, who  promised  to  pay  it  soon.  He  had  previously  requested 
that  the  carriage  should  not  be  sold,  a  request  which  substantially  is 
equivalent  to  asking  the  plaintiff  to  keep  it  for  him  when  finished. 
Without  contending  .that  these  circumstances  amount  to  a  delivery 
and  acceptance  within  the  statute  of  frauds,  the  plaintiff  may  well 
claim  that  enough  has  been  done,  in  a  case  not  within  that  statute,  to 
vest  the  general  ownership  in  the  defendant,  and  to  cast  upon  him 


FORM:  STATUTE  OF  FRAUDS.  163 

the  risk  of  loss  by  fire,  while  the  chattel  remained  in  the  plaintiff's 
possession. 

According  to  the  terms  of  the  reservation,  the  verdict  must  be  set 
aside,  and  judgment  entered  for  the  plaintiff.1 

20  Cyc.  241  (70-79) ;  14  L.  E.  A.  230;  13  C.  L.  R.  525;  Williston  on  Sales, 
pp.  60-63  (8-17). 

i  English  rule  at  common  law. — In  Lee  v.  Griffin,  1  Best  &  Smith,  272,  the 
action  was  brought  to  recover  the  sum  of  £21  for  two  sets  of  artificial  teeth 
ordered  by  the  deceased.  Crompton,  J.,  said:  "The  main  question  which 
arose  at  the  trial  was,  whether  the  contract  in  the  second  count  could  be  treated 
as  one  for  work  and  labour,  or  whether  it  was  a  contract  for  goods  sold  and 
delivered.  The  distinction  between  these  two  causes  of  action  is  sometimes 
very  fine;  but,  where  the  contract  is  for  a  chattel  to  be  made  and  delivered, 
it  clearly  is  a  contract  for  the  sale  of  goods.  There  are  some  cases  in  which 
the  supply  of  the  materials  is  ancillary  to  the  contract,  as  in  the  case  of  a 
printer  supplying  the  paper  on  which  a  book  is  printed.  In  such  a  case  an 
action  might  perhaps  be  brought  for  work  and  labour  done,  and  materials  pro- 
vided, as  it  could  hardly  be  said  that  the  subject-matter  of  the  contract  was 
the  sale  of  a  chattel:  perhaps  it  is  more  in  the  nature  of  a  contract  merely 
to  exercise  skill  and  labour.  Clay  v.  Yates,  1  H.  &  N.  73,  turned  on  its  own 
peculiar  circumstances.  I  entertain  some  doubt  as  to  the  correctness  of  that 
decision;  but  I  certainly  do  not  agree  to  the  proposition  that  the  value  of 
the  skill  and  labour,  as  compared  to  that  of  the  material  supplied,  is  a  criterion 
by  which  to  decide  whether  the  contract  be  for  work  and  labour  or  for  the 
sale  of  a  chattel.  Here,  however,  the  subject-matter  of  the  contract  was  the 
supply  of  goods.  The  case  bears  a  strong  resemblance  to  that  of  a  tailor  sup- 
plying a  coat,  the  measurement  of  the  mouth  and  fitting  of  the  teeth  being 
analogous  to  the  measurement  and  fitting  of  the  garment." 

New  York  rule  at  common  law. — In  Cooke  v.  Millard,  65  N.  Y.  352,  the 
defendants,  desiring  to  purchase  lumber,  went  to  plaintiff's  yard,  where  they 
were  shown  lumber  of  the  desired  quality,  but  which,  to  meet  their  require- 
ments, needed  to  be  dressed  and  cut  into  different  sizes.  They  gave  a  verbal 
order  for  certain  quantities  and  sizes,  amounting,  at  the  prices  specified,  to 
$918.22,  to  be  taken  from  the  lots  examined  by  defendants.  The  court  held 
the  contract  to  be  a  sale  and  within  the  statute  of  frauds.  Dwight,  C.,  in  an 
exhaustive  opinion  said :  "It  is  held  here  by  a  long  course  of  decisions,  that  an 
agreement  for  the  sale  of  any  commodity  not  in  existence  at  the  time,  but 
which  the  vendor  is  to  manufacture  or  put  in  a  condition  to  be  delivered, 
such  as  flour  from  wheat  not  yet  ground,  or  nails  to  be  made  from  iron  be- 
longing to  the  manufacturer,  is  not  a  contract  of  sale.  The  New  York  rule 
lays  stress  on  the  word  sale.  There  must  be  a  sale  at  the  time  the  contract 
is  made.  The  latest  and  most  authoritative  expression  of  the  rule  is  found 
in  a  recent  case  in  this  court.  (Parsons  v.  Loucks,  48  N.  Y.  17,  19.)  The 
contrast  between  Parsons  v.  Loucks,  in  this  state  on  the  one  hand,  and  Lee 
v.  Griffin  ( supra ) ,  in  England  on  the  other  is,  that  in  the  former  case,  the 
word  sale  refers  to  time  of  entering  into  the  contract,  while  in  the  latter,  ref- 
erence is  had  to  the  time  of  delivery,  as  contemplated  by  the  parties.  If  at 
that  time  it  is  a  chattel  it  is  enough,  according  to  the  English  rule.  Other 
cases  in  this  State  agreeing  with  Parsons  v.  Loucks,  are  Crookshank  v.  Burrel 
(18  J.  R.  58);  Sewall  v.  Fitch  (8  Cow.  215);  Robertson  v.  Vaughn  (5 
Sandf.  S.  C.  1);  Parker  v.  Schenck  (28  Barb.  38).  These  cases  are  based 
on  certain  old  decisions  in  England,  such  as  Towers  v.  Osborne  ( 1  Strange, 


164  FORMATION   OF   CONTRACT. 

GREENWOOD  v.  LAW. 

55  NEW  JERSEY  LAW,  168.— 1892. 

VAN  SYCKEL,  J.  Law,  the  plaintiff  below,  gave  to  Greenwood,  the 
defendant,  a  mortgage  upon  lands  in  this  State  for  the  sum  of  $3700. 
Law  alleged  that  Greenwood  entered  into  a  parol  agreement  with  him 
to  assign  him  this  mortgage  for  the  sum  of  $3000,  and  brought  this 
suit  to  recover  damages  for  the  refusal  of  Greenwood  to  execute  said 
parol  agreement. 

On  the  trial  below,  a  motion  was  made  to  nonsuit  the  plaintiff,  on 
the  ground  that  the  alleged  agreement  was  within  the  statute  of 
frauds.  The  refusal  of  the  trial  court  to  grant  this  motion  is  as- 
signed for  error. 

Lord  Chief  Justice  Denman,  in  Humble  v.  Mitchell,  reported  in 
11  Ad.  &  E.  205,  and  decided  in  1840,  said  that  no  case  directly  in 

506),  and  Clayton  v.  Andrews  (4  Burrow,  2101),  which  have  been  wholly  dis- 
carded in  that  country. 

The  case  at  bar  does  not  fall  within  the  rule  of  Parsons  v.  Loucks.  The 
facts  of  that  case  were,  that  a  manufacturer  agreed  to  make  for  the  other 
party  to  the  contract  two  tons  of  book  paper.  The  paper  was  not  in  exist- 
ence, and  so  far  as  appears,  not  even  the  rags,  'except  so  far  as  such  existence 
may  be  argued  from  the  fact  that  matter  is  indestructible.'  So  in  Sewall  v. 
Fitch  (supra),  the  nails  which  were  the  subject  of  the  contract  were  not  then 
wrought  out,  but  were  to  be  made  and  delivered  at  a  future  day. 

Nothing  of  this  kind  is  found  in  the  present  case.  The  lumber,  with  the 
possible  exception  of  the  clap-boards,  was  all  in  existence  when  the  con- 
tract was  made.  It  only  needed  to  be  prepared  for  the  purchaser — dressed  and 
put  in  a  condition  to  fill  his  order.  ...  I  think  the  true  rule  to  be  applied  in 
this  state  is,  that  when  the  chattel  is  in  existence,  so  as  not  to  be  governed  by 
Parsons  v.  Loucks  (supra),  the  contract  should  be  deemed  one  of  sale,  even 
though  it  may  have  been  ordered  from  a  seller  who  is  to  do  some  work  upon 
it  to  adapt  it  to  the  uses  of  the  purchaser.  Such  a  rule  makes  a  single  dis- 
tinction, and  that  is  between  existing  and  non-existing  chattels.  There  will 
still  be  border  cases  where  it  will  be  difficult  to  draw  the  line,  and  to  dis- 
cover whether  the  chattels  are  in  existence  or  not." 

For  citations  of  cases  in  jurisdictions  following  the  English,  Massachusetts 
and  New  York  common  law  rules,  respectively,  see  Williston,  Sales,  pp.  61-63, 
notes  10a-17. 

Statutory  rule. — By  the  Uniform  Sales  Act,  now  adopted  in  New  York, 
Mass.,  Ohio  and  several  other  states,  the  test  for  determining  whether  the 
contract  is  one  for  a  sale  or  one  for  work,  labor,  and  materials  is  provided  by 
§4  sub-div.  2  (draftsman's  numeration)  as  follows:  "The  provisions  of  this 
section  apply  to  every  such  contract  or  sale,  notwithstanding  that  the  goods 
may  be  intended  to  be  delivered  at  some  future  time  or  may  not  at  the  time 
of  such  contract  or  sale  be  actually  made,  procured,  or  provided,  or  fit  or 
ready  for  delivery,  or  some  act  may  be  requisite  for  the  making  or  completing 
thereof,  or  rendering  the  same  fit  for  delivery;  but  if  the  goods  are  to  be  manu- 
factured by  the  seller  especially  for  the  buyer  and  are  not  suitable  for  sale  to 
others  in  the  ordinary  course  of  the  seller's  business,  the  provisions  of  this 
section  shall  not  apply." 


FORM:  STATUTE  OF  FRAUDS.  165 

point  on  this  subject  had  been  found,  and  he  held  that  shares  in  an 
incorporated  company  were  not  goods,  wares,  and  merchandise  within 
the  seventeenth  section  of  the  statute  of  frauds. 

He  overlooked  the  cases  of  Mussell  v.  Cooke,  reported  in  Precedents 
in  Chancery,  533  (decided  in  1720),  and  Crull  v.  Dodson,  reported 
in  Select  Cases  in  Chancery  (temp.  King),  41  (decided  in  1725),  in 
which  the  contrary  view  was  taken. 

In  the  case  of  Pickering  v.  Appleby  (Com.  354)  this  question  was 
fully  argued  before  the  twelve  judges,  who  were  equally  divided  upon 
it.  The  cases  decided  in  the  English  courts  since  1840  have  followed 
Humble  v.  Mitchell.  They  will  be  found  collected  in  Benjamin  on 
Sales  (ed.  1888)  in  a  note  on  page  106. 

In  this  country  a  different  rule  prevails  in  most  of  the  States. 

In  Baldwin  v.  Williams  (3  Mete.  365)  a  parol  contract  for  the  sale 
of  a  promissory  note  was  held  to  be  within  the  statute. 

In  Connecticut  and  Maine  a  contract  for  the  sale  of  shares  in  a 
joint  stock  company  is  required  to  be  in  writing.  North  v.  Forest, 
15  Conn.  400 ;  Pray  v.  Mitchell,  60  Me.  430. 

Chief  Justice  Shaw,  after  a  full  discussion  of  the  subject  in  Tisdale 
v.  Harris  (20  Pick.  9),  concludes  that  a  contract  for  the  sale  of  shares 
in  a  manufacturing  corporation  is  a  contract  for  the  sale  of  goods  or 
merchandise  within  the  statute  of  frauds,  and  in  the  absence  of  the 
other  requisites  of  the  statute  must  be  proved  by  some  note  or  memo- 
randum in  writing  signed  by  the  party  to  be  charged  or  his  agent. 
He  did  not  regard  the  argument,  that  by  necessary  implication  the 
statute  applies  only  to  goods  of  which  part  may  be  delivered,  as  worthy 
of  much  consideration.  An  animal  is  not  susceptible  of  part  delivery, 
yet  undoubtedly  the  sale  of  a  horse  by  parol  is  within  the  statute. 
The  exception  in  the  statute  is,  when  part  is  delivered;  but  if  there 
cannot  be  a  delivery  in  part,  the  exception  cannot  exist  to  take  the 
case  out  of  the  general  prohibition. 

Bonds  and  mortgages  were  expressly  held  to  be  goods  and  chattels 
in  Terhune  v.  Executors  of  Bray,  1  Harr.  53.  That  was  an  action 
of  trover  for  a  bond  and  mortgage.  Chief  Justice  Hornblower,  in 
deciding  the  case,  said  that,  although  the  attachment  act  and  letters 
of  administration  seem  to  distinguish  between  rights  and  credits  and 
goods  and  chattels,  and  although  an  execution  against  the  latter  will 
not  reach  bonds  and  notes,  yet  there  is  a  sense  in  which  upon  sound 
legal  principles  such  securities  are  goods  and  chattels. 

This  sense  ought  to  be  applied  to  these  words  in  this  case. 

Reason  and  sound  policy  require  that  contracts  in  respect  to  securi- 
ties for  money  should  be  subject  to  the  reasonable  restrictions  pro- 
vided by  the  statute  to  prevent  frauds  in  the  sale  of  other  personal 
property. 

The  words  "goods,  wares,  and  merchandise"  in  the  sixth  section  of 


FORMATION    OF    CONTRACT. 

the  statute  are  equivalent  to  the  term  "personal  property,"  and  are 
intended  to  include  whatever  is  not  embraced  by  the  phrase  'lands, 
tenements,  and  hereditaments"  in  the  preceding  section.  In  my 
judgment,  the  contract  sued  upon  is  within  the  statute  of  frauds,  and 
it  was  error  in  the  court  below  to  refuse  to  nonsuit. 

20  Cyc.  244  (83-87)  ;  16  H.  L.  R.  602;  Williston  on  Sales,  pp.  70-72  (48-58). 


Consideration. 

(i.)  Consideration  is  necessary  to  the  validity  of  every  simple  con- 
tract. 

COOK  v.  BKADLEY. 
7  CONNECTICUT,  57.— 1828. 

Bill  for  the  correction  of  a  mistake  in  a  discharge  given  by  Bradley 
to  defendant's  intestate,  or  for  an  injunction  against  the  use  of  the 
discharge  in  an  action  at  law,  then  pending. 

The  action  at  law  was  on  a  written  instrument  delivered  by  de- 
fendant's intestate  to  Bradley,  wherein  he  acknowledged  himself  in- 
debted in  the  sum  of  sixty  dollars  to  Bradley  for  necessaries  furnished 
by  Bradley  to  the  father  of  the  intestate,  and  promised  to  pay  the 
same  in  case  the  father  failed  to  do  so.  The  father  had  since  died 
without  paying  the  same. 

The  discharge  was  given-  in  settlement  of  an  action  of  book  debt, 
and  by  mistake  was  so  drawn  as  to  cover  all  claims  and  demands  what- 
ever. Bradley  had  demanded  of  the  intestate  the  correction  of  the 
discharge,  but  this  was  refused. 

On  demurrer  the  bill  was  adjudged  sufficient.     Defendant  appealed. 

DAGGETT,  J.  The  question  presented  on  this  record  for  discussion, 
arises  on  the  validity  of  the  promise  of  the  deceased,  Henry  Cook, 
stated  in  the  bill.  If  no  action  can  be  supported  on  that  contract, 
then  the  interference  of  the  court  to  exercise  its  chancery  power,  to 
explain  or  invalidate  the  discharge,  would  be  useless;  and  the  exami- 
nation of  other  points  suggested  in  argument,  unnecessary.  I  am 
satisfied,  on  a  full  view  of  the  case,  that  the  contract  is  void,  for  want 
of  consideration ;  and  therefore  that  no  action  can  be  supported  on  it. 

1.  The  contract  is  not  a  specialty,  though  in  writing;  nor  is  it 
governed  by  the  law  merchant  applicable  to  negotiable  paper.  Were 
it  of  the  first  description,  by  the  rules  of  the  common  law,  the  con- 
sideration would  be  locked  up,  and  could  not  be  inquired  into.  Were 
it  a  note  or  bill  of  exchange,  the  law  merchant  would  give  to  it  the 
same  force  in  relation  to  third  persons.  It  is  true  that  in  Pillans  & 
Eose  v.  Van  Mierop  &  Hopkins  (3  Burr.  1664)  a  suggestion  was 


CONSIDERATION.  167 

made  by  Wilmot,  and  the  judges  who  sat  with  him  in  the  King's 
Bench,  that  mere  want  of  consideration  could  not  be  alleged  in  avoid- 
ance of  a  contract  in  writing.  This  suggestion  was  never  established 
as  law;  and  in  the  case  of  Rann  v.  Hughes  (7  Term  Rep.  350  n.)  the 
true  doctrine  of  the  common  law  was  laid  down.  A  mere  written 
contract  is  upon  the  footing  of  a  parol  contract,  and  a  consideration 
must  be  proved.  This  is  an  inflexible  rule  of  law;  and  the  court  is 
not  at  liberty,  if  it  had  the  disposition,  to  subvert  it.  Ex  nudo  pacto 
non  oritur  actio. 

2.  What  is  a  consideration  sufficient  to  uphold  a  contract?    Here, 
too,  the  common  law  furnishes  the  answer;  a  benefit  to  the  party 
promising,  or  a  loss  to  the  party  to  whom  the  promise  is  made.     The 
quantum  of  benefit,  on  the  one  hand,  or  of  loss  on  the  other,  is  im- 
material.    Powell  on  Contracts,  343,  344.     To  multiply  authorities 
on  this  point  is  quite  unnecessary. 

Let  us  now  apply  these  uncontroverted  principles  to  the  case  before 
us.  Could  Henry  Cook  possibly  receive  any  benefit  from  this  con- 
tract? He  gained  nothing — nothing  was  renounced  hereby.  Was  he 
induced  by  any  loss  to  the  promisee?  He  advanced  nothing;  he  be- 
came liable  for  nothing;  he  did  not  forego  anything,  by  or  on  the 
ground  of  it.  He  had  before,  not  at  the  request  of  Henry  Cook,  but 
of  Jonathan  Cook,  furnished  the  latter  with  necessaries  for  his  sup- 
port. It  is  impossible  to  discover,  thus  far,  any  consideration  known 
to  the  law. 

3.  The  defendant  in  error  still  insists,  that  the  father  being  poor 
and  unable  to  support  himself,  and  the  son  being  possessed  of  large 
property,  a  legal  obligation  rested  on  him  to  pay  for  these  necessaries 
thus  furnished;  and  a  legal  obligation  is  a  good  consideration  for  a 
promise.     The  conclusion  is  just,  if  the  premises  are  true.     But  was 
there  this  legal  obligation?     If  it  exist,  it  is  to  be  found  in  our 
statute  providing  for  the  support  of  paupers.     Stat.  369,  tit.  73,  c.  1. 
Provision  is  there  made,  that  poor  and  impotent  persons,  unable  to 
support  themselves,  shall  be  supported  by  their  children,  if  of  suffi- 
cient ability.     The  manner  in  which  they  shall  be  compelled  to  fur- 
nish this  support  is  prescribed.     The  selectmen  of  the  town  where 
the  poor  persons  reside,  or  one  or  more  of  their  relations,  may  make 
application  to  the  county  court,  and  the  court  may  order  such  sup- 
port to  be  supplied,  by  the  relations  of  the  poor  persons,  from  the 
time  of  such  application.     The  facts  are  to  be  ascertained  by  the 
court.     The  provision  is  prospective  only.     It  regards  no  supplies 
already  furnished,  or  expenses  already  incurred ;  and  the  liability,  the 
legal  obligation,  is  precisely  as  extensive  as  the  law  establishes  it,  and 
no  greater.     By  this  statute,  then,  for  these  reasons,  the  legal  obli- 
gation alleged  in  support  of  this  contract  does  not  appear. 

That  such  is  the  construction  of  this  statute,  I  cite  the  opinion  of 


168  FORMATION   OF   CONTRACT. 

the  Supreme  Court  of  Massachusetts  in  Mills  v.  Wyman  (3  Pick.  Rep 
207,  212)  as  to  a  similar  statute  of  that  State;  and  especially  I  rely 
on  the  decision  of  this  court  in  Wethersfield  v.  Montague  et  al.,  3 
Conn.  Rep.  507.  One  of  the  points  settled  in  that  case  was,  that  "no 
assessment  could  be  made,  by  virtue  of  this  statute,  for  past  expendi- 
tures, the  provisions  of  the  statute  being  exclusively  prospective." 
The  principle  then  is,  that  there  is  no  legal  obligation  to  pay  past 
expenditures;  which  exonerates  the  son  in  this  case  from  all  legal 
liability  for  the  expenditures  for  the  father. 

4.  This  opens  to  us  the  only  remaining  point.  The  counsel  for  the 
defendant  in  error  urge,  that  the  son  was  under  a  moral  obligation 
to  support  the  father,  that  this  is  a  sufficient  consideration  to  uphold 
the  promise,  and  that,  therefore,  the  son  is  liable. 

It  cannot  be  successfully  contended,  that  in  every  case  where  a 
person  is  under  a  moral  obligation  to  do  an  act,  as,  to  relieve  one  in 
distress  by  personal  exertions,  or  the  expenditure  of  money,  a  promise 
to  that  effect  would  be  binding  in  a  court  of  law.  Such  an  idea  is 
unsupported  by  principle  or  precedent.  It  is  a  just  rule  of  morality, 
that  a  man  should  do  towards  others  what  he  might  reasonably  expect 
from  others  in  like  circumstances.  This  rule  is  sanctioned  by  the 
highest  authority,  and  is  very  comprehensive.  An  affectionate  father, 
brother,  or  sister  has  taken  by  the  hand  the  youngest  son  of  the  family, 
given  him  an  education,  and  placed  him  in  a  situation  to  become, 
and  he  has  become,  affluent.  The  father,  brother,  or  sister,  by  the 
visitation  of  Providence,  has  become  poor,  and  impotent,  and  house- 
less. The  son,  rolling  in  riches,  in  the  overflowings  of  his  gratitude 
for  kindness  experienced,  contracts  in  writing  to  discharge  some 
portion  of  the  debt  of  gratitude,  by  giving  to  his  destitute  relative 
some  one  of  his  numerous  houses  for  a  shelter,  and  a  thousand  of  his 
many  thousand  dollars  for  his  subsistence ;  can  such  a  promise  be  en- 
forced in  any  judicial  tribunal?  Municipal  laws  will  not  decide 
what  honor  or  gratitude  ought  to  induce  the  son  to  do  in  such  a  case, 
as  Dr.  Blackstone  remarks  (2  Bla.  Com.  445),  but  it  must  be  left 
to  the  forum  of  conscience. 

It  cannot  be  denied  that  many  distinguished  judges  have  laid  down 
the  principle  that  moral  obligation  is  alone  a  sufficient  consideration 
to  support  a  contract.  Thus  did  Lord  Mansfield,  in  Cowper,  288, 
544.  He  was  followed  by  Mr.  Justice  Buller,  by  Lord  Ellenborough, 
and  other  judges  in  other  cases.  But  it  is  an  obvious  remark,  that 
the  cases  cited  in  illustration  of  those  positions  were  all  cases  where 
a  prior  legal  obligation  had  existed,  but  by  reason  of  some  statute, 
or  stubborn  rule  of  law,  it  could  not  be  enforced ;  as  a  promise  to  pay 
a  debt  barred  by  bankruptcy,  or  the  statute  of  limitations,  or  a 
promise  by  an  adult  to  pay  a  debt  contracted  during  minority.  In 


CONSIDERATION.  169 

all  these  instances  a  good  consideration  existed,  for  each  had  received 
a  benefit. 

All  the  cases  on  this  subject  are  carefully,  and  with  just  discrimi- 
nation, revised  in  a  note  in  3  Bos.  &  Pull.  249,  and  the  true  distinc- 
tions taken.  The  law  of  this  note  has  been  recently  adopted  in  the 
Supreme  Court  of  New  York  in  the  cases  of  Smith  v.  Ware  (13 
Johns.  Eep.  257,  289)  and  Edwards  et  ux.  v.  Davis  (16  Johns.  Eep. 
281,  283  n.),  and  in  a  still  later  case  (in  the  year  1826)  in  Massa- 
chusetts, viz.,  Mills  v.  Wyman  (3  Pick.  Eep.  207) — a  case  referred 
to  above  for  another  purpose.  No  stronger  case  of  moral  obligation, 
can  be  found.  "A  son  who  was  of  full  age  and  had  ceased  to  be  a 
member  of  his  father's  family  was  suddenly  taken  sick  among 
strangers,  and  being  poor  and  in  distress,  was  relieved  by  the  plain- 
tiff, and  afterwards  the  father  wrote  to  the  plaintiff,  promising  to 
pay  him  the  expenses  incurred;  it  was  held  that  such  promise  would 
not  sustain  an  action."  I  am  well  satisfied  with  the  very  able  and 
sound  reasoning  of  the  court  delivered  by  Chief  Justice  Parker  on 
that  occasion. 

I  will  now  advert  to  the  particular  decisions  of  the  English  courts 
cited  at  the  bar  and  relied  on.  Watson  v.  Turner,  Bull.  Nisi  Prius, 
147.  It  is  no  longer  doubted  that  the  defendants  in  that  case,  the 
overseers  of  the  poor,  were  under  a  legal  obligation  to  furnish  the 
support  for  which  the  promise  was  made.  It  is  a  case,  therefore, 
within  the  rule  in  3  Bos.  &  Pull.  249  n.  The  case  of  Scott  v.  Nelson, 
cited  Esp.  Dig.  95,  and  an  anonymous  case  in  2  Shower,  184,  seem 
to  imply  that  a  father  was  holden  liable  on  a  promise  to  pay  for  sup- 
plies for  his  bastard  child ;  but  in  my  opinion,  it  may  be  safely  inferred 
from  the  facts  that  the  supplies  were  furnished  on  request,  which 
would  make  a  material  difference.  In  Wing  v.  Mill  (1  Barn.  &  Aid. 
104)  the  whole  court  held  that  a  legal  and  moral  obligation  existed. 
In  the  case  of  Barnes  v.  Hedley  &  Conway  (2  Taunt.  184)  the  court 
held,  that  when  the  parties  to  usurious  securities  stripped  them  of  all 
usury,  and  the  securities  were  given  up  and  cancelled,  by  agreement 
of  the  parties,  and  the  borrower  of  the  money  promised  in  consider- 
ation of  having  received  the  principal,  to  pay  the  same  with  legal 
interest,  the  promise  was  binding.  This  case  rests  upon  the  same 
principles  which  were  recognized  by  this  court  in  the  case  of  Kilborun 
v.  Bradley  (3  Day,  356),  where  the  court  decided  that  if  a  usurious 
security  be  given  up,  and  a  new  security  be  taken  for  the  principal 
sum  due  and  legal  interest,  the  latter  security  will  be  good.  This 
bears  not  at  all  upon  the  case  under  consideration.  The  money  ad- 
vanced was  a  good  consideration  of  the  promise  to  repay  it,  the  usury 
being  expunged.  In  the  case  of  Lee  v.  Muggeridge  et  al.,  executors 
of  Mary  Muggeridge,  deceased  (5  Taunt.  36),  it  was  held  that  a  feme 


170  FORMATION    OF    CONTRACT. 

covert,  having  given  a  bond  for  money  advanced  to  her  son-in-law, 
at  her  request,  was  bound  by  a  promise  made  by  her  after  she  became 
discovert.  Mary,  the  obligor  in  that  case,  had  a  large  estate  settled' 
to  her  separate  use.  In  this  condition  she  executed  a  bond  for  money 
advanced  to  her  son-in-law,  at  her  request.  After  the  death  of  the 
husband,  and  while  single,  she  wrote  a  letter  promising  to  pay  the 
amount  thus  advanced.  The  court,  in  giving  their  opinion,  say  this 
is  a  promise  founded  on  a  moral  obligation,  and  that  it  is  a  good 
consideration.  I  should  say  the  promise  was  founded  on  the  ad- 
vancement of  the  money,  at  her  request,  to  her  son-in-law,  and  as 
she  was  incapacitated  to  bind  herself,  by  reason  of  the  coverture, 
when  she  received  the  benefit,  and  is  therefore  protected  from  liability 
by  a  stubborn  rule  of  law,  yet  if  when  this  rule  of  law  ceases  to 
operate  upon  her,  she  will  promise  to  pay,  it  will  bind  her. 

On  the  whole,  I  am  not  satisfied  that  a  case  can  be  found  in  the 
English  books  in  which  it  has  been  held  that  a  moral  obligation  is  a 
sufficient  consideration  for  an  express  promise,  though  there  are 
many  to  the  contrary,  but  that  it  is  limited  in  its  application  to  the 
cases  where  a  good  and  valuable  consideration  has  once  existed,  as 
laid  down  by  the  Supreme  Court  in  Massachusetts,  once  and  again 
adverted  to. 

I  am  therefore  of  opinion  that  there  is  error  in  the  decree  com- 
plained of,  and  that  the  judgment  be  reversed. 

HOSMER,  C.  J.,  was  of  the  same  opinion. 

PETERS  and  LANMAN,  JJ.,  dissented. 

BRAINARD,  J.,  was  absent. 

Judgment  reversed.1 

9  Cyc.  311  (79)  ;  312  (80-83)  ;  313  (84)  ;  313-315  (85-29)  ;  W.  P.  199  (12). 
Ames,  Two  theories  of  consideration,  12  H.  L.  R.  515;  13  H.  L.  R.  29.  Langdell, 
Mutual  promises  as  consideration  for  each  other,  14  H.  L.  R.  496. 

i  "The  mystery  of  consideration  has  possessed  a  peculiar  fascination  for 
writers  upon  the  English  law  of  contract.  No  fewer  than  three  distinct 
theories  of  its  origin  have  been  put  forward  within  the  last  eight  years. 
According  to  one  view,  'the  requirements  of  consideration  in  all  parol  con- 
tracts is  simply  a  modified  generalization  of  quid  pro  quo  to  raise  a  debt  by 
parol.'  Holmes,  Early  English  Equity,  1  L.  Q.  Rev.  171;  The  Common  Law, 
285.  A  similar  opinion  had  been  previously  advanced  by  Professor  Lang- 
dell,  Contracts,  §  47.  On  the  other  hand,  consideration  is  described  as  'a 
modification  of  the  Roman  principle  of  causa,  adopted  by  equity,  and  trans- 
ferred thence  into  the  common  law.'  Salmond,  History  of  Contract,  3  L,  Q. 
Rev.  166,  178.  A  third  learned  writer  derives  the  action  of  assumpsit  from 
the  action  on  the  case  for  deceit,  the  damage  to  the  plaintiff  in  that  action 
being  the  forerunner  of  the  'detriment  to  the  promisee,'  which  constitutes  the 
consideration  of  all  parol  contracts.  Hare,  Contracts,  ch.  vii.  and  viii. 
To  the  present  writer  it  seems  impossible  to  refer  consideration  to  a  single 
source.  At  the  present  day  it  is  doubtless  just  and  expedient  to  resolve 
every  consideration  into  a  detriment  to  the  promisee  incurred  at  the  request 


CONSIDERATION.  171 

(n.)   Consideration  need  not  be  adequate  to  the  promise,  but  must 
be  of  some  value  in  the  eye  of  the  law. 


SCHNELL  v.  NELL. 

17  INDIANA,  29.— 1861. 

Appeal  from  the  Marion  Common  Pleas. 

PERKINS,  J.  Action  by  J.  B.  Nell  against  Zacharias  Schnell  upon 
the  following  instrument: 

"This  agreement  entered  into  this  13th  day  of  February,  1356,  between 
Zach.  Schnell,  of  Indianapolis,  Marion  County,  State  of  Indiana,  as  party  of 
the  first  part,  and  J.  B.  Nell,  of  the  same  place,  Wendelin  Lorenz,  of  Stiles- 
ville,  Hendricks  County,  State  of  Indiana,  and  Donata  Lorenz,  of  Frickinger, 
Grand  Duchy  of  Baden,  Germany,  as  parties  of  the  second  part,  witnesseth: 
The  said  Zacharias  Schnell  agrees  as  follows:  whereas  his  wife,  Theresa 
Schnell,  now  deceased,  has  made  a  last  will  and  testament,  in  which,  among 
other  provisions,  it  was  ordained  that  every  one  of  the  above  named  second 
parties  should  receive  the  sum  of  $200;  and  whereas  the  said  provisions  of 
the  will  must  remain  a  nullity,  for  the  reason  that  no  property,  real  or  per- 
sonal, was  in  the  possession  of  the  said  Theresa  Schnell,  deceased,  in  her  own 
name,  at  the  time  of  her  death,  and  all  property  held  by  Zacharias  and 
Theresa  Schnell  jointly  therefore  reverts  to  her  husband;  and  whereas  the 
said  Theresa  Schnell  has  also  been  a  dutiful  and  loving  wife  to  the  said  Zach. 
Schnell,  and  has  materially  aided  him  in  the  acquisition  of  all  property,  real 
and  personal,  now  possessed  by  him;  for,  and  in  consideration  of  all  this,  and 

of  the  promisor.  But  this  definition  of  consideration  would  not  have  covered 
the  cases  of  the  sixteenth  century.  There  were  then  two  distinct  forms  of 
consideration:  (1)  detriment;  (2)  a  precedent  debt.  Of  these  detriment  was 
the  more  ancient,  having  become  established,  in  substance,  as  early  as  1504. 
On  the  other  hand,  no  case  has  been  found  recognizing  the  validity  of  a 
promise  to  pay  a  precedent  debt  before  1542.  These  two  species  of  consider- 
ation, so  different  in  their  nature,  are,  as  would  be  surmised,  of  distinct  origin. 
The  history  of  detriment  is  bound  up  with  the  history  of  special  assumpsit, 
whereas  the  consideration  based  upon  a  precedent  debt  must  be  studied  in  the 
development  of  indebitatus  assumpsit." — Ames,  The  history  of  assumpsit,  2 
H.  L.  R.  1. 

Mutual  promises  as  consideration. — "Before  the  introduction  of  the  action 
of  assumpsit,  a  mere  promise  was  not  a  consideration,  as  it  could  not  create  a 
debt;  and  hence  purely  bilateral  contracts,  not  under  seal,  had  then  no  exist- 
ence in  our  law.  But  when  it  had  become  established  that  anything  of  value 
given,  or  done  by  the  promisee  might  be  made  the  consideration  for  a  promise, 
the  courts  were  not  long  in  perceiving  that  the  making  of  a  binding  promise 
was  giving  or  doing  something  of  value,  and  hence  that  such  promises  were 
entitled  to  be  admitted  into  the  category  of  sufficient  'considerations,' 
( Stranborough  and  Warner,  1588,  4  Leon.,  3;  Gower  v.  Capper,  1597,  Cro. 
Eliz.,  543;  Nicholas  v.  Raynbred,  1615,  Hobart,  88.)  Hence  the  introduction 
of  bilateral  contracts  not  under  seal  was  one  of  the  great  changes  wrought 
in  our  law  of  contracts  by  means  of  the  action  of  assumpsit." — Langdell  Contr., 
pp.  102-103.  ("Peck  v.  Redman,  1555,  Dyer,  113,  appears  to  be  the  earliest 
case  of  mutual  promises."  Ames,  in  8  H.  L.  R.  259,  note  2). 


172  FORMATION   OF   CONTRACT. 

the  love  and  respect  he  bears  to  his  wife;  and,  furthermore,  in  consideration 
of  one  cent,  received  by  him  of  the  second  parties,  he,  the  said  Zach.  Schnell, 
agrees  to  pay  the  above  named  sums  of  money  to  the  parties  of  the  second 
part,  to  wit:  $200  to  the  said  J.  B.  Nell,  $200  to  the  said  Wendelin  Lorenz, 
and  $200  to  the  said  Donata  Lorenz,  in  the  following  installments,  viz.:  $200 
in  one  year  from  the  date  of  these  presents;  $200  in  two  years,  and  $200  in 
three  years;  to  be  divided  between  the  parties  in  equal  portions  of  $66§  each 
year,  or  as  they  may  agree,  till  each  one  has  received  his  full  sum  of  $200. 
"And  the  said  parties  of  the  second  part,  for,  and  in  consideration  of  this 
agree  to  pay  the  above  named  sum  of  money  (one  cent),  and  to  deliver  up  to 
said  Schnell,  and  abstain  from  collecting  any  real  or  supposed  claims  upon 
him  or  his  estate,  arising  from  the  said  last  will  and  testament  of  the  said 
Theresa  Schnell,  deceased. 

"In  witness  whereof,  the  said  parties  have,  on  this  13th  day  of  February, 
1856,  set  hereunto  their  hands  and  seals. 

"ZACHABIAS  SCHNELL,    (seal) 
"J.  B.  NELL,  (seal) 

"WEN.  LORENZ.  (seal)" 

The  complaint  contained  no  averment  of  a  consideration  for  the 
instrument  outside  of  those  expressed  in  it;  and  did  not  aver  that 
the  one  cent  agreed  to  be  paid  had  been  paid  or  tendered. 

A  demurrer  to  the  complaint  was  overruled. 

The  defendant  answered,  that  the  instrument  sued  on  was  given 
for  no  consideration  whatever. 

He  further  answered,  that  it  was  given  for  no  consideration,  be- 
cause his  said  wife,  Theresa,  at  the  time  she  made  the  will  mentioned, 
and  at  the  time  of  her  death,  owned,  neither  separately,  nor  jointly 
with  her  husband  or  any  one  else  (except  so  far  as  the  law  gave  her 
an  interest  in  her  husband's  property),  any  property,  real  or  personal, 
etc. 

The  will  is  copied  into  the  record,  but  need  not  be  into  this  opinion. 

The  court  sustained  a  demurrer  to  these  answers,  evidently  on  the 
ground  that  they  were  regarded  as  contradicting  the  instrument  sued 
on,  which  particularly  set  out  the  considerations  upon  which  it  was 
executed.  But  the  instrument  is  latently  ambiguous  on  this  point. 
See  Ind.  Dig.,  p.  110. 

The  case  turned  below,  and  must  turn  here,  upon  the  question 
whether  the  instrument  sued  on  does  express  a  consideration  sufficient 
to  give  it  legal  obligation,  as  against  Zacharias  Schnell.  It  specifies 
three  distinct  considerations  for  his  promise  to  pay  $600: 

1.  A  promise,  on  the  part  of  the  plaintiffs,  to  pay  him  one  cent. 

2.  The  love  and  affection  he  bore  his  deceased  wife,  and  the  fact 
that  she  had  done  her  part,  as  his  wife,  in  the  acquisition  of  property. 

3.  The  fact  that  she  had  expressed  her  desire,  in  the  form  of  an 
inoperative  will,  that  the  persons  named  therein  should  have  the 
sums  of  money  specified. 

The  consideration  of  one  cent  will  not  support  the  promise  of 


CONSIDERATION.  173 

Schnell.  It  is  true  that  as  a  general  proposition,  inadequacy  of  con- 
sideration will  not  vitiate  an  agreement.  Baker  v.  Roberts,  14  Ind. 
552.  But  this  doctrine  does  not  apply  to  a  mere  exchange  of  sums 
of  money,  of  coin  whose  value  is  exactly  fixed,  but  to  the  exchange 
of  something  of,  in  itself,  indeterminate  value  for  money  or,  perhaps, 
for  some  other  thing  of  indeterminate  value.1  In  this  case,  had  the 
one  cent  mentioned  been  some  particular  one  cent,  a  family  piece, 
or  ancient,  remarkable  coin,  possessing  an  indeterminate  value,  ex- 
trinsic from  its  simple  money  value,  a  different  view  might  be  taken. 
As  it  is,  the  mere  promise  to  pay  six  hundred  dollars  for  one  cent, 
even  had  the  portion  of  that  cent  due  from  the  plaintiff  been  tendered, 
is  an  unconscionable  contract,  void,  at  first  blush,  upon  its  face,  if  it  be 
regarded  as  an  earnest  one.  Hardesty  v.  Smith,  3  Ind.  39.  The 
consideration  of  one  cent  is  plainly  in  this  case  merely  nominal,  and 
intended  to  be  so.  As  the  will  and  testament  of  Schnell's  wife  im- 
posed no  legal  obligation  upon  him  to  discharge  her  bequests  out  of 
his  property,  and  as  she  had  none  of  her  own,  his  promise  to  dis- 
charge them  was  not  legally  binding  upon  him  on  that  ground.  A 
moral  consideration  only  will  not  support  a  promise.  Ind.  Dig.,  p. 
13.  And  for  the  same  reason,  a  valid  consideration  for  his  promise 
cannot  be  found  in  the  fact  of  a  compromise  of  a  disputed  claim ;  for 
where  such  claim  is  legally  groundless,  a  promise  upon  a  compromise 
of  it,  or  a  suit  upon  it,  is  not  legally  binding.  Spahr  v.  Hollings- 
head,  8  Blackf.  415.  There  was  no  mistake  of  law  or  fact  in  this 
case,  as  the  agreement  admits  the  will  inoperative  and  void.  The 
promise  was  simply  one  to  make  a  gift.  The  past  services  of  his 
wife,  and  the  love  and  affection  he  had  borne  her,  are  objectionable 
as  legal  considerations  for  Schnell's  promise  on  two  grounds :  1.  They 
are  past  considerations.  Ind.  Dig.,  p.  13.  2.  The  fact  that  Schnell 
loved  his  wife,  and  that  she  had  been  industrious,  constituted  no 
consideration  for  his  promise  to  pay  J.  B.  Nell  and  the  Lorenzes  a 
sum  of  money.  Whether,  if  his  wife,  in  her  lifetime,  had  made  a 
bargain  with  Schnell  that,  in  consideration  of  his  promising  to  pay, 
after  her  death,  to  the  persons  named,  a  sum  of  money,  she  would 
be  industrious  and  worthy  of  his  affection,  such  a  promise  would 
have  been  valid  and  consistent  with  public  policy,  we  need  not  decide. 
Nor  is  the  fact  that  Schnell  now  venerates  the  memory  of  his  de- 
ceased wife,  a  legal  consideration  for  a  promise  to  pay  any  third 
person  money. 

The  instrument  sued  on,  interpreted  in  the  light  of  the  facts  al- 
leged in  the  second  paragraph  of  the  answer,  will  not  support  an 
action.  The  demurrer  to  the  answer  should  have  been  overruled. 
See  Stevenson  v.  Druley,  4  Ind.  519. 

1  Upon  this  point  see  also  Shepard  v.  Rhodes,  post,  p.  265. 


174  FORMATION    OF   CONTRACT. 

Per  Curiam.     The  judgment  is  reversed,  with  costs.     Cause  re- 
manded, etc. 

9  Cyc.  357   (86) ;  367   (40-41)  ;  W.  P.  193   (4). 


HAMEK  v.  SIDWAY. 

124  NEW  YORK,  538.— 1891. 

Appeal  from  an  order  of  the  General  Term  of  the  Supreme  Court 
which  reversed  a  judgment  in  favor  of  plaintiff  entered  at  the  trial 
at  Special  Term. 

The  action  was  brought  by  plaintiff,  as  assignee,  against  defendant, 
as  executor,  upon  a  contract  alleged  to  have  been  made  between  plain- 
tiff's remote  assignor  and  defendant's  testator. 

PARKER,  J.  The  question  which  provoked  the  most  discussion  by 
counsel  on  this  appeal,  and  which  lies  at  the  foundation  of  plaintiff's 
asserted  right  of  recovery,  is  whether  by  virtue  of  a  contract  de- 
fendant's testator  William  E.  Story  became  indebted  to  his  nephew 
William  E.  Story,  2d,  on  his  twenty-first  birthday  in  the  sum  of  five 
thousand  dollars.  The  trial  court  found  as  a  fact  that  "on  the  20th 
day  of  March,  1869,  .  .  .  William  E.  Story  agreed  to  and  with 
William  E.  Story,  2d,  that  if  he  would  refrain  from  drinking  liquor, 
using  tobacco,  swearing,  and  playing  cards  or  billiards  for  money 
until  he  should  become  21  years  of  age,  then  he,  the  said  William  E. 
Story,  would  at  that  time  pay  him,  the  said  William  E.  Story,  2d, 
the  sum  of  $5000  for  such  refraining,  to  which  the  said  William  E. 
Story,  2d,  agreed,"  and  that  he  "in  all  things  fully  performed  his 
part  of  said  agreement." 

The  defendant  contends  that  the  contract  was  without  consider- 
ation to  support  it,  and,  therefore,  invalid.  He  asserts  that  the 
promisee  by  refraining  from  the  use  of  liquor  and  tobacco  was  not 
harmed  but  benefited;  that  that  which  he  did  was  best  for  him  to  do 
independently  of  his  uncle's  promise,  and  insists  that  it  follows  that 
unless  the  promisor  was  benefited,  the  contract  was  without  consider- 
ation. A  contention  which,  if  well  founded,  would  seem  to  leave 
open  for  controversy  in  many  cases  whether  that  which  the  promisee 
did  or  omitted  to  do  was,  in  fact,  of  such  benefit  to  him  as  to  leave 
no  consideration  to  support  the  enforcement  of  the  promisor's  agree- 
ment. Such  a  rule  could  not  be  tolerated,  and  is  without  foundation 
in  the  law.  The  Exchequer  Chamber,  in  1875,  defined  consideration 
as  follows:  "A  valuable  consideration  in  the  sense  of  the  law  may 
consist  either  in  some  right,  interest,  profit,  or  benefit  accruing  to 
the  one  party,  or  some  forbearance,  detriment,  loss,  or  responsibility 
given,  suffered,  or  undertaken  by  the  other."  Courts  "will  not  ask 


CONSIDERATION.  175 

whether  the  thing  which  forms  the  consideration  does  in  fact  benefit 
the  promisee  or  a  third  party,  or  is  of  any  substantial  value  to  any 
one.  It  is  enough  that  something  is  promised,  done,  forborne,  or 
suffered  by  the  party  to  whom  the  promise  is  made  as  consideration 
for  the  promise  made  to  him."  Anson's  Prin.  of  Con.  63. 

"In  general,  a  waiver  of  any  legal  right  at  the  request  of  another 
party  is  a  sufficient  consideration  for  a  promise."  Parsons  on  Con- 
tracts, 444. 

"Any  damage,  or  suspension  or  forbearance  of  a  right,  will  be  suffi- 
cient to  sustain  a  promise."  Kent,  Vol.  2,  465,  12th  ed.  » 

Pollock,  in  his  work  on  contracts,  page  166,  after  citing  the  defi- 
nition given  by  the  Exchequer  Chamber  already  quoted,  says:  "The 
second  branch  of  this  judicial  description  is  really  the  most  important 
one.  Consideration  means  not  so  much  that  one  party  is  profiting 
as  that  the  other  abandons  some  legal  right  in  the  present  or  limits 
his  legal  freedom  of  action  in  the  future  as  an  inducement  for  the 
promise  of  the  first." 

Now,  applying  this  rule  to  the  facts  before  us,  the  promisee  used 
tobacco,  occasionally  drank  liquor,  and  he  had  a  legal  right  to  do  so. 
That  right  he  abandoned  for  a  period  of  years  upon  the  strength  of 
the  promise  of  the  testator  that  for  such  forbearance  he  would  give 
him  $5000.  We  need  not  speculate  on  the  effort  which  may  have 
been  required  to  give  up  the  use  of  those  stimulants.  It  is  sufficient 
that  he  restricted  his  lawful  freedom  of  action  within  certain  pre- 
scribed limits  upon  the  faith  of  his  uncle's  agreement,  and  now  hav- 
ing fully  performed  the  conditions  imposed,  it  is  of  no  moment 
whether  such  performance  actually  proved  a  benefit  to  the  promisor, 
and  the  court  will  not  inquire  into  it,  but  were  it  a  proper  subject  of 
inquiry,  we  see  nothing  in  this  record  that  would  permit  a  determi- 
nation that  the  uncle  was  not  benefited  in  a  legal  sense.  Few  cases 
have  been  found  which  may  be  said  to  be  precisely  in  point,  but  such 
as  have  been  support  the  position  we  have  taken. 

In  Shadwell  v.  ShadweU  (9  C.  B.  N.  S.  159)  an  uncle  wrote  to 
his  nephew  as  follows: 

"My  DEAB  LANCET — I  am  so  glad  to  hear  of  your  intended  marriage  with 
Ellen  Nicholl,  and  as  I  promised  to  assist  you  at  starting,  I  am  happy  to  tell 
you  that  I  will  pay  to  you  150  pounds  yearly  during  my  life  and  until  your 
annual  income  derived  from  your  profession  of  a  chancery  barrister  shall 
amount  to  600  guineas,  of  which  your  own  admission  will  be  the  only  evidence 
that  I  shall  require. 

"Your  affectionate  uncle, 

"CHABLES  SHADWELL." 

It  was  held  that  the  promise  was  binding  and  made  upon  good  con- 
sideration. 

In  Lakota  v.  Newton,  an  unreported  case  in  the  Superior  Court  of 


176  FORMATION    OF   CONTRACT. 

Worcester,  Mass.,  the  complaint  averred  defendant's  promise  that  "if 
you  (meaning  plaintiff)  will  leave  off  drinking  for  a  year  I  will  give 
you  $100,"  plaintiff's  assent  thereto,  performance  of  the  condition  by 
him,  and  demanded  judgment  therefor.  Defendant  demurred  on  the 
ground,  among  others,  that  the  plaintiffs  declaration  did  not  allege 
a  valid  and  sufficient  consideration  for  the  agreement  of  the  de- 
fendant. The  demurrer  was  overruled. 

In  Talbott  v.  Stemmons  (a  Kentucky  case  not  yet  reported),1  the 
step-grandmother  of  the  plaintiff  made  with  him  the  following  agree- 
ment :  "I  do  promise  and  bind  myself  to  give  my  grandson,  Albert 
R.  Talbott,  $500  at  my  death,  if  he  will  never  take  another  chew  of 
tobacco  or  smoke  another  cigar  during  my  life  from  this  date  up  to 
my  death,  and  if  he  breaks  this  pledge  he  is  to  refund  double  the 
amount  to  his  mother."  The  executor  of  Mrs.  Stemmons  demurred 
to  the  complaint  on  the  ground  that  the  agreement  was  not  based 
on  a  sufficient  consideration.  The  demurrer  was  sustained  and  an 
appeal  taken  therefrom  to  the  Court  of  Appeals,  where  the  decision 
of  the  court  below  was  reversed.  In  the  opinion  of  the  court  it  is 
said  that  "the  right  to  use  and  enjoy  the  use  of  tobacco  was  a  right 
that  belonged  to  the  plaintiff  and  not  forbidden  by  law.  The  aban- 
donment of  its  use  may  have  saved  him  money  or  contributed  to  his 
health;  nevertheless,  the  surrender  of  that  right  caused  the  promise, 
and  having  the  right  to  contract  with  reference  to  the  subject-matter, 
the  abandonment  of  the  use  was  a  sufficient  consideration  to  uphold 
the  promise."  Abstinence  from  the  use  of  intoxicating  liquors  was 
held  to  furnish  a  good  consideration  for  a  promissory  note  in  Lindell 
v.  Rokes,  60  Mo.  249.  The  cases  cited  by  the  defendant  on  this  ques- 
tion are  not  in  point.  ...  It  will  be  observed  that  the  agreement 
which  we  have  been  considering  was  within  the  condemnation  of  the 
statute  of  frauds,  because  not  to  be  performed  within  a  year,  and  not 
in  writing.  But  this  defense  the  promisor  could  waive,  and  his 
letter  and  oral  statements  subsequent  to  the  date  of  final  performance 
on  the  part  of  the  promisee  must  be  held  to  amount  to  a  waiver. 
Were  it  otherwise,  the  statute  could  not  now  be  invoked  in  aid  of  the 
defendant.  It  does  not  appear  on  the  face  of  the  complaint  that  the 
agreement  is  one  prohibited  by  the  statute  of  frauds,  and,  therefore, 
such  defense  could  not  be  made  available  unless  set  up  in  the  answer. 
Porter  v.  Wormser,  94  N.  Y.  431,  450.  This  was  not  done. 

In  further  consideration  of  the  questions  presented,  then,  it  must 
be  deemed  established  for  the  purposes  of  this  appeal,  that  on  the 
31st  day  of  January,  1875,  defendant's  testator  was  indebted  to  Will- 
iam E.  Story,  2d,  in  the  sum  of  $5000,  and  if  this  action  were  founded 

i  89  Ky.,  222. 


CONSIDERATION.  177 

on  that  contract  it  would  be  barred  by  the  statute  of  limitations  which 
has  been  pleaded,  but  on  that  date  the  nephew  wrote  to  his  uncle  as 
follows : 

"DEAB  UNCLE — I  am  now  21  years  old  to-day,  and  I  am  now  my  own  boss, 
and  I  believe,  according  to  agreement,  that  there  is  due  me  $5000.  I  have 
lived  up  to  the  contract  to  the  letter  in  every  sense  of  the  word." 

A  few  days  later,  and  on  February  sixth  the  uncle  replied,  and, 
so  far  as  it  is  material  to  this  controversy,  the  reply  is  as  follows : 

"DEAB  NEPHEW — Your  letter  of  the  31st  ult.  came  to  hand  all  right  saying 
that  you  had  lived  up  to  the  promise  made  to  me  several  years  ago.  I  have 
no  doubt  but  you  have,  for  which  you  shall  have  $5000  as  I  promised  you.  1 
had  the  money  in  the  bank  the  day  you  was  21  years  old  that  I  intended  for 
you,  and  you  shall  have  the  money  certain.  Now,  Willie,  I  don't  intend  to 
interfere  with  this  money  in  any  way,  until  I  think  you  are  capable  of  taking 
care  of  it,  and  the  sooner  that  time  comes  the  better  it  will  plfease  me.  I 
would  hate  very  much  to  have  you  start  out  in  some  adventure  that  you 
thought  all  right  and  lose  this  money  in  one  year.  .  .  .  This  money  you  have 
earned  much  easier  than  I  did,  besides  acquiring  good  habits  at  the  same  time, 
and  you  are  quite  welcome  to  the  money.  Hope  you  will  make  good  use  of 
it.  ... 

"W.  E.  STORY. 

"P.  S. — You  can  consider  this  money  on  interest." 

The  trial  court  found  as  a  fact  that  "said  letter  was  received  by 
said  William  E.  Story,  2d,  who  thereafter  consented  that  said  money 
should  remain  with  the  said  William  E.  Story  in  accordance  with 
the  terms  and  conditions  of  said  letter."  And  further,  "That  after- 
wards, on  the  first  day  of  March,  1877,  with  the  knowledge  and  con- 
sent of  his  said  uncle,  he  duly  sold,  transferred,  and  assigned  all  his 
right,  title,  and  interest  in  and  to  said  sum  of  $5000  to  his  wife 
Libbie  H.  Story,  who  thereafter  duly  sold,  transferred,  and  assigned 
the  same  to  the  plaintiff  in  this  action;" 

We  must  now  consider  the  effect  of  the  letter,  and  the  nephew's 
assent  thereto.  Were  the  relations  of  the  parties  thereafter  that  of 
debtor  and  creditor  simply,  or  that  of  trustee  and  cestui  que  trust? 
If  the  former,  then  this  action  is  not  maintainable,  because  barred 
by  lapse  of  time.  If  the  latter,  the  result  must  be  otherwise.  No 
particular  expressions  are  necessary  to  create  a  trust.  Any  language 
clearly  showing  the  settler's  intention  is  sufficient  if  the  property  and 
disposition  of  it  are  definitely  stated.  Lewin  on  Trusts,  55. 

A  person  in  the  legal  possession  of  money  or  property  acknowledg- 
ing a  trust  with  the  assent  of  the  cestui  que  trust,  becomes  from  that 
time  a  trustee  if  the  acknowledgment  be  founded  on  a  valuable  con- 
sideration. His  antecedent  relation  to  the  subject,  whatever  it  may 
have  been,  no  longer  controls.  2  Story's  Eq.  §  972.  If  before  a 


178  FORMATION    OF    CONTRACT. 

declaration  of  trust  a  party  be  a  mere  debtor,  a  subsequent  agree- 
ment recognizing  the  fund  as  already  in  his  hands  and  stipulating 
for  its  investment  on  the  creditor's  account  will  have  the  effect  to 
create  a  trust.  Day  v.  Roth,  18  N.  Y.  448. 

It  is  essential  that  the  letter  interpreted  in  the  light  of  surround- 
ing circumstances  must  show  an  intention  on  the  part  of  the  uncle 
to  become  a  trustee  before  he  will  be  held  to  have  become  such;  but 
in  an  effort  to  ascertain  the  construction  which  should  be  given  to  it, 
we  are  also  to  observe  the  rule  that  the  language  of  the  promisor  is 
to  be  interpreted  in  the  sense  in  which  he  had  reason  to  suppose  it 
was  understood  by  the  promisee.  White  v.  Hoyt,  73  N.  Y.  505,  511. 
At  the  time  the  uncle  wrote  the  letter  he  was  indebted  to  his  nephew 
in  the  sum  of  $5000,  and  payment  had  been  requested.  The  uncle, 
recognizing  the  indebtedness,  wrote  the  nephew  that  he  would  keep 
the  money  until  he  deemed  him  capable  of  taking  care  of  it.  He  did 
not  say  "I  will  pay  you  at  some  other  time/'  or  use  language  that 
would  indicate  that  the  relation  of  debtor  and  creditor  would  continue. 
On  the  contrary,  his  language  indicated  that  he  had  set  apart  the 
money  the  nephew  had  "earned"  for  him,  so  that  when  he  should 
be  capable  of  taking  care  of  it  he  should  receive  it  with  interest.  He 
said:  "I  had  the  money  in  the  bank  the  day  you  were  21  years  old 
that  I  intended  for  you,  and  you  shall  have  the  money  certain."  That 
he  had  set  apart  the  money  is  further  evidenced  by  the  next  sentence : 
"Now,  Willie,  I  don't  intend  to  interfere  with  this  money  in  any  way 
until  I  think  you  are  capable  of  taking  care  of  it."  Certainly,  the 
uncle  must  have  intended  that  his  nephew  should  understand  that  the 
promise  not  "to  interfere  with  this  money"  referred  to  the  money  in 
the  bank  which  he  declared  was  not  only  there  when  the  nephew  be- 
came 21  years  old,  but  was  intended  for  him.  True,  he  did  not  use 
the  word  "trust,"  or  state  that  the  money  was  deposited  in  the  name 
of  William  E.  Story,  2d,  or  in  his  own  name  in  trust  for  him,  but  the 
language  used  must  have  been  intended  to  assure  the  nephew  that  his 
money  had  been  set  apart  for  him,  to  be  kept  without  interference  un- 
til he  should  be  capable  of  taking  care  of  it,  for  the  uncle  said  in  sub- 
stance and  in  effect :  "This  money  you  have  earned  much  easier  than 
I  did  .  .  .  you  are  quite  welcome  to.  I  had  it  in  the  bank  the  day  you 
were  21  years  old,  and  don't  intend  to  interfere  with  it  in  any  way 
until  I  think  you  are  capable  of  taking  care  of  it,  and  the  sooner  that 
time  comes  the  better  it  will  please  me."  In  this  declaration  there  is 
not  lacking  a  single  element  necessary  for  the  creation  of  a  valid  trust, 
and  to  that  declaration  the  nephew  assented. 

The  learned  judge  who  wrote  the  opinion  of  the  General  Term, 
seems  to  have  taken  the  view  that  the  trust  was  executed  during  the 
lifetime  of  defendant's  testator  by  payment  to  the  nephew,  but  as  it 
does  not  appear  from  the  order  that  the  judgment  was  reversed  on  the 


CONSIDERATION.  179 

facts,  we  must  assume  the  facts  to  be  as  found  by  the  trial  court,  and 
those  facts  support  its  judgment. 

The  order  appealed  from  should  be  reversed  and  the  judgment  of  the 
Special  Term  affirmed,  with  costs  payable  out  of  the  estate. 

All  concur. 

Order  reversed  and  judgment  of  Special  Term  affirmed.1 

9  Cyc.  315  (31)  ;  W.  P.  185  (1)  ;  195  (8). 


a.  First  test  of  reality.  Did  the  promisee  do,  forbear,  suffer,  or 
promise  anything  in  respect  of  the  promise? 

Motive  must  be  distinguished  from  consideration. 

FINK  v.  COX. 
18  JOHNSON   (N.  Y.),  145.— 1820. 

Assumpsit  to  recover  the  amount  of  a  promissory  note  given  by 
defendant's  testator  to  his  son,  the  plaintiff.  Verdict  for  plaintiff, 
subject  to  the  opinion  of  the  court  as  to  the  law  of  the  case. 

SPENCER,  C.  J.,  delivered  the  opinion  of  the  court.  The  question 
in  this  case  is,  whether  there  is  a  sufficient  consideration  for  the  note 
on  which  this  suit  is  founded.  It  appears  from  the  declaration  of  the 
testator  when  the  note  was  given,  that  he  intended  it  as  an  absolute 
gift  to  his  son,  the  plaintiff;  alleging  that  the  plaintiff  was  not  so 

i  In  Dunton  v.  Dunton,  18  Viet.  L.  R.  114,  defendant  promised  his  divorced 
wife  that  he  would  pay  her  £6  per  month  "so  long  as  she  shall  conduct  her- 
self with  sobriety  and  in  a  respectable,  orderly  and  virtuous  manner."  It  was 
held  that  inasmuch  as  she  was  legally  at  liberty  to  conduct  herself  in  these 
respects  as  she  might  think  fit,  the  surrender  of  such  liberty  would  be  good 
consideration. 

In  Hoshor  v.  Kautz,  19  Wash.  258,  the  defendant  promised  plaintiff  $360 
a  year  for  four  years  if  he  would  attend  a  specified  university  as  a  student. 
Plaintiff  attended  the  university  and  this  was  held  a  sufficient  consideration. 

In  Brooks  v.  Ball,  18  Johns.  (N.  Y.)  337,  the  question  was,  "whether  a 
promise  to  pay  a  sum  claimed  to  be  due  by  one  party  and  denied  by  the  other, 
if  the  party  claiming  would  swear  to  the  correctness  of  the  claim,  and  he 
does  so  swear,  is  a  valid  promise."  It  was  held  "that  such  a  promise  as  the 
present  is  good  in  point  of  law,  and  that  the  making  the  proof  or  affidavit, 
whether  by  a  third  person  or  by  the  party  himself,  is  a  sufficient  consideration 
for  the  promise.  It  is  not  making  a  man  a  judge  in  his  own  cause,  but  it  is 
referring  a  disputed  fact  to  the  conscience  of  the  party.  It  is  begging  the 
question  to  suppose  that  it  will  lead  to  perjury.  If  the  promise  is  binding, 
because  the  making  the  proof  or  affidavit  is  a  consideration  for  it,  the  de- 
fendant must  necessarily  be  precluded  from  gainsaying  the  fact.  He  volun- 
tarily waives  all  other  proof;  and  to  allow  him  to  draw  in  question  the  verity 
or  correctness  of  the  proof  or  affidavit  would  be  allowing  him  to  alter  the  con- 
ditions of  his  engagement  and  virtually  to  rescind  his  promise." 


180  FORMATION    OF    CONTRACT. 

wealthy  as  his  brothers,  that  he  had  met  with  losses,  and  that  he  and 
his  brothers  had  had  a  controversy  about  a  stall.  Such  were  the  rea- 
sons assigned  for  his  giving  the  note  to  the  plaintiff. 

There  can  be  no  doubt  that  a  consideration  is  necessary  to  uphold 
the  promise,  and  that  it  is  competent  for  the  defendant  to  show  that 
there  was  no  consideration.  17  Johns.  Eep.  301;  Schoonmaker  v. 
Eoosa  and  De  Witt.  The  only  consideration  pretended  is  that  of 
natural  love  and  affection  from  a  father  to  a  child;  and  if  that  is  a 
sufficient  consideration,  the  plaintiff  is  entitled  to  recover,  otherwise 
not. 

It  is  conceded  that  the  gift,  in  this  case,  is  not  a  donatio  causa 
mortis,  and  cannot  be  supported  on  that  ground.  In  Pearson  v. 
Pearson  (7  Johns.  Eep.  26)  the  question  was,  whether  the  gift  of  a 
note  signed  by  the  defendant  to  the  plaintiff  was  such  a  vested  gift, 
though  without  consideration,  as  to  be  valid  in  law;  we  held  that  it 
was  not,  and  that  a  parol  promise  to  pay  money,  as  a  gift,  was  no 
more  a  ground  of  action  than  a  promise  to  deliver  a  chattel  as  a  gift ; 
and  we  referred  to  the  case  of  Noble  v.  Smith  (2  Johns.  Eep.  52), 
where  the  question  underwent  a  full  discussion  and  consideration. 
The  case  of  Grangiac  v.  Arden  (10  Johns.  Eep.  293)  was  decided  on 
the  principle  that  the  gift  of  the  ticket  had  been  completed  by  delivery 
of  possession,  and  is  in  perfect  accordance  with  the  former  cases. 

It  has  been  strongly  insisted  that  the  note  in  the  present  case,  al- 
though intended  as  a  gift,  can  be  enforced  on  the  consideration  of 
blood.  It  is  undoubtedly  a  fair  presumption  that  the  testator's  in- 
ducement to  give  the  note  sprang  from  parental  regard.  The  con- 
sideration of  blood,  or  natural  love  and  affection,  is  sufficient  in  a 
deed,  against  all  persons  but  creditors  and  bona  fide  purchasers;  and 
yet  there  is  no  case  where  a  personal  action  has  been  founded  on  an  exe- 
cutory contract,  where  a  consideration  was  necessary,  in  which  the 
consideration  of  blood,  or  natural  love  and  affection,  has  been  held 
sufficient.  In  such  a  case  the  consideration  must  be  a  valuable  one, 
for  the  benefit  of  the  promisor,  or  to  the  trouble,  loss,  or  prejudice  of 
the  promisee.  The  note  here  manifested  a  mere  intention  to  give  the 
one  thousand  dollars.  It  was  executory,  and  the  promisor  had  a  locus 
pcenitentice.  It  was  an  engagement  to  give,  and  not  a  gift.  None  of 
the  cases  cited  by  the  plaintiff's  counsel  maintain  the  position,  that 
because  a  parent,  from  love  and  natural  affection,  engages  to  give  his 
son  money,  or  a  chattel,  that  such  a  promise  can  be  enforced  at  law. 

-,  Judgment  for  the  defendant. 

9  Cyc.  319  (71);  W.  P.  9  (4). 


CONSIDERATION.  181 

EICKETTS  v.  SCOTHORN. 

57  NEBRASKA,  51.— 1898. 

SULLIVAN,  J.  In  the  District  Court  of  Lancaster  County  the  plain- 
tiff Katie  Scothorn  recovered  judgment  against  the  defendant  Andrew 
D.  Ricketts,  as  executor  of  the  last  will  and  testament  of  John  C. 
Ricketts,  deceased.  The  action  was  based  upon  a  promissory  note,  of 
which  the  following  is  a  copy : 

"May  the  first,  1891.  I  promise  to  pay  to  Katie  Scothorn  on  demand, 
$2000  to  be  at  6  per  cent  per  annum. 

"J.  C.  RICKETTS." 

In  the  petition  the  plaintiff  alleges  that  the  consideration  for  the 
execution  of  the  note  was  that  she  should  surrender  her  employment 
as  bookkeeper  for  Mayer  Bros,  and  cease  to  work  for  a  living.  She 
also  alleges  that  the  note  was  given  to  induce  her  to  abandon  her  oc- 
cupation, and  that,  relying  on  it,  and  on  the  annual  interest,  as  a 
means  of  support,  she  gave  up  the  employment  in  which  she  was  then 
engaged.  These  allegations  of  the  petition  are  denied  by  the  excutor. 
The  material  facts  are  undisputed.  They  are  as  follows:  John  C. 
Ricketts,  the  maker  of  the  note,  was  the  grandfather  of  the  plaintiff. 
Early  in  May, — presumably  on  the  day  the  note  bears  date, — he  called 
on  her  at  the  store  where  she  was  working.  What  transpired  between 
them  is  thus  described  by  Mr.  Modene,  one  of  the  plaintiff's  witnesses : 

A.  Well  the  old  gentleman  came  in  there  one  morning  about 
9  o'clock, — probably  a  little  before  or  a  little  after,  but  early  in  the 
morning, — and  he  unbuttoned  his  vest  and  took  out  a  piece  of  paper 
in  the  shape  of  a  note ;  that  is  the  way  it  looked  to  me ;  and  he  says  to 
Miss  Scothorn,  "I  have  fixed  out  something  that  you  have  not  got  to 
work  any  more."  He  says,  "None  of  my  grandchildren  work  and  you 
don't  have  to." 

Q.    Where  was  she? 

A.  She  took  the  piece  of  paper  and  kissed  him ;  and  kissed  the  old 
gentleman  and  commenced  to  cry. 

It  seems  Miss  Scothorn  immediately  notified  her  employer  of  her* 
intention  to  quit  work,  and  that  she  did  soon  after  abandon  her  occu- 
pation. The  mother  of  the  plaintiff  was  a  witness  and  testified  that 
she  had  a  conversation  with  her  father,  Mr.  Ricketts,  shortly  after 
the  note  was  executed,  in  which  he  informed  her  that  he  had  given  the 
note  to  the  plaintiff  to  enable  her  to  quit  work ;  that  none  of  his  grand- 
children worked  and  he  did  not  think  she  ought  to.  For  something 
more  than  a  year  the  plaintiff  was  without  an  occupation ;  but  in  Sep- 
tember, 1892,  with  the  consent  of  her  grandfather,  and  by  his  assis- 
tance, she  secured  a  position  as  bookkeeper  with  Messrs.  Funke  & 


182  FORMATION   OF   CONTRACT. 

Odgen.  On  June  8,  1894,  Mr.  Ricketts  died.  He  had  paid  one  year's 
interest  on  the  note,  and  a  short  time  before  his  death  expressed  regret 
that  he  had  not  been  able  to  pay  the  balance.  In  the  summer  or  fall 
of  1892,  he  stated  to  his  daughter,  Mrs.  Scothorn,  that  if  he  could 
sell  his  farm  in  Ohio  he  would  pay  the  note  out  of  the  proceeds.  He 
at  no  time  repudiated  the  obligation. 

We  quite  agree  with  counsel  for  the  defendant  that  upon  this  evi- 
dence there  was  nothing  to  submit  to  the  jury,  and  that  a  verdict 
should  have  been  directed  peremptorily  for  one  of  the  parties. 

The  testimony  of  Flodene  and  Mrs.  Scothorn,  taken  together,  con- 
clusively establishes  the  fact  that  the  note  was  not  given  in  considera- 
tion of  the  plaintiff  pursuing,  or  agreeing  to  pursue,  any  particular 
line  of  conduct.  There  was  no  promise  on  the  part  of  the  plaintiff 
to  do  or  refrain  from  doing  anything.  Her  right  to  the  money 
promised  in  the  note  was  not  made  to  depend  upon  an  abandonment 
of  her  employment  with  Mayer  Bros,  and  future  abstention  from  like 
service.  Mr.  Ricketts  made  no  condition,  requirement,  or  request. 
He  exacted  no  quid  pro  quo.  He  gave  the  note  as  a  gratuity  and 
looked  for  nothing  in  return.  So  far  as  the  evidence  discloses,  it  was 
his  purpose  to  place  the  plaintiff  in  a  position  of  independence,  where 
she  could  work  or  remain  idle  as  she  might  choose.  The  abandon- 
ment by  Miss  Scothorn  of  her  position  as  bookkeeper  was  altogether 
voluntary.  It  was  not  an  act  done  in  fulfillment  of  any  contract  obli- 
gation assumed  when  she  accepted  the  note.  The  instrument  in  suit 
being  given  without  any  valuable  consideration,  was  nothing  more 
than  a  promise  to  make  a  gift  in  the  future  of  the  sum  of  money  there- 
in named. 

Ordinarily,  such  promises  are  not  enforceable  even  when  put  in  the 
form  of  a  promissory  note.  Kirkpatrick  v.  Taylor,  43  111.  207 ;  Phelps 
v.  Phelps,  28  Barb.  N.  Y.  121 ;  Johnston  v.  Griest,  85  Ind.  503 ;  Fink 
v.  Cox,  18  Johns.  N.  Y.  145.  But  it  has  often  been  held  that  an  ac- 
tion on  a  note  given  to  a  church,  college,  or  other  like  institution,  upon 
the  faith  of  which  money  has  been  expended  or  obligations  incurred, 
could  not  be  successfully  defended  on  the  ground  of  a  want  of  con- 
sideration. Barnes  v.  Ferine,  12  N.  Y.  18;  Philomath  College  v. 
Hartless,  6  Ore.  158 ;  Thompson  v.  Mercer  County,  40  111.  379 ;  Irwin 
V.  Lombard  University,  56  0.  St.  9.  In  this  class  of  cases  the  note 
in  suit  is  nearly  always  spoken  of  as  a  gift  or  donation,  but  the  deci- 
sion is  generally  put  on  the  ground  that  the  expenditure  of  money  or 
assumption  of  liability  by  the  donee,  on  the  faith  of  the  promise, 
constitutes  a  valuable  and  sufficient  consideration.  It  seems  to  us 
that  the  true  reason  is  the  preclusion  of  the  defendant,  under  the  doc- 
trine of  estoppel,  to  deny  the  consideration.  Such  seems  to  be  the 
view  of  the  matter  taken  by  the  supreme  court  of  Iowa  in  the  case  of 
Simpson  Centenary  College  v.  Tuttle  (71  la.  596),  where  Rothrock, 


CONSIDERATION.  183 

J.,  speaking  for  the  court,  said:  "Where  a  note,  however,  is  based 
on  a  promise  to  give  for  the  support  of  the  objects  referred  to,  it  may 
still  be  open  to  this  defense  [want  of  consideration],  unless  it  shall 
appear  that  the  donee  has,  prior  to  any  revocation,  entered  into  en- 
gagements or  made  expenditures  based  on  such  promise,  so  that  he 
must  suffer  loss  or  injury  if  the  note  is  not  paid.  This  is  based  on 
the  equitable  principle  that,  after  allowing  the  donee  to  incur  obliga- 
tions on  the  faith  that  the  note  would  be  paid,  the  doner  would  be 
estopped  from  pleading  want  of  consideration/'  And  in  the  case  of 
Eeimensnyder  v.  Gans  (110  Pa.  St.  17),  which  was  an  action  on  a 
note  given  as  a  donation  to  a  charitable  objecc,  the  court  said :  "The 
fact  is  that,  as  we  may  see  from  the  case  of  Ryerss  v.  Trustees  (33  Pa. 
St.  114),  a  contract  of  the  kind  here  involved  is  enforceable  rather  by 
way  of  estoppel  than  on  the  ground  of  consideration  in  the  original 
undertaking."  It  has  been  held  that  a  note  given  in  expectation  of 
the  payee  performing  certain  services,  but  without  any  contract  bind- 
ing him  to  serve,  will  not  support  an  action.  Hulse  v.  Hulse,  84 
Eng.  Com.  Law,  709.  But  when  the  payee  changes  his  position  to 
his  disadvantage,  in  reliance  on  the  promise,  a  right  of  action  does 
arise.  McClure  v.  Wilson,  43  111.  356 ;  Trustees  v.  Garvey,  53  111.  401. 

Under  the  circumstances  of  this  case  is  there  an  equitable  estoppel 
which  ought  to  preclude  the  defendant  from  alleging  that  the  note  in 
controversy  is  lacking  in  one  of  the  essential  elements  of  a  valid  con- 
tract? We  think  there  is.  An  estoppel  in  pais  is  defined  to  be  "a 
right  arising  from  acts,  admissions,  or  conduct  which  have  induced  a 
change  of  position  in  accordance  with  the  real  or  apparent  intention  of 
the  party  against  whom  they  are  alleged."  Mr.  Pomeroy  has  formu- 
lated the  following  definition :  "Equitable  estoppel  is  the  effect  of  the 
voluntary  conduct  of  a  party  whereby  he  is  absolutely  precluded,  both 
at  law  and  in  equity,  from  asserting  rights  which  might  perhaps  have 
otherwise  existed,  either  of  property,  or  contract,  or  of  remedy,  as 
against  another  person  who  in  good  faith  relied  upon  such  conduct, 
and  has  been  led  thereby  to  change  his  position  for  the  worse,  and 
who  on  his  part  acquires  some  corresponding  right  either  of  property, 
of  contract,  or  of  remedy."  2  Pomeroy,  Equity  Jurisprudence,  804. 

According  to  the  undisputed  proof,  as  shown  by  the  record  before 
us,  the  plaintiff  was  a  working  girl,  holding  a  position  in  which  she 
earned  a  salary  of  $10  per  week.  Her  grandfather,  desiring  to  put 
her  in  a  position  of  independence,  gave  her  the  note,  accompanying  it 
with  the  remark  that  his  other  grandchildren  did  not  work,  and  that 
she  would  not  be  obliged  to  work  any  longer.  In  effect  he  suggested 
that  she  might  abandon  her  employment  and  rely  in  the  future  upon 
the  bounty  which  he  promised.  He,  doubtless,  desired  that  she  should 
give  up  her  occupation,  but  whether  he  did  r.r  not,  it  is  entirely  cer- 
tain that  he  contemplated  such  action  on  her  part  as  a  reasonable  and 


184  FORMATION   OF   CONTRACT; 

probable  consequence  of  his  gift.  Having  intentionally  influenced  the 
plaintiff  to  alter  her  position  for  the  worse  on  the  faith  of  the  note  be- 
ing paid  when  due,  it  would  be  grossly  inequitable  to  permit  the  maker, 
or  his  executor,  to  resist  payment  on  the  ground  that  the 
promise  was  given  without  consideration.  The  petition  charges  the 
elements  of  an  equitable  estoppel,  and  the  evidence  conclusively  estab- 
lishes them.  If  errors  intervened  at  the  trial  they  could  not  have  been 
prejudicial.  A  verdict  for  the  defendant  would  be  unwarranted.  The 
judgment  is  right  and  is 

Affirmed. 

W.  P.  650  (1)  ;  12  H.  L.  R.  506;  12  Yale  Law  Journal,  422-423   (Ashley) ; 
Langdell,  Cont.,  §  79. 


Consideration  must  move  from  promisee. 

NOTE. — For  cases  on  the  proposition  that  the  consideration  must  move  from 
the  promisee,  see  cases  under  "Limits  of  Contractual  Obligation,"  post,  Part 
II.  Ch.  I. 


b.  Second  test  of  reality.  Was  the  promisee's  act,  forbearance, 
sufferance,  or  promise  of  any  ascertainable  value? 

Prima  facie  impossibility. 

BEEBE  v.  JOHNSON. 

19  WENDELL   (N.  Y.),  500.— 1838. 

This  was  an  action  of  covenant. 

On  the  21st  January,  1833,  Johnson,  for  the  consideration  of  $5000, 
conveyed  by  deed  to  Beebe,  the  sole  and  exclusive  right  to  make,  use, 
and  vend  in  Upper  and  Lower  Canada,  in  certain  counties  of  this 
State,  and  in  other  places,  a  threshing  machine  which  had  been 
patented  to  one  Warren,  and  covenanted  to  perfect  the  patent  right  in 
England  as  soon  as  practicable  and  within  a  reasonable  space  of  time, 
so  as  to  secure  to  Beebe  the  entire  control  of  the  provinces  of  Upper 
and  Lower  Canada.  In  April,  1834,  Beebe  commenced  this  suit,  and 
in  his  declaration,  after  setting  forth  the  contract,  averred,  that  al- 
though a  reasonable  time  for  the  purpose  had  long  since  elapsed,  that 
Johnson  had  not  perfected  the  patent  right  in  England,  or  otherwise 
secured  to  him  the  sole  and  exclusive  right  of  making,  using,  and  vend- 
ing the  machine  in  the  provinces  of  Upper  and  Lower  Canada.  He 
further  averred,  that  Johnson  and  himself  being  citizens  of  the  United 
States,  Johnson  could  not  obtain,  either  for  himself  or  for  Beebe, 
the  plaintiff,  from  the  proper  authorities  in  Canada,  the  exclusive  right 
of  vending  the  machine  within  those  provinces ;  and  so,  he  said,  John- 


CONSIDERATION.  185 

eon  had  not  kept  his  covenant.'  The  defendant  pleaded  the  general  is- 
sue, and  gave  notice  of  special  matter  to  be  proved  on  the  trial.  On  the 
trial  of  the  cause  the  plaintiff  read  in  evidence  a  letter  of  the  defend- 
ant, dated  8th  April,  1833,  in  which  he  admitted,  in  substance,  that 
in  the  negotiation  between  the  parties  the  exclusive  right  of  vending 
the  machine  in  the  Canadas  had  been  estimated  at  $500.  The  plain- 
tiff also  proved  by  a  witness,  who  had  been  employed  in  the  Canadas 
by  him  in  vending  the  article,  that  the  exclusive  right  of  vending  it 
there  would,  in  his  opinion,  be  worth  $500.  By  a  written  stipulation 
between  the  parties,  it  was  admitted  that  the  patent  right  could  not 
be  perfected  in  England,  because  tKe  authority  to  grant  letters  patent 
for  such  improvements  was  vested  in  the  provinces,  and  that  in  the 
provinces  the  exclusive  right  of  vending  improvements  of  this  nature 
can  be  conferred  upon  a  subject  of  Great  Britain,  and  a  resident 
of  the  provinces,  and  that  the  patentee,  the  plaintiff,  and  the  defendant 
are  all  citizens  of  the  United  States,  and  cannot  become  subjects  of 
Great  Britain  short  of  a  residence  in  the  provinces  of  seven  years. 
The  jury  found  a  verdict  for  the  plaintiff  of  $601.23,  being  the  sum  of 
$500,  with  the  interest  thereof  from  the  date  of  the  deed  declared  upon. 
The  defendant's  counsel  having  moved  for  a  nonsuit,  which  was  over- 
ruled, and  having  excepted  to  the  charge  of  the  judge,  now  moved 
for  a  new  trial.  The  principal  grounds  relied  upon  in  support  of  the 
application  will  appear  from  the  opinion  delivered  refusing  a  new 
trial. 

NELSON,  C.  J.  It  is  supposed  by  the  counsel  for  the  defendant  that 
a  legal  impossibility  prevented  the  fulfilment  of  the  covenant  to  per- 
fect the  patent  right  in  England,  so  as  to  secure  the  monopoly  of  the 
Canadas  to  the  plaintiff,  and  hence  that  the  obligation  was  dispensed 
with,  so  that  no  action  can  be  maintained.  There  are  authorities  which 
go  that  length,  Co.  Litt.  206,  b. ;  Shep.  Touch.  164 ;  2  Co.  Litt.  26 ; 
Platt.  on  Cov.  569 ;  but  if  the  covenant  be  within  the  range  of  possi- 
bility, however  absurd  or  improbable  the  idea  of  the  execution  of  it 
may  be,  it  will  be  upheld :  as  where  one  covenants  it  shall  rain  to- 
morrow, or  that  the  Pope  shall  be  at  Westminster  on  a  certain  day. 
To  bring  the  case  within  the  rule  of  dispensation,  it  must  appear  that 
the  thing  to  be  done  cannot  by  any  means  be  accomplished;  for,  if  it  is 
only  improbable,  or  out  of  the  power  of  the  obligor,  it  is  not  in  law 
deemed  impossible.  3  Comyn's  Dig.  93;  1  Roll.  Abr.  419.  Now  it 
is  clear  that  the  fulfilment  in  this  case  cannot  be  considered  an  im- 
possibility within  the  above  exposition  of  the  rule;  because,  for  any- 
thing we  know  to  the  contrary,  the  exclusive  right  to  make,  use,  and 
vend  the  machine  in  the  Canadas,  might  have  been  secured  in  England 
by  act  of  Parliament  or  otherwise ;  at  least,  there  is  nothing  in  all  this 
necessarily  impossible.  These  provinces  are  a  part  of  the  British  Em- 
pire, and  subject  to  the  power  of  the  Parliament  at  home ;  which  body 


186  FORMATION    OF   CONTRACT. 

might  very  well  grant  the  privilege  the  defendant  covenanted  to  pro- 
cure. Certainly  we  are  unable  to  say  the  government  cannot  or  would 
not  by  any  means  grant  it.  There  is,  then,  nothing  in  the  case  to 
take  it  out  of  the  rule  in  Paradine  v.  Jane  (Aleyn,  27)  as  expounded 
by  Chambre,  J.,  in  Beale  v.  Thompson  (3  Bos.  &  Pull.  420),  namely, 
if  a  party  enter  into  an  absolute  contract  without  any  qualification  or 
exception,  and  receives  from  the  party  with  whom  he  contracts  the  con- 
sideration of  such  engagement,  he  must  abide  by  the  contract,  and 
either  do  the  act  or  pay  damages;  his  liability  arising  from  his  own 
direct  and  positive  undertaking.  6  T.  K.  750;  8  Id.  267,  Lawrence, 
J.;  10  East,  533;  4  Carr.  &  Payne,  295;  1  Selw.  344. 

It  has  also  been  said  that  the  action  cannot  be  maintained,  as  the 
covenant  contemplated  the  violation  of  the  laws  of  England.  We  are 
unable  to  perceive  the  force  of  this  objection,  as  the  fulfilment  of  the 
covenant  necessarily  required  the  procurement  of  lawful  authority  to 
make  and  vend  the  machine  in  the  Canadas.  It  is  difficult  to  under- 
stand how  this  could  be  accomplished  by  other  than  lawful  means. 
That  it  might  be  by  such,  we  have  already  considered  not  impossible. 

Again,  it  was  said  the  contract  was  void  because  it  contemplated  a 
renunciation  of  citizenship  by  the  defendant.  Whether,  if  the  fact 
was  admitted,  the  consequence  would  follow,  we  need  not  stop  to  con- 
sider, because  it  is  very  clear  that  no  such  step  is  necessarily  embraced 
in  the  covenant.  For  aught  we  know,  the  patent  might  be  procured 
without  such  renunciation ;  and  if  it  were  considered  unlawful  to  con- 
tract for  expatriation,  inasmuch  as  this  agreement  does  not  necessarily 
contemplate  it,  we  would  be  bound  to  hold  that  the  defendant  assumed 
to  procure  the  patent  without  it.  But  even  in  England,  the  common 
law  rule  against  the  expatriation  of  the  subject  is  so  far  modified  that 
naturalization  abroad  for  commercial  purposes  is  recognized,  and  is 
of  course  lawful.  1  Comyn,  677;  8  T.  E.  31;  1  Bos.  &  Pull.  430, 
440,  444 ;  2  Kent's  Comm.  49 ;  1  Peter's  C.  C.  E.  159.  In  the  case  of 
Wilson  v.  Marryat  (8  T.  E.  31,  and  1  Bos.  &  Pull.  430)  it  was  decided 
that  Collet,  a  natural-born  subject  of  Great  Britain,  having  become 
a  citizen  of  the  United  States,  according  to  our  laws,  was  entitled  to 
all  the  advantages  of  an  American  citizen  under  the  treaty  of  1794. 
There  the  defendant  undertook  to  avoid  a  policy  of  insurance  procured 
by  the  plaintiff  for  the  benefit  of  Collet  upon  an  American  ship  and 
cargo,  of  which  he  was  master,  on  the  ground  that  he  was  a  British 
subject,  and  therefore  the  trade  in  which  he  was  engaged  illegal,  being 
in  violation  of  the  privileges  of  the  East  India  Company,  which  trade 
was  secured  to  American  citizens  by  the  treaty  of  1794. 

New  trial  denied. 

9  Cyc.  326  (12-14)  ;  327  (15-18) ;  W.  P.  522  (1) ;  530  (13). 


CONSIDERATION.  187 

STEVENS  v.  COON. 

1  PINNEY   (WIS.),  356.— 1843. 

DUNN,  C.  J.  Error  is  brought  in  this  case  to  reverse  a  judgment 
of  the  District  Court  of  Jefferson  County. 

Coon,  plaintiff  below,  brought  his  action  of  assumpsit  against 
Stevens,  defendant  below,  to  recover  damages  on  a  liability  growing 
out  of  a  contract,  which  is  in  the  words,  etc.,  following,  viz. : 

"ASTOB,  March  23,  1839. 

"In  consideration  of  C.  J.  Coon  entering  the  west  half  of  the  northwest 
quarter  of  section  35,  in  town  13,  range  13,  I  bind  myself  that  the  said  eighty 
acres  of  land  shall  sell,  on  or  before  the  1st  October  next,  for  two  hundred 
dollars  or  more,  and  the  said  Coon  agrees  to  give  me  one-half  of  the  amount 
over  two  hundred  dollars  said  land  may  sell  for  in  consideration  of  my  war- 
ranty. 

"HAMILTON  STEVENS. 

"I  agree  to  the  above  contract. 

"C.  J.  COON." 

At  the  August  term  of  the  said  Jefferson  County  District  Court, 
in  the  year  1840,  the  said  defendant  Stevens  pleaded  the  general  issue 
which  was  joined  by  the  said  plaintiff  Coon,  and  after  several  con- 
tinuances the  case  was  tried  at  the  October  term,  1842.  On  the  trial, 
the  above  contract,  and  the  receiver's  receipt  to  said  plaintiff  Coon, 
for  the  purchase  money  for  said  tract  of  land  described  in  said  con- 
tract, were  read  in  evidence  to  the  jury;  and  Abraham  Vanderpool,  a 
witness,  testified  "that  he  had  visited  that  part  of  the  country  where 
the  land  lies,  specified  in  said  writing,  and  was  upon  the  same,  as 
he  has  no  doubt,  and  estimated  the  present  value  of  the  same  at  $1.50 
per  acre,  and  that  in  October,  1839,  it  might  be  worth  $1.25  an  acre." 
Upon  this  evidence  and  testimony  the  plaintiff  rested  his  case. 

Under  the  construction  put  on  the  contract  read  in  evidence,  the 
jury  found  for  the  plaintiff  $116.50  in  damages,  and  judgment  was 
entered  thereon.  There  is  manifest  error  in  this  decision  of  the 
coujt..  From  an  inspection  of  the  contract,  it  is  obvious  that  it  is 
not  such  an  one  as  is  obligatory  on  either  party.  There  is  no  reci- 
procity of  benefit,  and  it  binds  the  defendant  below  to  the  perform- 
ance of  a  legal  impossibility,  so  palpable  to  the  contracting  parties 
that  it  could  not  have  been  seriously  intended  by  the  parties  as  obliga- 
tory on  either.  The  undertaking  of  the  defendant  below  is,  "that 
plaintiff's  tract  of  land  shall  sell  for  a  certain  sum  by  a  given  day." 
Is  it  not  legally  impossible  for  him  to  perform  this  undertaking? 
Certainly,  no  man  can  in  legal  contemplation  force  the  sale  of  an- 
other's property  by  a  given  day,  or  by  any  day,  as  of  his  own  act. 
The  plaintiff  was  well  apprised  of  the  deficiency  of  his  contract  on  the 


188  FORMATION   OF   CONTRACT. 

trial,  as  the  testimony  of  his  witness  was  entirely  apart  from 
the  contract  sued  on,  and  was  directed  in  part  to  a  different  contract, 
and  such  an  one  as  the  law  would  have  recognized.  If  the  contract 
had  been  that  the  tract  of  land  would  be  worth  $200  by  a  given  day, 
then  it  could  have  been  recovered  on,  if  it  did  not  rise  to  that  value 
in  the  time.  1  Comyn  on  Contracts,  14,  16,  18 ;  Comyn's  Dig.,  title 
"Agreement";  1  Pothier  on  Obligations,  71;  6  Petersdorf's  Abridg. 
218;  2  Sand.  137  (d).  The  District  Court  should  not  have  entered 
judgment  on  the  finding  of  the  jury  in  this  case.  The  construction 
of  the  contract  by  the  District  Court  was  erroneous. 

Judgment  reversed  with  costs. 
9  Cyc.  326  (14). 


Uncertainty. 

SHERMAN  v.  KITSMILLER,  Adm'r. 
17  SERGEANT  &  RAWLE   (PENN.),  45.— 1827. 

DUNCAN,  J.     The  declaration  contains  four  counts: 

1.  On  the  special  promise  to  give  Elizabeth  Koons  one  hundred 
acres  of  land,  in  consideration  that  she  should  live  with  the  intestate, 
as  his  housekeeper,  until  her  marriage,  with  an  averment  that  she 
did  live  with  him,  and  keep  his  house  until  her  marriage. 

2.  That  he  would  give  her  one  hundred  acres  of  land,  if  she  lived 
with  him  until  her  marriage,  and  married  the  plaintiff,  George  Sher- 
man, with  an  averment  that  she  did  live  with  him  until  she  inter- 
married with  George  Sherman. 

3.  It  is  a  promise  to  give  her  one  hundred  acres  of  land,  if  she 
married  George  Sherman,  with  an  averment  that  she  intermarried 
with  George  Sherman. 

4.  Is  a  quantum  meruil  for  work,  labor,  and  services. 

The  error  assigned  is,  in  that  part  of  a  long  charge  in  which  the 
court  say,  "There  can  be  no  recovery,  unless  there  was  a  legal  promise, 
seriously  made ;  if  a  promise  is  so  vague  in  its  terms  as  to  be  incapable 
of  being  understood,  and  of  being  carried  into  effect,  it  cannot  be 
enforced.  If  George  Sherman  had  reference  to  no  particular  lands, 
if  he  did  not  excite  or  intend  to  excite,  a  hope  or  expectation  in  Eliza- 
beth Koons,  that  after  her  marriage  with  George  Sherman  she  should 
get  any  land,  such  promise  would  not  be  so  perfect  as  to  furnish  the 
ground  of  an  action  for  damages.  But  if  George  Sherman  was  seized 
of  several  tracts  in  the  vicinity,  and  he  promised  her  one  hundred 
acres,  in  such  a  manner  as  to  excite  an  expectation  in  her  that  it  was 
a  particular  part  of  his  lands  so  held  by  him,  though  not  particularly 
describing  or  specifying  its  value,  or  by  whom;  and  if,  in  pursuance 


CONSIDERATION.  189 

of  such  promise,  she  did  marry  George  Sherman,  then  the  action  might 
be  sustained." 

Now,  let  us  put  the  case  of  the  plaintiffs  in  the  most  favorable  light, 
without  regarding  the  form  of  the  declaration,  and  admit  that  the 
proof  met  the  allegation,  the  special  promise  of  the  one  hundred  acres 
of  land,  the  consideration  of  the  promise,  marriage,  and  its  execution, 
and  living  with  the  defendant's  intestate  until  the  marriage,  the 
charge  of  the  court  was,  in  the  particular  complained  of,  more  favor- 
able to  the  plaintiffs  than  their  case  warranted.  It  should  have  been, 
on  the  question  put  to  the  court,  that  the  promise  could  not  support 
the  action;  that  the  defendant's  intestate  did  not  assume  to  convey 
any  certain  thing,  to  convey  any  certain  or  particular  land,  or  that 
could,  with  reference  to  anything  said  by  him,  refer  to  anything  cer- 
tain. Whereas  the  court  submitted  to  the  jury  whether  it  did  refer 
to  anything  certain,  viz.,  lands  of  the  intestate  in  the  vicinity;  anl 
that  without  one  spark  of  evidence  to  authorize  the  jury  to  make  such 
an  inference  or  draw  such  conclusion.  And  if  the  verdict  had  been 
for  the  plaintiffs,  on  either  of  these  three  counts,  the  judgment  would 
have  been  reversed  for  this  error.  The  jury  have  found  that  the 
promise  referred  to  nothing  certain,  no  particular  lands  anywhere 
of  which  the  promisor  was  seized.  Except  the  count  on  the  quantum 
meruit,  for  the  reasonable  allowance  for  the  services  of  Elizabeth 
Koons,  it  was  not  an  action  of  indebitatus  assumpsit,  but  an  action 
on  the  special  contract — an  action  to  recover  damages  sustained  by  the 
plaintiff  for  the  breach  of  a  promise  to  convey  one  hundred  acres  of 
land,  an  action  for  not  specifically  executing  the  contract.  There 
can  be  no  implied  promise,  because,  whatever  the  undertaking  was 
as  to  the  one  hundred  acres,  it  was  express ;  the  action  is  brought  on 
the  express  promise,  and  that  only  lies  where  a  man  by  express  words 
assumes  to  do  a  certain  thing.  Com.  Dig.,  title  "Assumpsit  upon  an 
Express  Promise,"  A.  3.  Not  that  this  means  an  absolute  certainty, 
but  a  certainty  to  a  common  intent,  giving  the  words  a  reasonable 
construction.  But  the  words  must  show  the  undertaking  was  certain ; 
for,  in  assumpsit  for  non-payment  of  money,  it  is  necessary  to  reduce 
the  amount  to  a  certainty ;  or,  on  a  quantum  meruit,  by  an  averment, 
where  the  amount  does  not  otherwise  appear.  Express  promises  or 
contracts  ought  to  be  certain  and  explicit,  to  a  common  intent  at 
least.  1  Com.  on  Cont.  They  may  be  rendered  certain  by  a  reference 
to  something  certain,  and  the  cases  to  be  found  in  the  books  as  to  the 
nature  of  this  reference  are  generally  on  promises  of  marriage;  as, 
where  A,  in  consideration  that  B  would  marry  his  daughter,  promised 
to  give  with  her  a  child's  portion,  and  that  at  the  time  of  his  death 
he  would  give  to  her  as  much  as  any  of  his  other  children,  except  his 
eldest  son, — this  was  holden  to  be  a  good  promise;  for,  although  a 
child's  portion  is  altogether  uncertain,  yet  what  the  rest  of  the  chil- 


190  FORMATION    OF   CONTRACT. 

dren,  except  the  eldest,  got,  reduces  it  to  a  sufficient  certainty.  Sil- 
vester's Case,  Popham,  148;  2  Eoll.  Rep.  104.  But  if  a  citizen  of 
London  promises  a  child's  portion,  that  of  itself  is  sufficiently  certain ; 
for,  by  the  custom  there,  it  is  certain  how  much  each  child  shall  have. 
2  Roll.  Rep.  104;  1  Lev.  88.  Now  here,  the  court  instructed  the 
jury,  that  if  they  could  find  this  promise  to  refer  to  anything  certain, 
any  land  in  particular,  the  action  could  be  maintained.  This  was 
leaving  it  to  the  jury  more  favorably  for  the  plaintiffs  than  ought 
to  have  been  done;  for  the  jury  should  have  been  instructed,  that  as 
there  was  nothing  certain  in  the  promise,  nothing  referred  to,  to  ren- 
der it  certain,  the  action  could  not  be  maintained.  The  contract  was 
an  express  one, — nothing  could  be  raised  by  implication, — no  other 
contract  could  be  implied.  By  the  statute  of  frauds  and  perjuries,  such 
a  promise  would  be  void  in  England,  not  being  in  writing;  and,  al- 
though that  provision  is  not  incorporated  in  our  act  on  the  subject, 
this  would  be  matter  of  regret,  if  such  loose  speeches  should  be  held 
to  amount  to  a  solemn  binding  promise,  obliging  the  speaker  to  convey 
one  hundred  acres  of  his  homestead  estate,  or  pay  the  value  in  money. 
If  a  certain  explicit,  serious  promise  was  made  with  her,  though  not 
in  writing,  if  marriage  was  contracted  on  the  faith  of  it,  and  the 
promise  was  certain  of  some  certain  thing,  it  would  be  binding. 

There  would,  in  the  present  case,  be  no  specific  performance  de- 
creed in  a  court  of  chancery;  the  promisor  himself  would  not  know 
what  to  convey,  nor  the  promisee  what  to  demand.  If  it  had  been  a 
promise,  to  give  him  one  hundred  pieces  of  silver,  this  would  be  too 
vague  to  support  an  action;  for  what  pieces? — fifty-cent  pieces  or 
dollars? — what  denomination?  One  hundred  cows  or  sheep  would 
be  sufficiently  certain,  because  the  intention  would  be,  that  they  should 
be  at  least  of  a  middling  quality;  but  one  hundred  acres  of  land, 
without  locality,  without  estimation  of  value,  without  relation  to 
anything  which  could  render  it  certain,  does  appear  to  me  to  be  the 
most  vague  of  all  promises;  and,  if  any  contract  can  be  void  for  its 
uncertainty,  this  must  be.  One  hundred  acres  on  the  Rocky  Moun- 
tains, or  in  the  Conestoga  Manor — one  hundred  acres  in  the  moun- 
tains of  Hanover  County,  Virginia,  or  in  the  Conewango  rich  lands 
of  Adams  County — one  hundred  acres  of  George  Sherman's  mansion- 
place  at  eighty  dollars  per  acre,  or  one  hundred  acres  of  his  barren 
lands  at  five  dollars. 

This  vague  and  void  promise,  incapable  of  specific  execution,  be- 
cause it  has  nothing  specific  in  it,  would  not  prevent  the  plaintiffs 
from  recovering  in  a  quantum  meruit  for  the  value  of  this  young 
woman's  services  until  her  marriage.  If  this  promise  had  been  that, 
in  consideration  of  one  hundred  pounds,  the  defendant's  testator 
promised  to  convey  her  one  hundred  acres  of  land,  chancery  would 
not  decree  a  specific  performance,  or  decree  a  conveyance  of  any  par- 


CONSIDERATION.  191 

ticular  land;  yet  the  party  could  recover  back  the  money  he  had  paid 
in  an  action.  As,  where  a  young  man,  at  the  request  of  his  uncle, 
lived  with  him,  and  his  uncle  promised  to  do  by  him  as  his  own  child, 
and  he  lived  and  worked  with  him  above  eleven  years;  and  his  uncle 
said  his  nephew  should  be  one  of  his  heirs,  and  spoke  of  advancing 
a  sum  of  money  to  purchase  a  farm  for  him  as  a  compensation  for  his 
services,  but  died  without  doing  anything  for  his  nephew,  or  making 
him  any  compensation,,  it  was  held  that  an  action  on  an  implied 
assumpsit  would  lie  against  the  executors  for  the  work  and  labor  per- 
formed by  the  nephew  for  the  testator.  Jacobson  v.  The  Executors 
of  Le  Grange,  3  Johns.  199.  In  Conrad  v.  Conrad's  Administrators 
(4  Ball.  Pa.  130)  a  plantation  was  bought  by  the  plaintiff,  an  illegiti- 
mate son  of  the  defendant's  intestate,  on  a  special  agreement  that  if 
the  plaintiff  would  live  with  the  intestate,  and  work  his  plantation 
for  six  years,  he  would  give  and  convey  to  him  one  hundred  acres  of 
the  land.  This  was  held  a  good  promise,  because  it  was  certain — one 
hundred  acres  of  the  plantation  on  which  the  father  lived.  But  in 
this  case  the  jury  have  negatived  all  idea  of  an  agreement  to  give 
Miss  Koons  one  hundred  acres  of  any  particular  kind  or  quality  of 
land,  of  any  certain  description,  on  which  any  value  could  be  put.  In 
2  Yeates,  522,  in  an  action  on  a  promise  to  convey  a  tract  of  land  in 
Northumberland  County  to  the  plaintiff,  the  promise  was  in  the  first 
instance  gratuitous,  but  the  plaintiff  had  paid  the  scrivener  to  draw 
the  conveyance,  which  was  held  to  be  a  sufficient  consideration  for 
the  promise;  the  action  was  for  damages  for  not  conveying  it.  No 
evidence  was  given  of  the  value  of  the  land.  The  court  stated  the 
difficulty  of  giving  damages  for  not  conveying  lands  of  the  value  of 
which  nothing  appeared.  The  plaintiff's  counsel  admitted  the  want 
of  evidence  of  the  value  of  the  land  was  an  incurable  defect.  If  the 
defect  of  evidence  of  value  would  be  incurable,  the  defect  of  all  alle- 
gation or  proof  of  anything  by  which  the  value  could  be  regulated, 
anything  to  afford  a  clue  to  the  jury  by  which  to  discover  what  was 
intended  to  be  given,  any  measure  of  damages,  would  be  fatal.  The 
promise  is  as  boundless  as  the  terrestrial  globe.  The  party  would 
lie  at  the  mercy  of  the  jury — there  would  be  the  same  reason  for  ten 
thousand  dollars  damages  as  ten  cents.  The  court  could  not  set  aside 
the  verdict  in  any  case,  either  on  account  of  extravagance  or  smallness 
of  damages,  for  there  is  nothing  by  which  to  measure  them;  but  the 
arbitrary  discretion  or  the  caprice  of  the  jury  must  decide  them,  with- 
out evidence  and  without  control.  It  cannot  be  compared  to  actions 
of  slander,  where  the  jury  have  a  wide  range,  and  must  exercise  some 
latitude, — it  is  an  action  on  an  express  promise,  which  the  law  says 
must  be  to  perform  something  either  certain  to  a  common  intent,  or 
by  a  reference  to  something  which  can  render  it  certain.  In  contracts 
which  can  be  enforced  specifically,  or  where  damages  are  to  be  given 


192  FORMATION   OF   CONTRACT. 

for  their  non-performance,  there  is  always  a  measure  of  damages; 
in  actions  affecting  the  reputation,  the  person,  or  the  liberty  of  a  man, 
they  must  depend,  in  some  measure,  on  the  direction  of  the  jury.  If 
the  jury  go  beyond  the  standard,  the  value  ascertained  by  evidence 
of  the  thing  contracted  for,  or  under  its  value,  the  court  will  set  aside 
the  verdict,  but  in  the  vindictive  class  of  actions,  the  damages  must 
be  outrageous  to  justify  the  interference  of  the  court, — seldom,  if 
ever,  for  smallness  of  damages.  There  is  a  great  difference  between 
damages  which  can  be  ascertained,  as  in  assumpsit,  trover,  etc.,  where 
there  is  a  measure,  and  personal  torts,  as  false  imprisonment,  slander, 
malicious  prosecution,  where  damages  are  matter  of  opinion.  To  say 
that  nominal  damages,  at  least,  ought  to  be  given,  is  taking  for  granted 
the  very  matter  in  controversy;  for  the  legal  question  is,  was  there 
an  actionable  promise — a  promise  to  do  anything  certain,  or  certain 
to  a  common  intent,  or  where,  by  reference  to  anything,  it  would  be 
rendered  certain?  The  jury  have  negatived  all  this. 

I  am  therefore  of  opinion  that  there  was  no  error  in  the  opinion 
of  the  court,  by  which  the  plaintiffs  have  been  endamaged;  that  the 
law  was  laid  down  more  favorably  for  them  than  the  evidence  war- 
ranted. 

Judgment  affirmed.1 

9  Cyc.  248   (42)  ;  325   (5-6) ;  W.  P.  49   (54). 


HAET  v.  GEOEGIA  EAILEOAD  COMPANY. 
101  GEORGIA,  188.— 1897. 

Action  by  Eva  F.  Hart  against  the  Georgia  Eailroad  Company.  A 
general  demurrer  to  the  complaint  was  sustained,  and  plaintiff  brings 
error. 

COBB,  J.  Mrs.  Hart  sued  the  Georgia  Eailroad  Company,  alleging 
in  her  petition  that  the  defendant  was  engaged  as  a  common  carrier 
in  the  carrying  of  passengers,  and  that  an  eating  station  for  the  com- 
fort and  convenience  of  passengers  on  the  road  was  practically  a 
necessity,  and  the  establishment  of  such  a  station  would  be  a  great 
advantage  to  the  road  in  increasing  its  popularity  and  patronage; 
that  the  company,  through  its  duly-authorized  agent  and  officer,  cove- 

i  In  The  United  Press  v.  New  York  Press  Co.,  164  N.  Y.  406,  it  was  held  that 
an  executory  contract  in  writing,  attempting  to  provide  over  a  period  of  years 
for  the  furnishing  of  news  reports  on  each  day  at  a  price  "not  exceeding  three 
hundred  dollars  during  each  and  every  week  that  said  news  report  is  received," 
is  so  indefinite  as  to  the  price  to  be  paid  as  to  preclude  a  recovery  of  substantial 
damages  for  its  breach  in  refusing  to  receive  the  service ;  the  court  saying  that 
"because  of  the  indefmiteness  of  the  obligation,  only  nominal  damages  were 
recoverable." 


CONSIDERATION.  193 

nanted  and  agreed  with  her  that,  if  she  would  erect  at  the  station  of 
Union  Point  a  permanent  and  first-class  eating  house  for  the  accom- 
modation of  the  traveling  public,  and  maintain  the  same  in  a  first- 
class  manner,  the  company,  by  the  patronage  of  its  road,  would 
maintain  and  support  the  same.  In  consideration  of  such  represen- 
tations and  promises,  and  of  the  profits  anticipated  from  the  patron- 
age, she  agreed  to  erect  such  a  house,  and  maintain  or  cause  it  to  be 
maintained  in  first-class  style,  promising  further  to  accommodate 
the  employes  of  said  company  thereat  for  a  reduced  price,  to  wit, 
25  cents  for  meals,  being  one-half  the  regular  price.  It  was  further 
alleged  that  in  accordance  with  the  terms  of  the  agreement  a  first- 
class  hotel  was  erected  and  maintained,  and  that  the  contract  was 
fully  performed  on  her  part.  It  was  also  alleged  that  said  company 
discontinued  stopping  its  trains  for  meals  at  Union  Point  until  only 
one  train  was  stopped  for  that  purpose,  the  patronage  of  which  was 
not  sufficient  to  make  the  business  of  maintaining  an  eating  house 
profitable;  that  the  business  was  wholly  dependent  for  support  upon 
the  patronage  of  the  trains  of  the  company,  and  could  not  be  other- 
wise sustained;  and  since  the  stopping  of  the  trains  she  is  unable  to 
conduct  the  business  at  all,  and  has  lost  the  entire  profits  which  could 
have  been  derived  therefrom,  to  the  net  annual  value  of  $4000.  To 
the  declaration  the  defendant  filed  a  general  demurrer,  which  was 
sustained,  and  the  plaintiff  excepted. 

The  contract  as  declared  on  contained  an  obligation  on  the  part 
of  the  plaintiff  to  erect  "a  permanent  and  first-class  hotel  for  the 
accommodation  of  the  traveling  public,  and  maintain  the  same  in  a 
first-class  manner,"  and  the  obligation  on  the  part  of  the  road  that  it, 
"by  the  patronage  of  its  road,  would  maintain  and  support  the  same." 
The  whole  of  the  alleged  parol  contract  is  contained  in  the  words 
quoted.  What  is  a  first-class  hotel  ?  How  is  a  hotel  maintained  in  a 
first-class  manner?  What  is  the  patronage  of  a  road  running  trains 
day  and  night  at  a  given  point  ?  Is  the  stopping  of  every  train  neces- 
sary to  maintain  and  support  an  eating  house  at  such  point  ?  If  not, 
how  many  trains,  and  what  trains?  Suppose  the  plaintiff  had  failed 
to  erect  an  hotel,  what  character  of  building  could  she  have  been  com- 
pelled to  erect  under  this  contract?  That  she  did  erect  an  hotel 
which,  in  her  opinion,  was  a  first-class  hotel,  and  that  she  did  main- 
tain the  same  in  what  she  understood  to  be  a  first-class  manner,  can- 
not make  certain  and  definite  stipulations  in  the  contract  declared 
on,  which  are  otherwise  vague  and  indefinite.  Construing  the  decla- 
ration as  a  whole,  it  is  impossible  to  determine  with  certainty  what 
was  the  contract  between  the  parties,  and  therefore  it  is  impossible 
to  determine  what  would  be  the  damages  arising  from  a  failure  to 
carry  out  the  alleged  contract.  As  the  language  alleged  does  not 


194  FORMATION    OF    CONTRACT. 

make  a  contract  between  the  parties  which  is  capable  of  enforcement, 
there  was  no  error  in  dismissing  the  declaration  on  demurrer. 

Judgment  affirmed. 

9  Cyc.  248   (42)  ;  W.  P.  49-51   (54-59). 


Forbearance  to  sue. 
DI  IORIO  v.  DI  BRASIO. 

21  RHODE  ISLAND,  208.— 1899. 

MATTESON,  C.  J.  [On  reargument.]  This  is  an  action  of  assump- 
sit.  The  declaration  avers  that,  one  Lungo  being  indebted  to  the 
plaintiff  in  the  sum  of  $40,  the  defendant,  in  consideration  thereof, 
and  in  further  consideration  of  the  request  by  the  defendant  to  for- 
bear and  give  time  to  said  Lungo  for  the  payment  of  said  $40  until 
August  24,  1897,  undertook  and  promised  the  plaintiff  to  pay  him 
said  sum  of  $40  on  August  24,  1897,  if  said  Lungo  should  then  fail 
to  make  said  payment  according  to  the  terms  of  a  certain  contract 
in  writing  in  the  Italian  language,  a  translation  of  which  is  annexed 
to  the  writ.  The  declaration  goes  on  to  aver  the  forbearance  of  the 
plaintiff  to  sue  Lungo  in  consequence  of  the  agreement  to  forbear, 
and  then  to  aver  the  failure  of  Lungo  to  make  payment  on  the  date 
specified,  whereby  the  defendant  became  liable  to  pay  the  plaintiff  the 
$40,  etc.  The  defendant  pleaded,  among  other  pleas,  that  Lungo 
was  not  indebted  to  the  plaintiff  as  alleged.  To  this  plea  the  plaintiff 
demurred.  One  of  the  grounds  of  demurrer  was  that  it  was  imma- 
terial whether  Lungo  was  ever  indebted  to  the  plaintiff,  since  the 
plaintiff  forbore  to  press  his  bona  fide  claim  against  him,  and  the 
defendant,  in  consideration  of  such  forbearance,  promised  to  pay 
the  claim  at  the  end  of  one  year  if  Lungo  did  not.  The  district 
court  of  the  Sixth  judicial  district,  in  which  the  suit  was  brought, 
sustained  the  demurrer.  The  case  was  then  tried,  and  the  court  gave 
its  decision  for  the  plaintiff  for  $40.  The  defendant  excepted  to  the 
ruling  of  the  district  court  sustaining  the  demurrer,  and  also  to  its 
ruling  excluding  the  testimony  which  he  offered  to  show  that  Lungo 
was  never  indebted  to  the  plaintiff  in  any  sum  whatever.  The  case 
was  before  us  on  these  exceptions,  and  we  filed  a  rescript  overruling 
the  exceptions,  and  remitting  the  case  to  the  district  court,  with 
directions  to  enter  judgment  on  its  decision.  Thereupon  the  de- 
fendant asked  for  and  obtained  a  reargument. 

We  think  the  plea  demurred  to  was  insufficient.  The  words  of  the 
plea  that  Lungo  was  not  indebted  to  the  plaintiff  were  equivalent  to 
saying  merely  that  the  plaintiff  had  no  valid  claim  against  Lungo, 
but  it  was  not  enough  to  constitute  a  defense  to  the  suit  that  the 


CONSIDERATION.  195 

plaintiff  should  not  have  had  a  valid  claim.  All  that  is  required  to 
sustain  the  action  is  that  the  forbearance  should  have  been  in  respect 
to  a  claim  which  the  plaintiff  honestly  believed  to  be  just,  even 
though,  if  such  claim  had  been  originally  prosecuted,  it  would  have 
been  defeated.  Callisher  v.  Bischoffsheim,  L.  E.  5  Q.  B.  449;  Ock- 
ford  v.  Barrelli,  25  Law  T.  E.  (1ST.  S.)  504;  Miles  v.  Estate  Co.,  32  Ch. 
Div.  267 ;  Cook  v.  Wright,  1  Best  &  S.  559 ;  6  Am.  &  Eng.  Enc.  Law 
(2d  ed.)  742. 

Our  opinion  is  therefore  that  the  demurrer  was  properly  sustained 
and  the  plea  overruled.  For  the  same  reason  the  court  committed  no 
error  in  excluding  the  testimony  that  Lungo  was  not  indebted  to  the 
plaintiff.  The  agreement  before  the  notary,  and  reduced  to  writing 
by  him,  unequivocally  admitted  the  indebtedness;  and,  so  far  as  ap- 
pears, there  was  no  testimony  showing,  or  tending  to  show,  nor  any 
testimony  offered,  that  the  plaintiff's  claim  was  not  made  in  good 
faith.  We  see  no  reason  for  changing  our  former  conclusion.1 

9  Cyc.  342  (97)  ;  W.  P.  214  (23)  ;  13  H.  L.  R.  148. 


FOSTEE  v.  METTS  &  CO. 
55  MISSISSIPPI,  77.— 1877. 

Action  upon  promissory  note.  Defendants  demurred;  demurrer 
sustained.  Error  to  the  Circuit  Court.  Two  hundred  dollars  be- 
longing to  the  plaintiff  in  error,  Foster,  were  stolen  from  the  United 
States  mail  by  a  carrier  employed  by  the  defendants  in  error,  Metts  & 
Co.,  who  were  contractors  for  carrying  the  mail  from  Louisville  to 
Arteeia.  At  first,  Metts  &  Co.  denied  any  liability  to  Foster  for  the 
loss,  but  finally,  upon  consideration  that  Foster  would  wait  a  few 
months  for  payment,  Metts  &  Co.  gave  to  him  their  promissory  note 
for  the  amount  lost.  The  note  not  being  paid  at  maturity,  this  action 
was  brought  upon  it. 

CAMPBELL,  J.  ...  In  this  case  the  money  was  stolen  by  the  mail- 
carrier.  As  to  that,  he  certainly  was  not  the  agent  of  the  contractors 
for  whom  he  was  riding,  and,  if  they  were  liable  for  his  acts  within 
the  scope  of  his  employment,  they  were  not  liable  for  his  wilful 

i  "If  he  (a  man)  bona  fide  believes  he  has  a  fair  chance  of  success,  he  has 
a  reasonable  ground  for  suing,  and  his  forbearance  to  sue  will  constitute  a 
good  consideration.  When  such  a  person  forbears  to  sue  he  gives  up  what  he 
believes  to  be  a  right  of  action  and  the  other  party  gets  an  advantage,  and,  in- 
stead of  being  annoyed  with  an  action,  he  escapes  from  the  vexations  incident 
to  it.  ...  It  would  be  another  matter  if  a  person  made  a  claim  which  he 
knew  to  be  unfounded,  and,  by  a  compromise,  derived  an  advantage  under 
it:  in  that  case  his  conduct  would  be  fraudulent." — Callisher  v.  Bischoffsheim, 
L.  R.f  5  Q.  B.  4~49. 


196  FORMATION    OF   CONTRACT. 

wrongs  and  crimes.  McCoy  v.  McKowen,  26  Miss.  487 ;  New  Orleans, 
Jackson  &  Great  Northern  R.  R.  Co.  v.  Harrison,  48  Miss.  112; 
Foster  v.  Essex  Bank,  17  Mass.  479;  Wiggins  v.  Hathaway,  6  Barb. 
632;  Story  on  Ag.,  sec.  309. 

As  the  defendants  in  error  were  not  liable  for  the  money  "ex- 
tracted" from  the  mail  by  the  carrier,  they  did  not  make  themselves 
liable  by  giving  their  promissory  note  for  it.  It  is  without  consider- 
ation. The  compromise  of  doubtful  rights  is  a  sufficient  consideration 
for  a  promise  to  pay  money,  but  compromise  implies  mutual  conces- 
sion. Here  there  was  none  on  the  part  of  the  payee  of  the  note. 
His  forbearance  to  sue  for  what  he  could  not  recover  at  law  or  in 
equity  was  not  a  sufficient  consideration  for  the  note.  Newell  v. 
Fisher,  11  Smed.  &  M.  431;  Sullivan  v.  Collins,  18  Iowa,  228;  Pal- 
frey v.  Railroad  Co.,  4  Allen,  55;  Allen  v.  Prater,  35  Ala.  169; 
Edwards  v.  Baugh,  11  Mee.  &  W.  641 ;  Longridge  v.  Dorville,  5  Barn. 
&  Aid.  117;  1  Pars,  on  Con.  440;  Smith  on  Con.  157;  1  Add.  on 
Con.  28,  sec.  14 ;  1  Hill  on  Con.  266,  sec.  20. 

Judgment  affirmed.1 

9  Cyc.  340  (87)  ;  340-342  (89-97)  ;  W.  P.  214  (23)  ;  15  H.  L.  R.  316;  12 
H.  L.  R.  517  (Ames).  Bennett,  Forbearance  to  sue,  10  H.  L.  R.  113. 


STRONG  v.  SHEFFIELD. 
144  NEW  YORK,  392.— 1895. 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court 
in  the  second  judicial  department,  entered  upon  an  order  made  De- 
cember 12th,  1892,  which  reversed  a  judgment  in  favor  of  defendant, 
entered  upon  a  verdict,  and  also  affirmed  an  order  denying  a  motion 
for  a  new  trial. 

This  was  an  action  upon  a  promissory  note. 

ANDREWS,  C.  J.  The  contract  between  a  maker  or  endorser  of  a 
promissory  note  and  the  payee  forms  no  exception  to  the  general  rule 
that  a  promise,  not  supported  by  a  consideration,  is  nudum  pactum. 
The  law  governing  commercial  paper  which  precludes  an  inquiry 
into  the  consideration  as  against  bona  fide  holders  for  value  before 
maturity,  has  no  application  where  the  suit  is  between  the  original 
parties  to  the  instrument.  It  is  undisputed  that  the  demand  note 
upon  which  the  action  was  brought  was  made  by  the  husband  of  the  de- 
fendant and  endorsed  by  her  at  his  request  and  delivered  to  the 
plaintiff,  the  payee,  as  security  for  an  antecedent  debt'  owing  by  the 
husband  to  the  plaintiff.  The  debt  of  the  husband  was  past  due  at 

i  As  to  forbearance  to  sue  upon  an  illegal,  as  distinguished  from  an  un- 
founded, claim  see  Kennedy  v.  Welch,  post,  p.  448. 


CONSIDERATION.  197 

the  time,  and  the  only  consideration  for  the  wife's  endorsement, 
which  is  or  can  be  claimed,  is  that  as  part  of  the  transaction  there 
was  an  agreement  by  the  plaintiff  when  the  note  was  given  to  forbear 
the  collection  of  the  debt,  or  a  request  for  forbearance,  which  was 
followed  by  forbearance  for  a  period  of  about  two  years  subsequent 
to  the  giving  of  the  note.  There  is  no  doubt  that  an  agreement  by 
the  creditor  to  forbear  the  collection  of  a  debt  presently  due  is  a 
good  consideration  for  an  absolute  or  conditional  promise  of  a  third 
person  to  pay  the  debt,  or  for  any  obligation  he  may  assume  in  re- 
spect thereto.  Nor  is  it  essential  that  the  creditor  should  bind  him- 
self at  the  time  to  forbear  collection  or  to  give  time.  If  he  is 
requested  by  his  debtor  to  extend  the  time,  and  a  third  person  under- 
takes in  consideration  of  forbearance  being  given  to  become  liable  as 
surety  or  otherwise,  and  the  creditor  does  in  fact  forbear  in  reliance 
upon  the  undertaking,  although  he  enters  into  no  enforcible  agree- 
ment to  do  so,  his  acquiescence  in  the  request,  and  an  actual  for- 
bearance in  consequence  thereof  for  a  reasonable  time,  furnishes  a 
good  consideration  for  the  collateral  undertaking.  In  other  words, 
a  request  followed  by  performance  is  sufficient,  and  mutual  promises 
at  the  time  are  not  essential,  unless  it  was  the  understanding  that 
the  promisor  was  not  to  be  bound,  except  on  condition  that  the  other 
party  entered  into  an  immediate  and  reciprocal  obligation  to  do  the 
thing  requested.  (Morton  v.  Burn,  7  A.  &  E.  19;  Wilby  v.  Elgee, 
L.  K.,  10  C.  P.  497;  King  v.  Upton,  4  Maine,  387;  Leake  on  Con., 
p.  54;  Am.  Lead.  Gas.,  Vol.  .II.,  p.  96  et  seq.  and  cases  cited.)  The 
general  rule  is  clearly,  and  in  the  main  accurately,  stated  in  the  note 
to  Forth  v.  Stanton  (1  Saund.  210,  note  b).  The  learned  reporter 
says :  "And  in  all  cases  of  forbearance  to  sue,  such  forbearance 
must  be  either  absolute  or  for  a  definite  time,  or  for  a  reasonable 
time;  forbearance  for  a  little,  or  for  some  time,  is  not  sufficient/' 
The  only  qualification  to  be  made  is  that  in  the  absence  of  a  speci- 
fied time  a  reasonable  time  is  held  to  be  intended.  (Oldershaw  v. 
King,  2  H.  &  N.  517;  Calkins  v.  Chandler,  36  Mich.  320.)  The  note 
in  question  did  not  in  law  extend  the  payment  of  the  debt.  It  was 
payable  on  demand,  and  although  being  payable  with  interest  it  was 
in  form  consistent  with  an  intention  that  payment  should  not  be 
immediately  demanded,  yet  there  was  nothing  on  its  face  to  prevent 
an  immediate  suit  on  the  note  against  the  maker  or  to  recover  the 
original  debt.  (Merritt  v.  Todd,  23  N.  Y.  28;  Shutts  v.  Fingar,  100 
N.  Y.  539.) 

In  the  present  case  the  agreement  made  is.  not  left  to  inference, 
nor  was  it  a  case  of  request  to  forbear,  followed  by  forbearance,  in 
pursuance  of  the  request,  without  any  promise  on  the  part  of  the 
creditor  at  the  time.  The  plaintiff  testified  that  there  was  an  ex- 
press agreement  on  his  part  to  the  effect  that  he  would  not  pay  the 


FORMATION   O£  CONTRACT. 

iway,  nor  put  it  in  any  bank  for  collection,  but  (using  the  words 
of  the  plaintiff)  "I  will  hold  it  until  such  time  as  I  want  my  money, 
I  will  make  a  demand  on  you  for  it."  And  again :  "No,  I  will  keep  • 
it  until  such  time  as  I  want  it."  Upon  this  alleged  agreement  the 
defendant  endorsed  the  note.  It  would  have  been  no  violation  of  the 
plaintiff's  promise  if,  immediately  on  receiving  the  note,  he  had 
commenced  suit  upon  it.  Such  a  suit  would  have  been  an  assertion 
that  he  wanted  the  money  and  would  have  fulfilled  the  condition  of 
forbearance.  The  debtor  and  the  defendant,  when  they  became  parties 
to  the  note,  may  have  had  the  hope  or  expectation  that  forbearance 
would  follow,  and  there  was  forbearance  in  fact.  But  there  was  no 
agreement  to  forbear  for  a  fixed  time  or  for  a  reasonable  time,  but 
an  agreement  to  forbear  for  such  time  as  the  plaintiff  should  elect. 
The  consideration  is  to  be  tested  by  the  agreement,  and  not  by  what 
was  done  under  it.  It  was  a  case  of  mutual  promises,  and  so  in- 
tended. We  think  the  evidence  failed  to  disclose  any  consideration 
for  the  defendant's  endorsement,  and  that  the  trial  court  erred  in 
refusing  so  to  rule. 

The  order  of  the  General  Term  reversing  the  judgment  should  be 
affirmed,  and  judgment  absolute  directed  for  the  defendant  on  the 
stipulation  with  costs  in  all  courts. 

All  concur,  except  GRAY  and  BARTLETT,  JJ..  not  voting,  and 
HAIOHT,  J.,  not  sitting. 

Ordered  accordingly.1 

9  Cyc.  343  (5-6)  ;  344  (16) ;  W.  P.  49  (56)  ;  50  (58)  ;  213  (22). 

i  "An  agreement  to  withhold  suit  is  a  good  consideration  to  support  a  prom- 
ise to  pay  a  debt  although  no  fixed  and  definite  time  is  expressly  agreed 
upon.  .  .  .  The  legal  effect  of  such  an  agreement  is  to  bind  the  creditor  to 
withhold  suit  for  a  reasonable  time." — Traders'  Nat.  Bank  v.  Parker,  130  N.  Y. 
415. 

But  in  Manter  v.  Churchill,  127  Mass.  31,  it  was  held  that  "Mere  for- 
bearance to  sue  is  not  a  sufficient  consideration  for  a  promise  to  pay  the  debt 
of  another.  Mecorney  v.  Stanley,  8  Cush.  85.  An  agreement  to  forbear  and 
actual  forbearance  under  such  agreement  is  a  sufficient  consideration.  Robin- 
son v.  Gould,  11  Cush.  55.  In  this  case,  the  presiding  judge,  although  he  finds 
there  was  forbearance  to  sue,  and  finds  that  the  plaintiff  was  induced  to  for- 
bear because  of  the  request  of  the  defendant,  yet  does  not  find  that  there  was 
upon  the  part  of  the  plaintiff  any  agreement  to  forbear.  The  plaintiff,  there- 
fore, was  under  no  obligation,  legal  or  moral,  not  to  bring  a  suit;  and  he 
might  at  any  moment  have  commenced  an  action  against  the  mother  of  the 
defendant,  without  any  cause  for  complaint  on  the  part  of  the  defendant  that 
he  had  violated  any  promise  or  engagement  to  him;  and  although  the  for- 
bearance was  at  the  request  of  the  defendant,  and  at  his  solicitation,  still  it 
is  not  found  to  have  been  by  virtue  of  an  agreement." 


CONSIDERATION.  199 

Compromise. 
RUSSELL  v.  COOK. 

3  HILL   (N.  Y.),  604.— 1842. 

Error  to  the  Onondaga  common  pleas.  Russell  recovered  judgment 
before  a  justice  against  Cook  and  Smith  on  a  promissory  note  made 
by  them,  payable  to  Sanford  B.  Palmer  or  bearer,  for  $68.34,  with 
interest,  and  bearing  date  April  4,  1836.  The  note  fell  due  in  July, 
1837,  and  was  transferred  to  the  plaintiff  after  that  time.  The  de- 
fendants insisted  that  the  note  was  without  consideration. 

COWEN,  J.  The  defendants  below  admitted  the  execution  of  the 
note;  and  the  burthen  of  showing  that  it  was  without  consideration 
lay  on  them.  They  accordingly  proved  that  several  years  before  suit 
was  brought,  they  undertook  with  Palmer  &  Noble  to  transport  from 
Manlius  to  Albany  certain  barley  in  which  they  (Palmer  &  Noble) 
had  a  special  property,  and  which  they  were  bound  to  see  delivered  at 
Albany  to  Taylor.  The  defendants  were  common  carriers  by  their 
boat  on  the  canal,  which,  owing  to  its  accidentally  striking  a  stone 
in  the  canal,  of  which  the  defendants  could  not  be  perfectly  aware, 
was  broken,  sunk,  and  the  water  let  in  upon  the  barley,  by  which  it 
was  much  injured.  A  dispute  arose  between  the  parties  whether  the 
defendants  were  liable,  and  this  was  compromised  by  Palmer  &  Noble 
agreeing  to  discount  one  half  of  their  claim,  and  the  defendants 
agreeing  to  pay  the  other.  The  half  which  fell  upon  the  defendants 
was  secured  by  several  promissory  notes,  of  which  the  note  in  ques- 
tion was  one.  The  estimate  of  damages  was  deliberately  and  fairly 
made.  Palmer  &  Noble  were  guilty  of  no  fraud ;  the  defendants  were 
fully  aware  of  all  the  facts;  and  there  was  no  mistake  in  the  case. 
This  is  the  defense,  as  made  out  by  the  defendants'  own  testimony. 
The  court  below  submitted  to  the  jury  whether  the  notes  were  made 
without  consideration,  and  the  jury  found  for  the  defendants. 

I  am  of  opinion  that  the  court  below  erred  in  omitting  to  charge 
the  jury  that  the  plaintiff  was  entitled  to  recover.  No  one  would 
think  of  denying,  that  at  least  the  dispute  between  the  parties  was 
doubtful,  and  that  probably  the  law  was  against  the  defendants  on 
the  facts  disclosed  by  their  evidence.  It  is  enough,  however,  that  it 
was  doubtful,  and  that  the  notes  were  given  in  pursuance  of  an  agree- 
ment to  compromise,  in  no  way  impeached  for  want  of  fairness.  To 
show  that  this  is  so,  I  shall  do  little  more  than  refer  to  Chit,  on  Cont. 
43,  44,  ed.  of  1842,  and  the  notes,  where  cases  are  cited  which  refuse 
to  open  an  agreement  of  this  kind,  under  circumstances  much  stronger 
in  favor  of  the  defendant  than  exist  here  on  the  most  liberal  con- 
struction which  the  defense  can  pretend  to  claim.  The  case  of 


200  FORMATION    OF    CONTRACT. 

O'Keson  v.  Barclay  (2  Pennsyl.  R.  531)  sustained  a  promissory  note 
given  on  the  settlement  of  a  slander  suit  for  words  not  actionable. 
In  such  cases  it  matters  not  on  which  side  the  right  ultimately  turns 
out  to  be.  The  court  will  not  look  behind  the  compromise.  Taylor  v. 
Patrick,  1  Bibb,  168;  Fisher  v.  May's  Heirs,  2  Id.  448.  It  is  not 
necessary,  however,  in  the  present  case  to  go  farther  than  was  done  in 
Longridge  v.  Dorville,  5  Barn.  &  Aid.  117.  There  the  ship  Carolina 
Matilda  had  run  foul  of  the  ship  Zenobia  in  the  Thames,  and  the 
former  was  arrested  and  detained  by  process  from  the  admiralty  to 
secure  the  payment  of  the  damage.  The  agents  for  the  owners  of 
the  Carolina  Matilda  stipulated  with  the  agents  for  the  owner  of  the 
Zenobia  that,  on  the  latter  relinquishing  their  claim  on  the  Carolina 
Matilda,  the  damages  should  be  paid  on  due  proof  of  them,  if  they 
did  not  exceed  £180.  The  proceedings  in  the  admiralty  being  with- 
drawn, an  action  was  brought  on  the  promise.  The  Carolina  Matilda 
had  a  regular  Trinity-house  pilot  on  board  when  the  collision  took 
place;  and  there  was  some  doubt  on  the  law,  therefore,  whether  the 
owners  were  liable.  Held,  that  the  compromise  being  of  a  claim 
thus  doubtful,  the  defendants  were  absolutely  bound,  without  regard 
to  the  question  of  actual  liability.  Abbott,  C.  J.,  said,  "The  parties 
agree  to  put  an  end  to  all  doubts  on  the  law  and  the  fact,  on  the  de- 
fendants' engaging  to  pay  a  stipulated  sum."  "The  parties  agreed 
to  waive  all  questions  of  law  and  fact/'  Indeed,  such  is  the  intent  of 
every  compromise;  and  the  best  interests  of  society  require  that  such 
should  be  the  effect. 

I  therefore  prefer  putting  the  case  on  that  ground,  though  I  feel 
very  little  doubt  that  the  defendants  were  liable  to  Palmer  &  Noble 
for  the  whole  damages,  instead  of  the  half  for  which  they  were  let  off. 

Judgment  reversed.1 

9  Cyc.  345  (25)  ;  25  L.  R.  A.  (w.  s.)  275;  W.  P.  214  (23)  ;  12  H.  L.  R.  276. 

iGrandin  v.  Grandin,  49  N.  J.  L.  508,  514  (1887)  :  "The  compromise  of  a 
disputed  claim  made  bona  fide  is  a  good  consideration  for  a  promise,  whether 
the  claim  be  in  suit,  or  litigation  has  not  been  actually  commenced,  even 
though  it  should  ultimately  appear  that  the  claim  was  wholly  unfounded—^ 
the  detriment  to  the  party  consenting  to  a  compromise,  arising  from  the 
alteration  in  his  position,  forms  the  real  consideration  which  gives  validity 
to  the  promise.  The  only  elements  necessary  to  a  valid  agreement  of  com- 
promise are  the  reality  of  the  claim  made  and  the  bona  fides  of  the  compro- 
mise. Cook  v.  Wright,  1  B.  &  S.  559-570;  Callisher  v.  Bischoffsheim,  L.  R.  (5 
Q.  B.)  449;  Ockford  v.  Barelli,  25  L.  T.  504;  Miles  v.  N.  Z.  &c.  Est.  Co.,  32 
Ch.  Div.  267,  283,  291,  298." 


CONSIDERATION.  201 

MINEHAN  v.  HILL. 

144  N.  Y.  APPELLATE  DIVISION,  854.— 1911. 

HOUGHTON,  J.  Eliza  Bagley  and  James,  her  husband,  in  1902, 
executed  mutual  wills,  each  making  the  other  sole  devisee  and  legatee. 
James  died  in  March,  1905,  and  Eliza  became  the  owner  of  a  farm 
and  some  personal  property.  The  plaintiff  was  her  cousin,  and,  after 
the  death  of  her  husband,  Eliza  proposed  to  make  her  home  with  the 
plaintiff.  The  plaintiff  claims  that,  in  consideration  of  providing  a 
home  and  caring  for  her,  Eliza  agreed  to  make  a  will  giving  her  all 
of  her  property  at  her  death.  Eliza  spent  a  portion  of  her  time  at 
plaintiff's  house,  and  certain  things  were  done  for  her  comfort  and 
welfare  for  about  a  year,  when  she  died. 

Immediately  on  her  death,  the  defendant,  who  was  her  only  heir 
at  law  and  next  of  kin,  came  to  the  plaintiff's  house,  and  a  conver- 
sation was  had  respecting  a  will  and  the  disposition  of  the  property 
of  the  deceased.  The  plaintiff  says  that  the  defendant  asked  her  if 
Eliza  had  made  a  will,  and  that  she  told  her  she  did  not  know,  and 
that  the  defendant  replied,  if  a  will  had  been  made,  she  knew  the 
plaintiff  would  get  everything,  but,  if  there  was  no  will,  she,  the  de- 
fendant, would  get  it  because  she  was  the  only  heir  at  law,  and  that 
the  defendant  admitted  Eliza  had  never  liked  her  and  never  intended 
her  to  have  any  of  her  property,  and  that  the  defendant  said:  "It 
is  between  me  and  you,  .  .  .  and  the  best  thing  we  can  do  is  to  go  out 
and  settle  it  between  ourselves."  Inquiry  was  made  as  to  who  the  law- 
yer of  the  deceased  had  been,  and  they  finally  went  to  him  and  had  him 
draw  an  agreement,  under  seal,  which  both  signed  and  acknowledged, 
reciting  that  Eliza  Bagley  had  died,  and  that  the  plaintiff  was  a 
cousin  and  the  defendant  a  niece,  and  that  it  was  unknown  whether 
Eliza  had  died  intestate,  and  providing  as  follows: 

"Now,  therefore,  in  consideration  of  the  sum  of  one  dollar,  each  to  the  other 
in  hand  paid,  the  receipt  whereof  is  hereby  acknowledged,  it  is  mutually  cov- 
enated  and  agreed,  as  follows:  That  the  estate,  real  and  personal,  of  said 
Eliza  Bagley,  deceased,  shall  be  divided  equally  between  the  parties  to  this 
agreement,  and  if  it  shall  be  ascertained  that  said  Eliza  Bagley  left  a  last  will 
and  testament  giving,  bequeathing  or  devising  to  one  of  the  parties  to  this 
agreement  more  than  to  the  other,  then  each  will  execute  to  the  other  such 
transfers,  assignments,  bills  of  sale,  deeds  and  other  legal  instruments  as  shall 
be  necessary  to  carry  into  effect  this  agreement ;  it  being  understood  and  agreed, 
that  said  Bertie  Minehan  shall  receive  one  half  of  the  estate,  real  and  per- 
sonal, of  said  Eliza  Bagley,  deceased,  and  said  Mary  E.  Hill  shall  receive  the 
remaining  half  of  said  estate,  real  and  personal;  but  this  agreement  shall  not 
be  construed  to  make  either  of  the  parties  hereto  in  any  way  liable  for  any  part 
of  the  estate  of  said  Eliza  Bagley,  deceased,  real  or  personal,  which  shall  be 
given  or  devised  by  her  to  other  person  or  persons  than  the  parties  to  this 
agreement." 


202  FORMATION   OF    CONTRACT. 

The  version  of  the  defendant  as  to  how  this  agreement  came  to  be 
executed  differs  somewhat  from  that  of  the  plaintiff,  and  she  says  that 
the  plaintiff  told  her  that  Eliza  did  not  intend  that  she,  defendant, 
should  have  any  of  her  property,  and  that  the  defendant  asked  if  Eliza 
had  made  a  will,  and  the  plaintiff  replied  that  she  did  not  know 
whether  there  was  one  or  not,  but,  if  she  had  made  one  that  she, 
plaintiff,  would  have  all  the  property.  Eliza  had  not  made  any  other 
will  than  the  one  which  was  inoperative  because  of  her  husband's 
death  prior  to  her  own  decease,  and  her  property  passed  to  the  de- 
fendant as  sole  heir  and  next  of  kin,  but  the  defendant  refused  to 
surrender  any  part  of  the  property  to  the  plaintiff.  This  action  was 
brought  to  compel  the  defendant  to  turn  over  one-half  the  personal 
property  to  the  plaintiff  and  to  execute  a  deed  of  an  undivided  half  of 
the  real  property  and  for  a  partition,  and  resulted  in  a  dismissal  of  the 
complaint  on  the  ground  that  the  agreement  above  set  forth  was  void 
because  it  was  without  consideration. 

We  are  of  opinion  the  contract  was  a  valid  one,  and  that  upon  the 
evidence  adduced  the  learned  trial  court  erroneously  dismissed  the 
plaintiff's  complaint. 

It  is  difficult  to  see  why  the  agreement  does  not  come  within  the 
principle  laid  down  in  Briggs  v.  Tillotson,  8  Johns.  304,  and  Coleman 
v.  Eyre,  45  N.  Y.  38,  and  Smith  v.  Smith,  36  Ga.  184,  91  Am.  Dec. 
761,  and  why  it  is  not  a  valid  one  because  the  promise  of  the  one 
made  a  good  consideration  for  the  promise  of  the  other. 

But  it  is  unnecessary  to  place  our  decision  upon  this  narrow  ground 
because  the  extrinsic  facts  show  that  the  agreement  was  one  of  com- 
promise of  conflicting  claims.  The  plaintiff  gave  proof  tending  to 
show  that  Eliza  Bagley  had  agreed  to  will  her  all  of  her  property  in 
consideration  of  giving  her  such  board  and  care  as  she  should  desire 
during  her  lifetime,  and  that  plaintiff  had  performed  her  part  of  the 
bargain.  Whether  such  contract  was  sufficiently  specific  to  warrant  a 
decree  of  specific  performance,  or  whether  the  plaintiff  had  simply  a 
claim  for  the  value  of  services  performed,  is  unimportant. 

It  does  not  appear  that  the  plaintiff  explained  to  the  defendant  the 
contract  which  she  claimed  to  have  had  with  Eliza,  but  it  is  apparent 
that  the  defendant  believed  that  plaintiff  had  some  sort  of  claim,  and 
realized  that  she  had  not  been  in  the  good  graces  of  the  deceased,  and 
that,  if  there  was  any  will,  it  was  likely  to  be  in  the  plaintiff's  favor, 
and  that  she  herself  would  be  cut  off  with  only  a  small  portion  of  the 
property  or  none  at  all.  The  plaintiff  very  frankly  stated  that  she 
did  not  know  whether  the  deceased  had  made  a  will  or  not,  and  thereby 
fulfilled  the  bargain  which  she  claimed  had  been  made ;  but  it  is  per- 
fectly apparent  that  the  plaintiff  believed  she  had  some  claim  to  the 
property  either  through  a  will  or  through  the  bargain  itself. 

Such  claim  being  a  bona  fide  one,  so  far  as  consideration  for  the 


CONSIDERATION.  203 

compromise  is  concerned,  it  does  not  matter  whether  the  claim  was 
much  or  little,  or  for  that  matter  good  or  bad.  It  is  not  necessary 
in  order  to  uphold  a  compromise  agreement  based  upon  a  surrender  or 
composition  or  compromise  of  a  claim,  that  the  claim  should  be  a 
valid  one,  or  one  that  can  be  enforced  at  law.  A  promise  made  upon  a 
settlement  of  disputes  and  to  prevent  litigation  is  made  upon  a  good 
consideration,  and .  the  settlement  of  a  doubtful  claim  will  uphold  a 
promise  to  pay  a  stipulated  sum  or  do  any  other  lawful  act.  White 
v.  Hoyt,  73  N.  Y.  505,  514.  Courts  from  the  earliest  times  have 
favored  compromises  of  bona  fide  disputes,  and  have  held  agreements 
therefor  to  be  founded  upon  good  consideration  irrespective  of  the 
validity  of  the  claim  which  was  compromised.  Goilmere  v.  Battison, 
1  Vernon,  48;  Cann  v.  Cann,  1  Williams,  723;  Penn  v.  Lord  Balti- 
more, 1  Vesey  Sr.  Ch.  444;  Eussell  v.  Cook,  3  Hill,  504;  Hogue  v. 
Hogue,  1  Watts  (Pa.)  163,  216,  26  Am.  Dec.  52;  Leach  v.  Forbes,  11 
Gray  (Mass.)  506,  71  Am.  Dec.  732;  Sears  v.  Grand  Lodge  A.  0.  U. 
W.,  163  N.  Y.  374,  57  N.  E.  618,  50  L.  R.  A.  204.  Judges  have 
stated  the  rule  in  various  language,  all  however  to  the  same  tenor. 
In  Eussell  v.  Cook,  supra,  Cowen,  J.  says : 

"In  such  cases  it  matters  not  on  which  side  the  right  ultimately  turns  out 
to  be.  The  court  will  not  look  behind  the  compromise." 

In  speaking  of  a  contract  of  compromise  under  a  will  contest  Bige- 
low,  J.,  in  Leach  v.  Forbes,  supra,  says : 

"As  they  (such  contracts)  contribute  to  the  peace  and  harmony  of  families 
and  to  the  prevention  of  litigation,  they  will  be  supported  in  equity  without 
an  inquiry  into  the  adequacy  of  the  consideration  on  which  they  are  founded." 

Gibson,  C.  J.,  in  Hogue  v.  Hogue,  supra,  says : 

"The  compromise  of  a  doubtful  title  when  procured  without  such  deceit  as 
would  vitiate  any  other  contract  concludes  the  parties,  though  ignorant  of  the 
extent  of  their  rights." 

And  Bartlett,  J.,  in  Sears  v.  Grand  Lodge  A.  0.  U.  W.,  supra, 
says: 

"Compromises  of  disputed  claims  fairly  entered  into  are  final,  and  will  be 
sustained  by  the  courts  without  regard  to  the  validity  of  the  claims." 

There  is  no  proof  that  the  plaintiff  was  guilty  of  any  misrepresenta- 
tion or  deceived  the  defendant  in  any  way.  On  the  contrary,  it  ap- 
pears that,  although  the  defendant  is  now  loath  to  perform  the  agree- 
ment, she  was  the  one  who  was  most  anxious  to  enter  into  it.  It  is 
true  that  neither  knew  what  her  absolute  rights  were.  The  defendant 
knew,  however,  that,  if  there  was  a  will  giving  the  property  to  the 
plaintiff,  she  could  get  nothing,  and  the  plaintiff  realized  that  if  there 
was  no  will  the  defendant  would  take  all  the  property,  subject  to 


204  FORMATION    OF   CONTRACT. 

whatever  rights  she  might  have  under  the  agreement  which  she  claimed 
to  have  made  with  the  deceased.  To  avoid  litigation  and  controversy, 
the  parties,  without  fully  realizing  perhaps  how  commendable  their 
action  was,  entered  into  an  agreement  for  equal  division  no  matter 
what  the  situation  might  be.  On  the  death  of  Eliza,  the  title  to  the 
property  was  in  the  defendant  as  heir  and  next  of  kin  if  there  was  no 
will,  and,  if  there  was  a  will  in  plaintiff's  favor,  it  was  in  her,  and 
the  parties  were  not  dealing  with  a  mere  expectancy  or  concerning 
property  in  which  neither  had  any  interest. 

The  contract  was  not  a  wager  as  to  whether  or  not  the  deceased  had 
left  a  will  in  the  plaintiff's  favor,  as  the  defendant  insists. 

Nor  will  the  plaintiff  retain  her  claim  if  the  defendant  shall  transfer 
to  her  one-half  the  estate  of  the  deceased,  as  the  respondent  fears. 
The  effect  of  the  agreement,  if  valid,  is  to  wipe  out  the  plaintiff's 
claim,  whatever  it  may  be.  The  complaint  is  framed  in  a  twofold 
aspect,  and  asks  if  there  should  be  no  division  of  the  property  that  the 
plaintiff's  claim  be  enforced. 

Such  services  as  the  plaintiff  received  and  such  board  as  she  may 
have  furnished  did  not  necessarily  belong  to  the  plaintiff's  husband 
as  the  defendant  urges.  The  husband  was  present  and  heard  the 
bargain  and  never  has  made  and  now  makes  no  claim  and  it  is  fair 
to  say  that  if  any  emancipation  was  necessary  he  must  be  deemed  to 
have  assented  to  his  wife's  doing  business  on  her  own  account  and 
retaining  the  fruits  of  her  contract. 

If  we  are  right  in  our  conclusion  that  the  agreement  was  one  of 
compromise,  and  that  it  was  founded  upon  a  sufficient  consideration, 
it  follows  that  the  judgment  must  be  reversed  and  a  new  trial  granted, 
with  costs  to  the  appellant  to  abide  the  event.  All  concur. 


GUNNING  v.  EOYAL. 

59  MISSISSIPPI,  45.— 1881. 

For  the  purpose  of  carrying  dirt  from  a  hill  which  he  was  cut- 
ting down,  the  appellant  hired  a  mare  and  cart  from  the  appellee, 
who  furnished  an  inexperienced  negro  boy  for  driver.  While  a  fall 
was  being  made  at  one  end  of  the  work,  the  rule  was  for  the  cart 
to  be  loaded  at  the  other.  On  one  occasion  the  boy,  although 
warned  by  a  laborer  of  the  appellant,  drove  to  the  wrong  end  where 
there  was  no  dirt,  but  where  the  bank  was  ready  to  be  caved,  and 
while  he  was  attempting  to  comply  with  another  laborer's  direction 
to  turn  the  mare  away,  some  earth  accidentally  fell,  injuring  the 
animal  so  that  she  was  afterward  killed.  The  appellee  demanded  $150 
for  his  loss.  The  appellant  denied  liability,  but  after  a  long  dispute 
and  an  ineffectual  attempt  at  arbitration,  gave  his  note  for  $66  in 


CONSIDERATION.  205 

settlement  of  the  controversy.  When  sued  he  pleaded  want  of  con- 
sideration, and  a  jury  being  waived,  the  Court  gave  judgment  for  the 
plaintiff. 

CAMPBELL,  J.,  delivered  the  opinion  of  the  Court. 

The  facts  disclosed  by  the  evidence  acquit  Gunning  of  all  blame 
with  respect  to  the  injury  to  the  mare  and  cart  he  had  hired  of  Royal. 
He  was,  therefore,  not  legally  answerable  to  Royal  for  the  loss  he 
suffered,  or  any  part  of  it,  and  the  giving  of  his  note  in  settlement  of 
the  controversy  did  not  preclude  him  from  showing  that  he  was  not 
legally  liable  for  the  payment  of  the  sum  promised.  The  existence  of  a 
dispute  or  controversy  between  parties  is  not  a  sufficient  considera- 
tion to  support  a  promise  to  pay  money  in  settlement  of  it,  where 
no  valid  demand  for  anything  whatever  exists  in  favor  of  the  promisee. 
There  must  be  a  valid  demand  to  some  extent,  or  for  something,  to 
uphold  a  promise  of  this  kind.  Giving  a  note  to  settle  a  dispute  or 
controversy  does  not  impose  any  liability  on  the  maker,  if  he  gains 
nothing  and  the  payee  loses  nothing  by  it.  In  such  case  it  devolves 
on  the  maker  of  the  note,  when  sued,  to  show  the  entire  want  of  any 
consideration  for  his  promise,  and  Gunning  did  so  in  this  case.  Foster 
v.  Metts,  55  Miss.  77,  and  cases  there  cited ;  Boone  v.  Boone,  58  Miss. 
820. 

Reversed  and  remanded. 

9  Cyc.  341   (91);  W.  P.  214  (23). 


Gratuitous  undertakings. 
THORNE  v.  DBAS. 

4  JOHNSON   (N.  Y.),  84.— 1809. 

This  was  an  action  on  the  case,  for  a  nonfeasance,  in  not  causing 
insurance  to  be  made  on  a  certain  vessel,  called  the  Sea  Nymph,  on  a 
voyage  from  New  York  to  Camden,  in  North  Carolina. 

The  plaintiffs  were  copartners  in  trade,  and  joint  owners  of  one 
moiety  of  a  brig  called  the  Sea  Nymph,  and  the  defendant  was  sole 
owner  of  the  other  moiety  of  the  same  vessel.  The  brig  sailed  in 
ballast,  the  1st  December,  1804,  on  a  voyage  to  Camden,  in  North 
Carolina,  with  William  Thome,  one  of  the  plaintiffs,  on  board,  and 
was  to  proceed  from  that  place  to  Europe  or  the  West  Indies.  The 
plaintiffs  and  defendant  were  interested  in  the  voyage,  in  proportion 
to  their  respective  interests  in  the  vessel.  On  the  day  the  vessel  sailed, 
a  conversation  took  place  between  William  Thorne,  one  of  the  plain- 
tiffs, and  the  defendant,  relative  to  the  insurance  of  the  vessel,  in 
which  W.  Thorne  requested  the  defendant  that  insurance  might  be 
made;  to  which  the  defendant  replied,  "that  he  (Thorne)  might  make 


206  FORMATION    OF    CONTRACT. 

himself  perfectly  easy  on  the  subject,  for  that  the  same  should  be 
done."  About  ten  days  after  the  departure  of  the  vessel  on  her  voyage, 
the  defendant  said  to  Daniel  Thome,  one  of  the  plaintiffs,  "Well,  we 
have  saved  the  insurance  on  the  brig."  D.  Thorne  asked,  "How  so? 
or  whether  the  defendant  had  heard  of  her  arrival?"  To  which  the 
defendant  answered,  "No;  but  that,  from  the  winds,  he  presumed 
that  she  had  arrived,  and  that  he  had  not  yet  effected  any  insurance." 
On  this,  D.  Thorne  expressed  his  surprise,  and  observed,  ''that  he  sup- 
posed that  the  insurance  had  been  effected  immediately,  by  the  de- 
fendant, according  to  his  promise,  otherwise  he  would  have  had  it  done 
himself,  and  that,  if  the  defendant  would  not  have  the  insurance  im- 
mediately made,  he  would  have  it  effected."  The  defendant  replied, 
that  "he  (D.  Thorne)  might  make  himself  easy,  for  he  would  that  day 
apply  to  the  insurance  offices,  and  have  it  done." 

The  vessel  was  wrecked  on  the  21st  December,  on  the  coast  of  North 
Carolina.  No  insurance  had  been  effected.  No  abandonment  was 
made  to  the  defendant  by  the  plaintiffs. 

The  defendant  moved  for  a  nonsuit  on  the  ground  that  the  promise 
was  without  consideration  and  void;  and  that,  if  the  promise  was 
binding,  the  plaintiffs  could  not  recover,  without  a  previous  abandon- 
ment to  the  defendant.  These  points  were  reserved  by  the  judge. 

A  verdict  was  taken  for  the  plaintiffs,  for  one-half  of  the  cost  of 
the  vessel,  with  interest,  subject  to  the  opinion  of  the  court  on  the 
points  reserved. 

KENT,  C.  J.,  delivered  the  opinion  of  the  court.  The  chief  objec- 
tion raised  to  the  right  of  recovery  in  this  case  is  the  want  of  a  con- 
sideration for  the  promise.  The  offer,  on  the  part  of  the  defendant, 
to  cause  insurance  to  be  effected,  was  perfectly  voluntary.  Will,  then, 
an  action  lie,  when  one  party  entrusts  the  performance  of  a  business 
to  another,  who  undertakes  to  do  it  gratuitously,  and  wholly  omits  to 
do  it  ?  If  the  party  who  makes  this  engagement  enters  upon  the  exe- 
cution of  the  business,  and  does  it  amiss,  through  the  want  of  due 
care,  by  which  damage  ensues  to  the  other  party,  an  action  will  lie  for 
this  misfeasance.  But  the  defendant  never  entered  upon  the  execu- 
tion of  his  undertaking,  and  the  action  is  brought  for  the  nonfeasance. 
Sir  William  Jones,  in  his  Essay  on  the  Law  of  Bailments,  considers 
this  species  of  undertaking  to  be  as  extensively  binding  in  the  English 
law  as  the  contract  of  mandatum  in  the  Eoman  law;  and  that  an 
action  will  lie  for  damage  occasioned  by  the  nonperformance  of  a 
promise  to  become  a  mandatary,  though  the  promise  be  purely  gratui- 
tous. This  treatise  stands  high  with  the  profession,  as  a  learned  and 
classical  performance,  and  I  regret  that,  on  this  point,  I  find  so  much 
reason  to  question  its  accuracy.  I  have  carefully  examined  all  the 
authorities  to  which  he  refers.  He  has  not  produced  a  single  adjudged 
case,  but  only  some  dicta  (and  those  equivocal)  from  the  Year  Books, 


CONSIDERATION.  207 

in  support  of  his  opinion;  and  was  it  not  for  the  weight  which  the 
authority  of  so  respectable  a  name  imposes,  I  should  have  supposed 
the  question  too  well  settled  to  admit  of  an  argument. 

A  short  review  of  the  leading  cases  will  show  that,  by  the  common 
law,  a  mandatary,  or  one  who  undertakes  to  do  an  act  for  another 
without  reward,  is  not  answerable  for  omitting  to  do  the  act,  and  is 
only  responsible  when  he  attempts  to  do  it,  and  does  it  amiss.  In 
other  words,  he  is  responsible  for  a  misfeasance,  but  not  for  a  nonfea- 
sance,  even  though  special  damages  are  averred.  Those  who  are  con- 
versant with  the  doctrine  of  mandatum  in  the  civil  law,  and  have 
perceived  the  equity  which  supports  it  and  the  good  faith  which  it  en- 
forces, may,  perhaps,  feel  a  portion  of  regret  that  Sir  William  Jones 
was  not  successful  in  his  attempt  to  engraft  this  doctrine,  in  all  its 
extent,  into  the  English  law.  I  have  no  doubt  of  the  perfect  justice 
of  the  Eoman  rule,  on  the  ground  that  good  faith  ought  to  be  observed, 
because  the  employer,  placing  reliance  upon  that  good  faith  in  the 
mandatary,  was  thereby  prevented  from  doing  the  act  himself,  or 
employing  another  to  do  it.  This  is  the  reason  which  is  given  in  the 
Institutes  for  the  rule :  Mandatum  non  suscipere  cuilibet  liberum  est; 
susceptum  autem  consummandum  est,  aut  quam  primum  renuncian- 
dum,  ut  per  semetipsum  aut  per  alium,  eandem  rem  mandator  exequa- 
tur. Inst.  lib.  3,  27,  11.  But  there  are  many  rights  of  moral  obliga- 
tion which  civil  laws  do  not  enforce,  and  are,  therefore,  left  to  the 
conscience  of  the  individual,  as  rights  of  imperfect  obligation;  and 
the  promise  before  us  seems  to  have  been  so  left  by  the  common  law, 
which  we  cannot  alter,  and  which  we  are  bound  to  pronounce. 

The  earliest  case  on  this  subject  of  Watton  v.  Brinth  (Year  Book,  2 
Hen.  IV.  3  b),  in  which  it  appears  that  the  defendant  promised  to 
repair  certain  houses  of  the  plaintiff,  and  had  neglected  to  do  it,  to 
his  damage.  The  plaintiff  was  nonsuited,  because  he  had  shown  no 
covenant;  and  Brincheley  said,  that  if  the  plaintiff  had  counted  that 
the  thing  had  been  commenced,  and  afterwards,  by  negligence,  nothing 
done,  it  had  been  otherwise.  Here  the  court  at  once  took  the  distinc- 
tion between  nonfeasance  and  misfeasance.  No  consideration  was 
stated  and  the  court  required  a  covenant  to  bind  the  party. 

In  the  next  case,  11  Hen.  IV.  33  a,  an  action  was  brought  against  a 
carpenter,  stating  that  he  had  undertaken  to  build  a  house  for  the 
plaintiff  within  a  certain  time,  and  had  not  done  it.  The  plaintiff 
was  also  nonsuited,  because  the  undertaking  was  not  binding  without 
a  specialty ;  but,  says  the  case,  if  he  had  undertaken  to  build  the  house, 
and  had  done  it  illy  or  negligently,  an  action  would  have  lain,  with- 
out deed.  Brooke  (Action  sur  le  Case,  pi.  40)  in  citing  the  above 
case,  says,  that  "it  seems  to  be  good  law  to  this  day ;  wherefore  the  ac- 
tion upon  the  case  which  shall  be  brought  upon  the  assumption,  must 
state  that  for  such  a  sum  of  money  to  him  paid,  etc.,  and  that  in  the 


208  FORMATION    OF   CONTRACT. 

above  case,  it  is  assumed,  that  there  was  no  sum  of  money,  therefore  it 
was  a  nudum  pactum." 

The  case  of  3  Hen.  VI.  36  b  is  one  referred  to,  in  the  Essay  on 
Bailments,  as  containing  the  opinion  of  some  of  the  judges,  that  such 
an  action  as  the  present  could  be  maintained.  It  was  an  action  against 
Watkins,  a  mill-wright,  for  not  building  a  mill  according  to  promise. 
There  was  no  decision  upon  the  question,  and  in  the  long  conversa- 
tion between  the  counsel  and  the  court,  there  was  some  difference  of 
opinion  on  the  point.  The  counsel  for  the  defendant  contended  that 
a  consideration  ought  to  have  been  stated;  and  of  the  three  judges 
who  expressed  any  opinion,  one  concurred  with  the  counsel  for  the  de- 
fendant, and  another  (Babington,  C.  J.)  "was  in  favor  of  the  action, 
but  he  said  nothing  expressly  about  the  point  of  consideration,  and 
the  third  (Cokain,  J.)  said,  it  appeared  to  him  that  the  plaintiff  had  so 
declared,  for  it  shall  not  be  intended  that  the  defendant  would  build 
the  mill  for  nothing.  So  far  is  this  case  from  giving  countenance  to 
the  present  action,  that  Brooke  (Action  sur  le  Case,  pi.  7,  and  Con- 
tract, pi.  6)  considered  it  as  containing  the  opinion  of  the  court,  that 
the  plaintiffs  ought  to  have  set  forth  what  the  miller  was  to  have  for 
his  labor,  for  otherwise  it  was  a  nude  pact;  and  in  Coggs  v.  Bernard, 
Mr.  Justice  Gould  gave  the  same  exposition  of  the  case. 

The  general  question  whether  assumpsit  would  lie  for  a  nonfeasance 
agitated  the  courts  in  a  variety  of  cases  afterwards,  down  to  the  time  of 
Henry  VII.  14  Hen.  VI.  18  b,  pi.  58 ;  19  Hen.  VI.  49  a,  pi.  5 ;  20 
Hen.  VI.  34  a,  pi.  4 ;  2  Hen.  VII.  11,  pi.  9 ;  21  Hen.  VII.  41  a,  pi.  66. 
There  was  no  dispute  or  doubt,  but  that  an  action  upon  the  case  lay  for 
a  misfeasance  in  the  breach  of  a  trust  undertaken  voluntarily.  The 
point  in  controversy  was,  whether  an  action  upon  the  case  lay  for  a 
nonfeasance,  or  nonperformance  of  an  agreement,  and  whether  there 
was  any  remedy  where  the  party  had  not  secured  himself  by  a  covenant 
or  specialty.  But  none  of  these  cases,  nor,  as  far  as  I  can  discover, 
do  any  of  the  dicta  of  the  judges  in  them  go  so  far  as  to  say,  that  an 
assumpsit  would  lie  for  the  non-performance  of  a  promise,  without 
stating  a  consideration  for  the  promise.  And  when,  at  last,  an  action 
upon  the  case  for  the  non-performance  of  an  undertaking  came  to  be 
established,  the  necessity  of  showing  a  consideration  was  explicitly 
avowed. 

Sir  William  Jones  says,  that  "a  case  in  Brooke,  made  complete  from 
the  Year  Book  to  which  he  refers,  seems  directly  in  point."  The 
case  referred  to  is  21  Hen.  VII.  41,  and  it  is  given  as  a  loose  note 
of  the  reporter.  The  chief  justice  is  there  made  to  say,  that  if  one 
agree  with  me  to  build  a  house  by  such  a  day,  and  he  does  not  build  it, 
I  have  an  action  on  the  case  for  this  nonfeasance,  equally  as  if  he  had 
done  it  amiss.  Nothing  is  here  said  about  a  consideration ;  but  in  the 
next  instance  which  the  judge  gives  of  a  nonfeasance  for  which  an 


CONSIDERATION.  209 

action  on  the  case  lies,  he  states  a  consideration  paid.  This  case,  how- 
ever, is  better  reported  in  Keilway,  78,  pi.  5,  and  this  last  report  must 
have  been  overlooked  by  the  author  of  the  Essay.  Frowicke,  C.  J., 
there  says,  "that  if  I  covenant  witn  a  carpenter  to  build  a  house,  and 
pay  him  201.  to  build  the  house  by  a  certain  day,  and  he  does  not  do  it, 
I  have  a  good  action  upon  the  case,  by  reason  of  the  payment  of  my 
money;  and  urithout  payment  of  the  money  in  this  case,  no  remedy. 
And  yet,  if  he  make  the  house  in  a  bad  manner,  an  action  upon  the  case 
lies ;  and  so  for  the  nonfeasance,  if  the  money  be  paid,  action  upon  the 
case  lies." 

There  is,  then,  no  just  reason  to  infer,  from  the  ancient  authori- 
ties, that  such  a  promise  as  the  one  before  us  is  good,  without  showing 
a  consideration.  The  whole  current  of  the  decisions  runs  the  other 
way,  and,  from  the  time  of  Henry  VII.  to  this  time,  the  same  law  has 
been  uniformly  maintained. 

The  doctrine  on  this  subject,  in  the  Essay  on  Bailments,  is  true,  in 
reference  to  the  civil  law,  but  is  totally  unfounded  in  reference  to  the 
English  law ;  and  to  those  who  have  attentively  examined  the  head  of 
Mandates,  in  that  Essay,  I  hazard  nothing  in  asserting  that  that  part 
of  the  treatise  appears  to  be  hastily  and  loosely  written.  It  does  not 
discriminate  well  between  the  cases;  it  is  not  very  profound  in  re- 
search, and  is  destitute  of  true  legal  precision. 

But  the  counsel  for  the  plaintiffs  contended,  that  if  the  general  rule 
of  the  common  law  was  against  the  action,  this  was  a  commercial 
question,  arising  on  a  subject  of  insurance,  as  to  which  a  different  rule 
had  been  adopted.  The  case  of  Wilkinson  v.  Coverdale  (1  Esp.  Rep. 
75)  was  upon  a  promise  to  cause  a  house  to  be  insured,  and  Lord  Ken- 
yon  held,  that  the  defendant  was  answerable  only  upon  the  ground  that 
he  had  proceeded  to  execute  the  trust,  and  had  done  it  negligently. 
The  distinction,  therefore,  if  any  exists,  must  be  confined  to  cases  of 
marine  insurance.  In  Smith  v.  Lascelles  (2  Term  Rep.  188)  Mr. 
Justice  Buller  said  it  was  settled  law,  that  there  were  three  cases  in 
which  a  merchant,  in  England,  was  bound  to  insure  for  his  corres- 
pondent abroad. 

1.  Where  the  merchant  abroad  has  effects  in  the  hands  of  his  corres- 
pondent in  England,  and  he  orders  him  to  insure. 

2.  Where  he  has  no  effects,  but,  from  the  course  of  dealing  between 
them,  the  one  has  been  used  to  send  orders  for  insurance,  and  the  other 
to  obey  them. 

3.  Where  the  merchant  abroad  sends  bills  of  lading  to  his  corres- 
pondent in  England,  and  engrafts  on  them  an  order  to  insure,  as  the 
implied  condition  of  acceptance,  and  the  other  accepts: 

The  case  itself,  which  gave  rise  to  these  observations,  and  the  two 
cases  referred  to  in  the  note  to  the  report,  were  all  instances  of  mis- 
feasance, in  proceeding  to  execute  the  trust,  and  in  not  executing  it 


210  FORMATION   OF   CONTRACT. 

well.  But  I  shall  not  question  the  application  of  this  rule,  as  stated 
by  Buller,  to  cases  of  nonfeasance,  for  so  it  seems  to  have  been  applied 
in  Webster  v.  De  Tastet,  7  Term  Rep.  157.  They  have,  however,  no  ap- 
plication to  the  present  case.  The  defendant  here  was  not  a  factor  or 
agent  to  the  plaintiffs,  within  the  purview  of  the  law  merchant.  There 
is  no  color  for  such  a  suggestion.  A  factor,  or  commercial  agent,  is 
employed  by  merchants  to  transact  business  abroad,  and  for  which  he 
is  entitled  to  a  commission  or  allowance.  Malyne,  81 ;  Beawes,  44. 
In  every  instance  given,  of  the  responsibility  of  an  agent  for  not  in- 
suring, the  agent  answered  to  the  definition  given  of  a  factor,  who 
transacted  business  for  his  principal,  who  was  absent,  or  resided 
abroad;  and  there  were  special  circumstances  in  each  of  these  cases, 
from  which  the  agent  was  to  be  charged;  but  none  of  those  circum- 
stances exist  in  this  case.  If  the  defendant  had  been  a  broker,  whose 
business  it  was  to  procure  insurances  for  others,  upon  a  regular  com- 
mission, the  case  might,  possibly,  have  been  different.  I  mean  not  to 
say,  that  a  factor  or  commercial  agent  cannot  exist,  if  he  and  his  prin- 
cipal reside  together  at  the  same  time,  in  the  same  place ;  but  there  is 
nothing  here  from  which  to  infer  that  the  defendant  was  a  factor, 
unless  it  be  the  business  he  assumed  to  perform,  viz.,  to  procure  the 
insurance  of  a  vessel,  and  that  fact  alone  will  not  make  him  a  factor. 
Every  person  who  undertakes  to  do  any  specific  act,  relating  to  any 
subject  of  a  commercial  nature,  would  equally  become,  quoad  hoc,  a 
factor;  a  proposition  too  extravagant  to  be  maintained.  It  is  very 
clear,  from  this  case,  that  the  defendant  undertook  to  have  the  insur- 
ance effected,  as  a  voluntary  and  gratuitous  act,  without  the  least  idea 
of  entitling  himself  to  a  commission  for  doing  it.  He  had  an  equal 
interest  in  the  vessel  with  the  plaintiffs,  and  what  he  undertook  to  do 
was  as  much  for  his  own  benefit  as  theirs.  It  might  as  well  be  said, 
that  whenever  one  partner  promises  his  copartner  to  do  any  particular 
act  for  the  common  benefit,  he  becomes,  in  that  instance,  a  factor  to  his 
copartner,  and  entitled  to  a  commission.  The  plaintiffs  have,  then, 
failed  in  their  attempt  to  bring  this  case  within  the  range  of  the 
decisions,  or  within  any  principle  which  gives  an  action  against  a 
commercial  agent,  who  neglects  to  insure  for  his  correspondent.  Upon 
the  whole  view  of  the  case,  therefore,  we  are  of  opinion  that  the  defen- 
dant is  entitled  to  judgment. 

Judgment  for  the  defendant. 
9  Cyc.  310   (74)  ;  Beale,  Gratuitous  undertakings,  5  H.  L.  R.  222. 


CONSIDERATION.  211 

c.  Third  test  of  reality.  Does  the  promisee  do,  forbear,  suffer,  or 
promise  more  than  that  to  which  he  is  legally  bound? 

Delivering  property  wrongfully  withheld. 
TOLHURST  v.  POWEES. 

133  NEW  YORK,  460.— 1892. 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court, 
which  affirmed  a  judgment  in  favor  of  defendant,  entered  upon  the 
report  of  a  referee. 

This  action  was  brought  to  recover  a  balance  of  an  account  originally 
due  plaintiffs  from  one  Clinton  M.  Ball  for  services  in  the  construc- 
tion and  fitting  of  a  dynamo  and  other  electrical  appliances,  which 
it  was  claimed  defendant  had  agreed  to  pay. 

FINCH,  J.  We  agree  with  the  prevailing  opinion  of  the  General 
Term  that  there  was  no  consideration  to  support  the  promise  of 
Powers  to  pay  Ball's  debt  to  the  plaintiffs.  The  latter  originally  con- 
structed a  dynamo  for  which  Ball  became  indebted  to  them,  and  after 
all  payments  he  remained  so  indebted  when  the  machine  was  ready  for 
delivery.  The  builders,  of  course,  had  a  lien  upon  it  for  the  unpaid 
balance,  but  waived  and  lost  their  lien  by  a  delivery  to  Ball  without 
payment.  He,  being  then  the  owner  and  holding  the  title  free  from 
any  incumbrance,  sold  the  dynamo  to  Crane  on  a  contract  apparently 
contingent  upon  the  successful  working  of  the  machine.  It  did  not 
work  successfully  and  was  sent  back  to  the  plaintiffs  to  be  altered, 
with  a  view  of  correcting  its  imperfections.  At  this  point  occurred 
the  first  intervention  of  the  defendant  Powers.  He  had  not  then 
obtained,  so  far  as  the  case  shows,  any  interest  in  the  machine,  and  the 
complete  title  was  either  in  Crane  or  Ball,  or  in  both;  but  when 
the  plaintiffs  hesitated  about  entering  upon  the  new  work  until  their 
charges  for  it  should  be  made  secure,  Powers  agreed  to  pay  them.  The 
true  character  of  that  promise  is  immaterial,  for, 'when  the  work  was 
done,  Powers  did  pay  according  to  his  contract.  Thereafter,  Ball  and 
Powers  requiring  a  delivery  of  the  dynamo,  the  plaintiffs  undertook  or 
threatened  to  retain  the  possession  till  the  original  debt  should  be  paid. 
That  they  had  no  right  to  do.  Their  primary  lien  was  lost  by  the 
delivery,  and  they  acquired  no  new  one  by  reason  of  the  repairs  which 
were  paid  for.  Such  refusal  to  surrender  the  possession  was  an  abso- 
lute wrong  without  any  color  of  right  about  it.  After  demand  their 
refusal  was  a  trespass,  and  according  to  their  own  evidence  the  sole 
consideration  for  the  promise  which  they  claim  that  Powers  made  to 
pay  the  old  debt  of  Ball  was  their  surrender  of  possession.  To  that 
they  were  already  bound,  and  parted  with  nothing  by  the  surrender. 
They  gave  up  no  right  which  they  had  against  any  one,  but  extorted 


212  FORMATION   OF   CONTRACT. 

the  promise  by  a  threat  of  what  would  have  been,  if  executed,  a  wrong- 
ful conversion.  Doing  what  they  were  already  bound  to  do  furnished 
no  consideration  for  the  promise. 

It  is  said,  however,  that  Ball  made  no  demand,  and  until  he  did, 
the  plaintiffs  were  not  bound  to  deliver  the  possession,  and  that  the 
delivery  was  to  Powers  and  not  to  Ball.  But  there  was  certainly  a  re- 
quest to  ship  the  machine  and  so  part  with  the  possession,  and  both  the 
request  and  the  shipment  were  with  the  concurrence  of  Ball.  It  was 
that  very  request  that  brought  up  the  subject  of  the  old  debt,  and  Ball 
stood  by,  plainly  assenting,  at  least  by  omitting  any  dissent  or  objec- 
tion. The  shipment  to  Powers  by  name  made  it  none  the  less  a  de- 
livery to  Ball,  whose  concurrence  is  explicitly  found.  Surely,  after 
what  happened,  the  latter  could  not  have  maintained  an  action  for 
conversion  on  the  ground  that  there  had  been  no  delivery  to  him.  The 
undisputed  fact  is  that  the  plaintiffs  were  seeking  to  withhold  a  delivery 
to  the  owner  without  the  least  right  of  refusal.  There  was  no  harm 
to  plaintiffs  and  no  benefit  conferred  on  Powers.  The  former  parted 
with  nothing  of  their  own,  and  the  latter  gained  nothing,  for  the  ship- 
ment to  him  was  a  delivery  to  Ball,  the  owner,  since  made  with  his 
concurrence,  and  Powers  obtained  no  right  or  interest  in  the  property 
as  the  result  of  the  delivery.  He  simply  took  it,  if  he  took  at  all, 
which  is  doubtful,  as  the  agent  or  bailee  of  the  owner,  and  acquired  no 
right  in  it  until  a  later  period.  Until  the  mortgage  made  subse- 
quently, his  advances  for  repairs  constituted  only  an  unsecured  debt 
against  Ball.  The  turning  point  of  the  appellant's  argument  is  the 
unwarranted  assumption  that  the  plaintiffs  agreed  to  deliver,  and 
did  deliver  the  dynamo  to  one  whom  they  knew  not  to  be  the  owner 
without  the  assent  of  Ball,  who  was  the  owner,  but  who,  nevertheless, 
stood  by  and  made  no  objection.  No  fair  construction  of  the  evidence 
will  sustain  the  appellant's  theory. 

The  judgment  should  be  affirmed,  with  costs.     All  concur. 

Judgment  affirmed. 

9  Cyc.  347    (39-40). 


Performance  of  public  duty. 

SMITH  v.  WHILDIN". 
10  PENNSYLVANIA  STATE,  39.— 1848. 

In  error  from  the  Common  Pleas  of  Philadelphia. 

Assumpsit  on  the  common  counts.  The  plaintiff,  who  was  a  con- 
stable in  Philadelphia,  proved  that  the  defendant  had  offered  him 
a  reward  of  $100  for  the  arrest  of  one  M.  Crossin,  against  whom  war- 
rants had  been  issued  on  a  charge  for  obtaining  goods  under  false 
pretenses. 


CONSIDERATION.  213 

COULTER,  J.  There  was  no  consideration  for  the  promise,  and 
the  court  below  therefore  misconceived  the  law.  It  is  the  duty  of  a 
constable  to  pursue,  search  for,  and  arrest  offenders  against  whom 
criminal  process  is  put  into  his  hands.  It  is  stated  in  Com.  Digest 
(title  Justice  of  the  Peace,  B.  79)  that  the  duty  of  a  constable  re- 
quires him  to  do  his  utmost  to  discover,  pursue,  and  arrest  felons. 
The  office  of  constable  is  created  not  for  the  private  emolument  of  the 
holder,  but  to  conserve  the  public  peace,  and  to  execute  the  criminal 
law  of  the  country.  He  is  not  the  agent  or  employee  of  the  private 
prosecutor,  but  the  minister  of  the  law,  doing  the  work  of  the  public, 
which  he  is  bound  to  do  faithfully  for  the  fee  prescribed  by  law,  to 
be  paid  as  the  law  directs.  And  it  would  be  against  public  policy  as 
well  as  against  law  to  hold  otherwise. 

There  are  things  which  a  constable  is  not  officially  bound  to  do, 
such  as  to  procure  evidence,  and  the  like,  and  for  this  he  may  per- 
haps be  allowed  to  contract.  And  this  is  the  full  extent  of  the  princi- 
ple in  the  case  cited  from  11  Ad.  and  El.  856.  But  it  has  been  held 
that  even  a  sailor  cannot  recover  for  extra  work  on  a  promise  by  the 
master  to  pay  for  extra  work  in  managing  the  ship  in  peril,  the  sailor 
being  bound  to  do  his  utmost  independently  of  any  fresh  contract. 
Stilk  v.  Myrick,  2  Camp.  317,  and  the  cases  there  cited. 

It  would  open  a  door  to  profligacy,  chicanery,  and  corruption,  if  the 
officers  appointed  to  carry  out  the  criminal  law  were  permitted  to 
stipulate  by  private  contract;  it  would  open  a  door  to  the  escape  of 
offenders  by  culpable  supineness  and  indifference  on  the  part  of  those 
officers,  and  compel  the  injured  persons  to  take  upon  themselves  the 
burden  of  public  prosecutions.  It  ought  not  to  be  permitted.  Con- 
stables must  do  their  utmost  to  discover,  pursue,  and  arrest  offenders 
within  their  township,  district,  or  jurisdiction,  without  other  fee  or 
reward  than  that  given  by  the  law  itself. 

Judgment  reversed,  and  a  venire  de  novo  awarded.* 

9  Cyc.  348   (41-42)  ;  W.  P.  205   (16)  ;   11  C.  L.  R.  589. 

i  In  McCandless  v.  Alleghany  Bessemer  Steel  Co.,  152  Pa.  St.  139,  a  sheriff 
recovered  money  expended  by  him  for  expense  of  deputies  selected  by  him 
at  request  of  defendants,  for  their  special  benefit,  and  upon  the  faith  of  their 
promise  to  make  good  the  amount  thus  advanced. 

In  Reif  v.  Paige,  55  Wis.  496,  defendant's  wife  was  in  a  burning  hotel  and 
defendant  said:  "I  will  give  $5,000  to  any  person  who  will  bring  the  body 
of  my  wife  out  of  that  building,  dead  or  alive."  Plaintiff  was  a  paid  officer 
of  the  fire  department.  With  a  view  to  claiming  the  reward  he  rescued  the 
body.  In  an  action  for  the  reward  the  court  held:  "that  inasmuch  as  the 
plaintiff  could  not  rescue  the  body  of  Mrs.  Paige  from  the  burning  building 
without  imminent  peril  of  losing  his  own  life,  and  inasmuch  as  it  was  not 
his  duty  as  a  paid  officer  and  member  of  the  Fire  Department  to  do  so,  he 
is  in  a  position  to  claim  the  reward  alleged  to  have  been  offered  by  the  de- 
fendant for  such  rescue." 


214  FORMATION   OF   CONTRACT. 

Promise  to  perform,  existing  contract. 
COYNER  v.  LYNDE. 

10  INDIANA,  282.— 1858. 

HANNA,  J.  The  appellant  was  the  plaintiff,  and  the  appellees 
the  defendants.  The  plaintiff  was  a  contractor  with  the  Richmond 
and  Newcastle  Railroad  Company,  for  the  construction  of  a  portion 
of  said  road.  The  defendants  undertook,  and  agreed  with  the  plain- 
tiff, to  complete  a  portion  of  that  contract,  to  wit,  to  grade  the  road, 
for  which  they  were  to  receive  from  the  company  the  same  rates  per 
yard,  etc.,  that  the  plaintiff  was  to  have  received,  and  said  defendants 
were  to  pay  the  plaintiff  a  certain  portion  of  the  sum  so  received, 
to  wit,  so  much  per  yard,  etc.,  as  a  premium,  or  for  the  privilege  of 
said  contract.  This  suit  is  for  that  sum,  which  was  to  have  been 
thus  paid  by  defendants  to  plaintiff. 

The  court  overruled  the  demurrer  to  the  sixth  paragraph  of  the 
defendants'  answer,  and  gave  and  refused  certain  instructions  directed 
to  the  points  involved  in  that  paragraph.  Of  these  rulings  the  plain- 
tiff complains. 

The  sixth  paragraph  is,  in  substance,  that  after  the  plaintiff  and 
defendants  had  entered  into  the  agreement  sued  on,  it  was  ascertained 
that  the  prices  at  which  plaintiff  had  undertaken  with  the  company  to 
do  the  work  were  greatly  inadequate;  that  it  would  be  a  losing  busi- 
ness to  prosecute  the  work ;  that  upon  such  discovery,  the  defendants 
determined  to  abandon  the  contract,  and  leave  the  plaintiff  to  perform 
it ;  that  the  plaintiff,  knowing  he  would  suffer  loss  to  complete  the  same 
himself  at  the  prices,  "in  view  of  said  facts,  and  to  induce  the 
defendants  to  go  on  with  said  work,  and  not  throw  the  same  on  the 
hands  of  said  plaintiff,  he,  said  plaintiff,  agreed  that  if  said  defendants 
would  agree  to  continue  to  prosecute  said  work  to  final  completion,  and 
procure  additional  and  extra  pay  from  said  company,  which,  with 
the  amount  agreed  to  be  paid  plaintiff,  would  enable  them  to  complete 
said  work,  and  save  him  from  prosecuting  the  same,  he,  the  said  plain- 
tiff, then  and  there  agreed  to  release  and  acquit  them  from  said  pay- 
ment/' etc.;  that  relying  on  this  promise,  and  an  agreement  of  the 
company  to  pay  them  an  additional  compensation,  they  completed  said 
work. 

It  is  insisted  by  the  plaintiff  that  there  was  not,  nor  is  there  alleged 
to  be,  any  consideration  for  this  new  promise,  and  it  was  therefore 
void ;  whilst,  by  the  defendants,  it  is  argued  that  the  contract  was,  in 
effect,  abandoned,  and  the  work  afterwards  resumed  because  of  the 
new  promise,  and  that  such  resumption  of  work  was  a  sufficient  con- 


CONSIDERATION.  215 

sideration  for  the  new  agreement  to  pay  a  different  sum,  to  wit,  the 
whole,  instead  of  a  part,  of  the  original  contract  price. 

Whether  the  contract  between  the  plaintiff  and  the  defendants  was 
abandoned  or  not  by  the  defendants,  was  a  question  to  which  the  at- 
tention of  the  jury  was  fairly  called  by  the  instructions,  and  the  law 
stated  to  them  upon  such  a  state  of  facts,  if  found.  Under  these 
circumstances,  we  cannot  disturb  their  finding,  especially  as  the  whole 
evidence  is  not  in  the  record.  Mills  v.  Riley,  7  Ind.  R.  138. 

From  the  verdict  of  the  jury,  it  is  evident  that  they  must  have  come 
to  the  conclusion  that  the  contract  had  been  abandoned.  If  it  was 
abandoned,  the  plaintiff  had  his  election,  either  to  sue  the  defendants 
for  non-performance,  or  to  obtain  the  completion  of  the  work  by  a 
new  arrangement.  If,  in  making  such  new  arrangement  or  agreement, 
new  or  additional  promises  were  made  to  the  defendants  dependent 
upon  the  completion  of  the  work,  and  the  defendants,  in  consideration 
of  such  promises,  completed  the  work,  we  do  not  see  anything  to 
prevent  such  promises  from  being  binding.  Munroe  v.  Perkins,  9 
Pick.  302;  14  Johns.  330.  Such  new  agreement  might  embrace  in  its 
terms,  and  definitely  or  by  legitimate  implication  dispose  of,  any  right 
of  action  which  the  plaintiff  had,  under  the  previous  contract,  against 
the  defendants  for  failure  to  perform,  for  portions  of  the  sum  due  for 
work  done,  so  far  as  it  had  progressed.  4  Ind.  E.  75;  7  Id.  597. 
Whether  a  new  agreement  was  made,  and  if  so,  whether  the  defendants 
were  absolved  thereby  from  the  payment  of  the  bonus  previously  agreed 
upon,  were  also  questions  of  fact  for  the  jury,  and  were,  so  far  as  we 
can  see,  properly  submitted  to  them,  and  we  cannot  disturb  their 
verdict  thereon. 

In  the  case  cited  in  14  Johns.,  the  plaintiff  undertook,  by  agree- 
ment under  seal,  to  construct  a  certain  cart-way  for  the  sum  of  $900. 
After  progressing  with  the  work,  he  ascertained  that  the  price  was  in- 
adequate, and  determined  to  abandon  the  contract;  whereupon  the 
defendant  agreed  verbally  to  release  him  from  the  contract  and  pay 
him  by  the  day  if  he  would  complete  the  work,  which  he  did ;  and  in 
a  suit  for  work  and  labor,  the  second  contract  was  considered  binding. 
So  the  case  in  9  Pickering  was  for  work  and  labor,  etc.,  in  the  erection 
of  a  hotel.  Defense,  a  special  contract,  etc.  Reply,  waiver  of  the  con- 
tract, and  new  promise,  etc.  And  although,  so  far  as  can  be  gathered 
from  the  opinion,  the  evidence  of  an  abandonment  of  the  original  con- 
tract was  not  by  any  means  strong,  yet  the  verdict  of  the  jury  is  ad- 
verted to  as  settling  that  question.  See  also  7  Ind.  R.  138. 

As  the  evidence  is  not  in  the  record,  the  presumption  which  we 
have  often  decided  would  arise  in  reference  to  instructions  given  and 
refused,  would  prevent  us  from  saying  that  the  instructions  given  in 
this  case  were  improper ;  and  so,  also,  as  to  the  ruling  of  the  court  in 


216  FORMATION    OF   CONTRACT. 

refusing  those  that  were  asked.     9  Ind.  E.  115;  Id.  230;  Id.  286;  8 
Id.  502;  7  Id.  531. 

Per  Curiam.     The  judgment  is  affirmed  with  costs.1 

9  Cyc.  351-352  (63,  64,  66-67)  ;  34  L.  R.  A.  33;  30  L.  R.  A.  (N.  s.)  319; 
W.  P.  203  (15)  ;  15  H.  L.  R.  317;  7  C.  L.  R.  203  (ante-nuptial  contracts)  ;  5 
Mich.  L.  R.  570;  57  Univ.  of  Pa.  L.  R.  404;  Williston,  Successive  promises  of 
the  same  performance,  8  H.  L.  R.  27;  12  H.  L.  R.  521  (Ames)  ;  13  H.  L.  R. 
37  (Ames). 


ENDBISS.ir.    BELLE  ISLE  ICE  CO. 

49  MICHIGAN,  279.— 1882. 

Assumpsit.     Plaintiff  brings  error. 

GRAVES,  C.  J.  The  ice  company  agreed  with  plaintiff,  who  is  a 
brewer,  to  furnish  him  with  the  ice  he  would  require  for  his  brewery 
during  the  season  of  1880  at  $1.75  per  ton,  or  in  case  of  scarcity,  $2 
per  ton.  The  parties  proceeded  under  the  contract  until  May,  at 
which  time  the  ice  company  refused  further  performance  and  so 
notified  the  plaintiff.  Shortly  afterwards  the  parties  arranged  that 
the  ice  company  should  furnish  ice  at  $5  per  ton;  but  this  was  soon 
modified  by  reducing  the  price  to  $4  per  ton.  This  arrangement,  it 
seems,  was  carried  out.  The  plaintiff,  however,  brought  this  suit  to 
recover  damages  for  the  breach  of  the  original  contract,  and  his  con- 
tention was  that  when  the  ice  company  broke  that  contract  the  law 
made  it  his  duty  to  use  reasonable  efforts  to  mitigate  the  damages,  and 
hence  to  provide  himself  with  ice  on  the  best  practicable  terms,  and 
without  regard  to  the  individuality  of  the  party  of  whom  it  could  or 
might  be  obtained,  and  that  acting  in  accordance  with  that  duty,  he 

i  In  Rogers  v.  Rogers,  139  Mass.  440,  the  court  said:  "Whether  the  new 
agreement  was  substituted  for  the  old,  and  thus  operated  as  a  rescission  or 
discharge  of  it,  must  be  determined  by  the  intention  of  the  parties,  to  be 
ascertained  from  their  correspondence  and  conduct.  Munroe  v.  Perkins,  9 
Pick.  298;  Cummings  v.  Arnold,  3  Met.  486;  Stearns  v.  Hall,  9  Gush.  31; 
Holmes  v.  Doane,  9  Cush.  135;  Peck  v.  Requa,  13  Gray,  407;  Lawrence  v. 
Davey,  28  Vt.  264;  Stewart  v.  Keteltas,  36  N.  Y.  388;  Cooke  v.  Murphy,  70 
111.  96;  Moore  v.  Detroit  Locomotive  Works,  14  Mich.  266.  If  we  assume 
that  the  original  agreement  was  sufficiently  definite  to  constitute  a  valid 
contract,  as  it  was  a  continuing  contract,  the  parties  could  clearly  substitute 
for  it  a  new  contract,  which  should  determine  their  rights  and  liabilities  after 
the  new  contract  was  made,  and  this  would  operate  as  a  waiver  or  discharge 
of  the  first  contract  as  to  future  orders  and  deliveries,  unless  it  appeared  that 
the  first  contract  had  been  broken  by  an  absolute  refusal  on  the  part  of  the 
defendant  to  perform  it,  and  that  the  new  contract  was  not  intended  to  be  a 
discharge  of  the  breach.  .  .  .  Our  construction  of  the  correspondence  and  con- 
duct of  the  parties  is,  that  it  was  not  understood  or  intended  by  both  par- 
ties that  the  plaintiffs  should  retain  their  right  of  action,  if  they  had  any, 
for  the  alleged  breach  of  the  original  contract." 


CONSIDERATION.  217 

made  a  new  contract  with  the  ice  company,  and  one  wholly  distinct 
from  that  which  the  company  refused  to  perform,  at  $4,  and  without 
waiving  or  impairing  his  right  to  hold  the  ice  company  for  its  viola- 
tion of  the  original  contract. 

The  ice  company  claimed,  on  the  other  hand,  that  the  second  ar- 
rangement was  merely  a  modification  by  consent  of  the  first,  and  that 
it  left  open  no  ground  of  action  on  account  of  the  refusal  of  the  com- 
pany to  perform  the  contract  as  it  was  originally  made. 

The  trial  judge  was  of  opinion  that  the  evidence  was  all  one  way, 
and  that  it  afforded  no  room  for  argument  in  favor  of  the  position  of 
the  plaintiff,  and  he  ordered  a  verdict  for  the  defendant.  We  are  not 
able  to  concur  in  this  view. 

We  think  the  circumstances  raised  a  question  for  the  jury,  and  that 
it  should  have  been  left  to  them  to  construe  and  weigh  the  evidence, 
and  at  length  decide  between  the  conflicting  theories.  Goebel  v.  Linn 
(47  Mich.  489)  has  no  application.  The  suit  there  was  on  a  note, 
and  the  question  was  on  the  existence  of  legal  consideration,  and 
whether  the  defense  of  duress  was  compatible  with  admitted  facts. 

The  judgment  should  be  reversed  with  costs  and  a  new  trial  granted. 

The  other  Justices  concurred.1 

9  Cyc.  352    (65)  ;  W.  P.  203   (15). 


LINGENFELDER  et  al.  Executors  v.  WAINWRIGHT 
BREWING  CO. 

103  MISSOURI,  578.— 1890. 

Action  from  St.  Louis  City  Circuit  Court. 

Action  by  the  executors  of  Jungenfeld  for  services  performed  by 
him.  Jungenfeld,  an  architect,  was  employed  by  defendants  to  plan 
and  superintend  the  construction  of  brewery  buildings.  He  was  also 
president  of  the  Empire  Refrigerating  Company,  and  largely  interested 

i  In  Rollins  v.  Marsh,  128  Mass.  116,  the  court  said:  "The  parties  had 
made  a  contract  in  writing  with  which  the  plaintiff  had  become  dissatisfied, 
and  which  she  had  informed  the  defendant  that  she  should  not  fulfil  unless 
the  terms  were  modified.  If  she  had  abandoned  her  contract,  he  might  have 
made  a  new  arrangement  with  some  one  else  for  the  support  of  his  ward,  and 
enforced  whatever  remedy  he  had  for  the  breach  against  the  plaintiff.  In- 
stead of  this,  he  made  a  new  contract  with  her,  which  operated  as  a  rescission 
of  the  original  agreement.  Meanwhile  the  plaintiff  had  continued  in  the  per- 
formance of  her  original  agreement,  which  was  recognized  by  both  parties  as 
subsisting  and  binding,  till  it  was  rescinded  by  the  making  of  the  new  one. 
The  release  of  one  from  the  stipulations  of  the  original  agreement  is  the 
consideration  for  the  release  of  the  other;  and  the  mutual  releases  are  the 
consideration  for  the  new  contract,  and  are  sufficient  to  give  it  full  legal 
effect.  Cutter  v.  Cochrane,  116  Mass.  408." 


218  FORMATION   OF    CONTRACT. 

therein.  The  De  La  Vergne  Ice  Machine  Company  was  a  competitor 
in  business.  Against  Jungenfeld's  wishes  Wainwright  awarded  the 
contract  for  the  refrigerating  plant  to  the  De  La  Vergne  Company. 
The  brewery  was  at  that  time  in  process  of  erection  and  most  of  the 
plans  were  made.  When  Jungenfeld  heard  that  the  contract  was 
awarded,  he  took  his  plans,  called  off  his  superintendent  on  the  ground, 
and  notified  Wainwright  that  he  would  have  nothing  more  to  do  with 
the  brewery.  The  defendants  were  in  great  haste  to  have  their  new 
brewery  completed  for  divers  reasons.  It  would  be  hard  to  find  an 
architect  in  Jungenfeld's  place,  and  the  making  of  new  plans  and 
arrangements  when  another  architect  was  found  would  involve  much 
loss  of  time.  Under  these  circumstances  Wainwright  promised  to 
give  Jungenfeld  five  per  cent  on  the  cost  of  the  La  Vergne  ice 
machine  if  he  would  resume  work.  Jungenfeld  accepted,  and  ful- 
filled the  duties  of  superintending  architect  till  the  completion  of  the 
brewery. 

GANTT,  P.  J.  .  .  .  Was  there  any  consideration  for  the  promise  of 
Wainwright  to  pay  Jungenfeld  five  per  cent  on  the  refrigerator  plant  ? 
If  there  was  not,  plaintiff  cannot  recover  the  $3449.75,  the  amount  of 
that  commission.  The  report  of  the  referee,  and  the  evidence  upon 
which  it  is  based,  alike  show  that  Jungenfeld's  claim  to  this  extra 
compensation  is  based  upon  Wainwright's  promise  to  pay  him  this  sum 
to  induce  him,  Jungenfeld,  to  complete  his  original  contract  under  its 
original  terms. 

It  is  urged  upon  us  by  respondents  that  this  was  a  new  contract. 
New  in  what?  Jungenfeld  was  bound  by  his  contract  to  design  and 
supervise  this  building.  Under  the  new  promise  he  was  not  to  do 
anything  more  or  anything  different.  What  benefit  was  to  accrue  to 
Wainwright?  He  was  to  receive  the  same  service  from  Jungenfeld 
under  the  new  that  Jungenfeld  was  bound  to  tender  under  the  original 
contract.  What  loss,  trouble,  or  inconvenience  could  result  to  Jungen- 
feld that  he  had  not  already  assumed?  No  amount  of  metaphysical 
reasoning  can  change  the  plain  fact  that  Jungenfeld  took  advantage 
of  Wainwright's  necessities,  and  extorted  the  promise  of  five  per 
cent  on  the  refrigerator  plant,  on  the  condition  of  his  complying  with 
his  contract  already  entered  into.  Nor  had  he  even  the  flimsy  pre- 
text that  Wainwright  had  violated  any  of  the  conditions  of  the  con- 
tract on  his  part. 

Jungenfeld  put  it  upon  the  simple  proposition,  that  "if  he,  as  an 
architect,  put  up  the  brewery,  and  another  company  put  up  the  re- 
frigerator machinery,  it  would  be  a  detriment  to  the  Empire  Eefrig- 
erating  Company,"  of  which  Jungenfeld  was  president.  To  permit 
plaintiff  to  recover  under  such  circumstances  would  be  to  offer  a 
premium  upon  bad  faith,  and  invite  men  to  violate  their  most  sacred 
contracts,  that  they  may  profit  by  their  own  wrong. 


CONSIDERATION.  219 

"That  a  promise  to  pay  a  man  for  doing  that  which  he  is  already 
under  contract  to  do  is  without  consideration,"  is  conceded  by  re- 
spondents. The  rule  has  been  so  long  imbedded  in  the  common  law 
and  decisions  of  the  highest  courts  of  the  various  States  that  nothing 
but  the  most  cogent  reasons  ought  to  shake  it.  Harris  v.  Carter,  3  E. 
&  B.  559;  Stilk  v.  Myrick,  2  Camp.  317;  1  Chitty  on  Contracts  (11 
Amer.  ed.),  60;  Bartlett  v.  Wyman,  14  Johns.  260;  Keynolds  v. 
Nugent,  25  Ind.  328 ;  Ayres  v.  Railroad,  52  Iowa,  478 ;  Festerman  v. 
Parker,  10  Ired.  474;  Eblin  v.  Miller,  78  Ky.  371;  Sherwin  &  Co.  v. 
Brigham,  39  Ohio  St.  137 ;  Overdeer  v.  Wiley,  30  Ala.  709 ;  Jones  v. 
Miller,  12  Mo.  408 ;  Kick  v.  Merry,  23  Mo.  72 ;  Laidlou  v.  Hatch,  75 
111.  11;  Wimer  v.  Overseers  of  the  Poor,  104  Penn.  St.  317;  Cobb  v. 
Cowdery,  40  Vermont,  25 ;  Vanderbilt  v.  Schreyer,  91  N.  Y.  392. 

But  "it  is  carrying  coals  to  New  Castle"  to  add  authorities  on  a 
proposition  so  universally  accepted  and  so  inherently  just  and  right 
in  itself.  The  learned  counsel  for  respondents  do  not  controvert  the 
general  proposition.  Their  contention  is,  and  the  Crrcuit  Court 
agreed  with  them  that,  when  Jungenfeld  declined  to  go  further  on  his 
contract,  the  defendant  then  had  the  right  to  sue  for  damages,  and  not 
having  elected  to  sue  Jungenfeld,  but  having  acceded  to  his  demand 
for  the  additional  compensation,  defendant  cannot  now  be  heard  to  say 
his  promise  is  without  consideration.  While  it  is  true  Jungenfeld 
became  liable  in  damages  for  the  obvious  breach  of  his  contract,  we 
do  not  think  it  follows  that  defendant  is  estopped  from  showing  its 
promise  was  made  without  consideration. 

It  is  true  that  as  eminent  a  jurist  as  Judge  Cooley,  in  Goebel  v. 
Linn  (47  Michigan,  489),  held  that  an  ice  company  which  had  agreed 
to  furnish  a  brewery  with  all  the  ice  they  might  need  for  their  busi- 
ness from  November  8,  1879,  until  January  1,  1881,  at  $1.75  per  ton, 
and  afterwards  in  May,  1880,  declined  to  deliver  any  more  ice  unless 
the  brewery  would  give  it  $3  per  ton,  could  recover  on  a  promissory 
note  given  for  the  increased  price.  Profound  as  is  our  respect  for  the 
distinguished  judge  who  delivered  that  opinion,  we  are  still  of  the 
opinion  that  his  decision  is  not  in  accord  with  the  almost  universally 
accepted  doctrine  and  is  not  convincing,  and  certainly  so  much  of  the 
opinion  as  holds  that  the  payment  by  a  debtor  of  a  part  of  his  debt 
then  due  would  constitute  a  defense  to  a  suit  for  the  remainder  is  not 
the  law  of  this  State,  nor  do  we  think  of  any  other  where  the  com- 
mon law  prevails. 

The  case  of  Bishop  v.  Busse  (69  111.  403)  is  readily  distinguisha- 
ble from  the  case  at  bar.  The  price  of  brick  increased  very  consider- 
ably, and  the  owner  changed  the  plan  of  the  building  so  as  to  require 
nearly  double  the  number;  owing  to  the  increased  price  and  change 
in  the  plans,  the  contractor  notified  the  party  for  whom  he  was  build- 
ing, that  he  could  not  complete  the  house  at  the  original  prices,  and, 


220  FORMATION   OF   CONTRACT. 

thereupon,  a  new  arrangement  was  made,  and  it  is  expressly  upheld 
by  the  court  on  the  ground  that  the  change  in  the  buildings  was  such  a 
modification  as  necessitated  a  new  contract.  Nothing  we  have  said 
is  intended  as  denying  parties  the  right  to  modify  their  contracts,  or 
make  new  contracts,  upon  new  or  different  considerations  and  binding 
themselves  thereby. 

What  we  hold  is  that,  when  a  party  merely  does  what  he  has  al- 
ready obligated  himself  to  do,  he  cannot  demand  an  additional  com- 
pensation therefor,  and  although  by  taking  advantage  of  the  necessities 
of  his  adversary  he  obtains  a  promise  for  more,  the  law  will  regard 
it  as  nudum  pactum,  and  will  not  lend  its  process  to  aid  in  the  wrong. 

So  holding,  we  reverse  the  judgment  of  the  Circuit  Court  of  St. 
Louis,  to  the  extent  that  it  allow  the  plaintiffs  below,  respondents  here, 
the  sum  of  $3449.75,  the  amount  of  commission  at  five  per  cent  on  the 
refrigerator  plant;  and,  at  the  request  of  both  sides,  we  proceed  to 
enter  the  judgment  here,  which,  in  our  opinion,  the  Circuit  Court  of 
St.  Louis  should  have  entered,  and  accordingly  it  is  adjudged  that  the 
report  of  the  referee  be  in  all  things  approved,  and  that  defendant  have 
and  recover  of  plaintiffs  as  executors  of  Edmund  Jungenfeld  the  sum 
of  $1492.17  so  found  by  the  referee  with  interest  from  March  9,  1887. 
All  the  judges  of  this  division  concur.1 

9  Cyc.  349-350   (54-55)  ;  W.  P.  203   (15). 


KING  v.  DULUTH,  M.  N.  EY.  CO. 

61  MINNESOTA,  482.— 1895. 

START,  C.  J.  This  is  an  action  brought  by  the  plaintiff,  as  sur- 
viving partner  of  the  firm  of  Wolf  &  King,  to  recover  a  balance 
claimed  to  be  due  for  the  construction  of  a  portion  of  the  defendant's 

i  In  Vanderbilt  v.  Schreyer,  91  N.  Y.  392,  the  court  held:  "It  being 
clear  that  Vanderbilt  had  no  legal  right  to  require,  as  a  condition  to  the 
fulfilment  of  his  contract,  the  performance  of  an  act  not  required  by  the 
contract,  it  is  difficult  to  see  what  benefit  he  has  bestowed  or  what  incon- 
venience he  has  suffered  in  return  for  the  undertaking  assumed  by  the  de- 
fendant. He  promises  to  do  only  that  which  he  was  before  legally  bound 
to  perform.  Even  though  it  lay  in  his  power  to  refuse  to  perform  his 
contract,  he  could  do  this  only  upon  paying  the  other  party  the  damages 
occasioned  by  his  non-performance,  and  that  in  contemplation  of  law  would 
be  equivalent  to  performance.  He  had  no  legal  or  moral  right  to  refuse 
to  perform  the  obligation  of  the  contract  into  which  he  had  upon  a  good 
consideration  voluntarily  entered.  ...  It  would  doubtless  be  competent  for 
parties  to  cancel  an  existing  contract  and  make  a  new  one  to  complete  the 
same  work  at  a  different  rate  of  compensation,  but  it  seems  that  it  would 
be  essential  to  its  validity  that  there  should  be  a  valid  cancellation  of  the 
original  contract.  Such  was  the  case  of  Lattimore  v.  Harsen  (14  Johns. 
330)." 


CONSIDERATION.  221 

line  of  railway.  The  complaint  alleges  two  supposed  causes  of  action, 
to  each  of  which  the  defendant  demurred  on  the  ground  that  neither 
states  facts  constituting  a  cause  of  action.  From  an  order  overruling 
the  demurrer  the  defendant  appealed. 

1.  The  complaint  for  a  first  cause  of  action  alleges,  among  other 
things,  substantially,  that  in  January,  1893,  the  firm  of  Wolf  &  King 
entered  into  three  written  contracts  with  the  president  and  representa- 
tive of  the  defendant  for  the  grading,  clearing,  grubbing,  and  con- 
struction of  the  roadbed  of  its  railway  for  a  certain  stipulated  price 
for  each  of  the  general  items  of  work  and  labor  to  be  performed ;  that 
the  firm  entered  upon  the  performance  of  such  contracts,  but  in  the 
latter  part  of  February,  1893,  in  the  course  of  such  performance,  un- 
foreseen difficulties  of  construction,  involving  unexpected  expenses, 
and  such  as  were  not  anticipated  by  the  parties  to  the  contracts,  were 
encountered.  That  the  firm  of  Wolf  &  King  found  that  by  reason  of 
such  difficulties  it  would  be  impossible  to  complete  the  contracts  within 
the  time  agreed  upon  without  employing  an  additional  and  an  unusual 
force  of  men  and  means,  and  at  a  loss  of  not  less  than  $40,000  to  them, 
and  consequently  they  notified  the  representative  of  the  defendant  that 
they  would  be  unable  to  go  forward  with  the  contracts,  and  unable  to 
complete  or  prosecute  the  work.  Thereupon  such  representative  en- 
tered into  an  agreement  with  them  modifying  the  written  contracts, 
whereby  he  agreed  that  if  they  would  "go  forward  and  prosecute  the 
said  work  of  construction,  and  complete  said  contract,"  he  would  pay 
or  cause  to  be  paid  to  them  an  additional  consideration  therefor,  up 
to  the  full  extent  of  the  cost  of  the  work,  so  that  they  should  not  be 
compelled  to  do  the  work  at  a  loss  to  themselves ;  that  in  consideration 
of  such  promise  they  agreed  to  forward  the  work  rapidly,  and  force 
the  same  to  completion,  in  the  manner  provided  in  the  specification 
for  such  work,  and  referred  to  in  such  contracts.  That  in  reliance 
upon  the  agreement  modifying  the  former  contracts,  and  in  reliance 
upon  such  former  contracts,  they  did  prosecute  and  complete  the  work 
in  accordance  with  the  contracts  as  so  modified  by  the  oral  agreement, 
to  the  satisfaction  of  all  parties  in  interest.  That  such  contracts  and 
the  oral  contract  modifying  them  were  duly  ratified  by  the  defendant, 
and  that  the  actual  cost  of  such  construction  was  not  less  than  $30,000 
in  excess  of  the  stipulated  amount  provided  for  in  the  original  written 
contracts. 

It  is  claimed  by  appellant  that  the  complaint  shows  no  consideration 
for  the  alleged  promise  to  pay  extra  compensation  for  the  work;  that 
it  is  at  best  simply  a  promise  to  pay  the  contractors  an  additional  com- 
pensation if  they  would  do  that  which  they  were  already  legally  bound 
to  do.  The  general  rule  is  that  a  promise  of  a  party  to  a  contract  to 
do,  or  the  doing  of,  that  which  he  is  already  under  a  legal  obligation 
to  do  by  the  terms  of  the  contract  is  not  a  valid  consideration  to  sup- 


222  FORMATION   OF    CONTRACT. 

port  the  promise  of  the  other  party  to  pay  an  additional  compensation 
for  such  performance.  1  Chit.  Cont.  60;  Pol.  Cont.  176  (161); 
Leake,  Cont.  621.  In  other  words,  a  promise  by  one  party  to  a  sub- 
sisting contract  to  the  opposite  party  to  prevent  a  breach  of  the  con- 
tract on  his  part  is  without  consideration.  The  following  cases  sus- 
tain and  illustrate  the  practical  application  of  the  rule.  Ayres  v. 
Eailroad  Co.,  52  Iowa,  478,  3  N".  W.  522 ;  McCarty  v.  Association,  61 
Iowa,  287,  16  N.  W.  114;  Lingenfelder  v.  Brewing  Co.,  103  Mo.  578, 
15  S.  W.  844;  Vanderbilt  v.  Schreyer,  91  N.  Y.  392;  Reynolds  v.  Nu- 
gent, 25  Ind.  328;  Robinson  v.  Jewett,  116  N.  Y.  40,  22  N.  E.  224; 
Wimer  v.  Worth  Tp.,  104  Pa.  St.  317. 

If  the  allegations  of  the  complaint,  when  taken  together,  are  in  legal 
effect  simply  that  the  contractors,  finding  by  the  test  of  experience  in 
the  prosecution  of  the  work  that  they  had  agreed  to  do  that  which 
involved  a  greater  expenditure  of  money  than  they  calculated  upon, 
that  they  had  made  a  losing  contract,  and  thereupon  notified  the  op- 
posite party  that  they  were  unable  to  proceed  with  the  work,  and  he 
promised  them  extra  compensation  if  they  would  perform  their  con- 
tract, the  case  is  within  the  rule  stated,  and  the  demurrer  ought  to 
have  been  sustained  as  to  the  first  cause  of  action. 

It  is  claimed,  however,  by  the  respondent,  that  such  is  not  the 
proper  construction  of  the  complaint,  and  that  its  allegations  bring  the 
case  within  the  rule  adopted  in  several  states,  and  at  least  approved  in 
our  own,  to  the  effect  that  if  one  party  to  a  contract  refuses  to  per- 
form his  part  of  it  unless  promised  some  further  pay  or  benefit  than 
the  contract  provides,  and  such  promise  is  made  by  the  other  party,  it 
is  supported  by  a  valid  consideration,  for  the  making  of  the  new 
promise  shows  a  rescission  of  the  original  contract  and  the  substitu- 
tion of  another.  In  other  words,  that  the  party,  by  refusing  to  per- 
form his  contract,  thereby  subjects  himself  to  an  action  for  damages, 
and  the  opposite  party  has  his  election  to  bring  an  action  for  the 
recovery  of  such  damages  or  to  accede  to  the  demands  of  his  adver- 
sary and  make  the  promise;  and  if  he  does  so  it  is  a  relinquishment 
of  the  original  contract  and  the  substitution  of  a  new  one.  Monroe 
v.  Perkins,  9  Pick.  305;  Bryant  v.  Lord,  19  Minn.  396  (Gil.  342); 
Moore  v.  Locomotive  Works,  14  Mich.  266;  Goebel  v.  Linn,  47  Mich. 
489,  11  N.  W.  284;  Rogers  v.  Rogers,  139  Mass.  440,  1  N.  E.  122. 

The  doctrine  of  these  cases  as  it  is  frequently  applied  does  not  com- 
mend itself  either  to  our  judgment  or  our  sense  of  justice,  for  where 
the  refusal  to  perform  and  the  promise  to  pay  extra  compensation  for 
performance  of  the  contract  are  one  transaction,  and  there  are  no  ex- 
ceptional circumstances  making  it  equitable  that  an  increased  com- 
pensation should  be  demanded  and  paid,  no  amount  of  astute  reasoning 
can  change  the  plain  fact  that  the  party  who  refuses  to  perform,  and 
thereby  coerces  a  promise  from  the  other  party  to  the  contract  to  pay 


CONSIDERATION.  223 

him  an  increased  compensation  for  doing  that  which  he  is  legally 
bound  to  do,  takes  an  unjustifiable  advantage  of  the  necessities  of  the 
other  party.  To  hold,  under  such  circumstances,  that  the  party  mak- 
ing the  promise  for  extra  compensation  is  presumed  to  have  volun- 
tarily elected  to  relinquish  and  abandon  all  of  his  rights  under  the 
original  contract,  and  to  substitute  therefor  the  new  or  modified 
agreement,  is  to  wholly  disregard  the  natural  inference  to  be  drawn 
from  the  transaction,  and  invite  parties  to  repudiate  their  contract 
obligations  whenever  they  can  gain  thereby. 

There  can  be  no  legal  presumption  that  such  a  transaction  is  a 
voluntary  rescission  or  modification  of  the  original  contract,  for  the 
natural  inference  to  be  drawn  from  it  is  otherwise  in  the  absence 
of  any  equitable  considerations  justifying  the  demand  for  extra  pay. 
In  such  a  case  the  obvious  inference  is  that  the  party  so  refusing  to 
perform  his  contract  is  seeking  to  take  advantage  of  the  necessities 
of  the  other  party  to  force  from  him  a  promise  to  pay  a  further  sum 
for  that  which  he  is  already  legally  entitled  to  receive.  Surely  it 
would  be  a  travesty  on  justice  to  hold  that  the  party  so  making  the 
promise  for  extra  pay  was  estopped  from  asserting  that  the  promise 
was  without  consideration.  A  party  cannot  lay  the  foundation  of  an 
estoppel  by  his  own  wrong.  If  it  be  conceded  that  by  the  new  promise 
the  party  obtains  that  which  he  could  not  compel,  viz.,  a  specific  per- 
formance of  the  contract  by  the  other  party,  still  the  fact  remains 
that  the  one  party  has  obtained  thereby  only  that  which  he  was  legally 
entitled  to  receive,  and  the  other  party  has  done  only  that  which  he  was 
legally  bound  to  do.  How,  then,  can  it  be  said  that  the  legal  rights 
or  obligations  of  the  party  are  changed  by  the  new  promise?  It  is 
entirely  competent  for  the  parties  to  a  contract  to  modify  or  to  waive 
their  rights  under  it,  and  ingraft  new  terms  upon  it,  and  in  such  a 
case  the  promise  of  one  party  is  the  consideration  for  that  of  the 
other;  but  where  the  promise  to  the  one  is  simply  a  repetition  of  a 
subsisting  legal  promise  there  can  be  no  consideration  for  the  promise 
of  the  other  party,  and  there  is  no  warrant  for  inferring  that  the 
parties  have  voluntarily  rescinded  or  modified  their  contract. 

But  where  the  party  refusing  to  complete  his  contract  does  so  by 
reason  of  some  unforeseen  and  substantial  difficulties  in  the  perform- 
ance of  the  contract,  which  were  not  known  or  anticipated  by  the  par- 
ties when  the  contract  was  entered  into,  and  which  cast  upon  him  an 
additional  burden  not  contemplated  by  the  parties,  and  the  opposite 
party  promises  him  extra  pay  or  benefits  if  he  will  complete  his  con- 
tract, and  he  so  promises,  the  promise  to  pay  is  supported  by  a  valid 
consideration.  In  such  a  case  the  natural  inference  arising  from  the 
transaction,  if  unmodified  by  any  equitable  considerations,  is  rebutted, 
and  the  presumption  arises  that  by  the  voluntary  and  mutual  promises 
of  the  parties  their  respective  rights  and  obligations  under  the  original 


224  FORMATION    OF    CONTRACT. 

contract  are  waived,  and  those  of  the  new  or  modified  contract  substi- 
tuted for  them.  Cases  of  this  character  form  an  exception  to  the 
general  rule  that  a  promise  to  do  that  which  a  party  is  already  legally 
bound  to  do  is  not  a  sufficient  consideration  to  support  a  promise 
by  the  other  party  to  the  contract  to  give  the  former  an  additional 
compensation  or  benefit.  1  Whart.  Cont.  §  500. 

On  the  other  hand,  where  no  unforeseen  additional  burdens  have 
been  cast  upon  a  party  refusing  to  perform  his  contract,  which  make 
his  refusal  to  perform,  unless  promised  further  pay,  equitable,  and 
such  refusal  and  promise  of  extra  pay  are  all  one  transaction,  the 
promise  of  further  compensation  is  without  consideration,  and  the 
case  falls  within  the  general  rule,  and  the  promise  cannot  be  legally 
enforced,  although  the  other  party  has  completed  his  contract  in  re- 
liance upon  it.  This  proposition,  in  our  opinion,  is  correct  on  prin- 
ciple and  supported  by  the  weight  of  authority.  What  unforeseen 
difficulties  and  burdens  will  make  a  party's  refusal  to  go  forward  with 
his  contract  equitable,  so  as  to  take  the  case  out  of  the  general  rule 
and  bring  it  within  the  exception,  must  depend  upon  the  facts  of  each 
particular  case.  They  must  be  substantial,  unforeseen,  and  not  within 
the  contemplation  of  the  parties  when  the  contract  was  made.  They 
need  not  be  such  as  would  legally  justify  the  party  in  his  refusal  to 
perform  his  contract,  unless  promised  extra  pay,  or  to  justify  a  court 
of  equity  in  relieving  him  from  the  contract;  for  they  are  sufficient 
if  they  are  of  such  a  character  as  to  render  the  party's  demand  for 
extra  pay  manifestly  fair,  so  as  to  rebut  all  inference  that  he  is  seek- 
ing to  be  relieved  from  an  unsatisfactory  contract,  or  to  take  advan- 
tage of  the  necessities  of  the  opposite  party  to  coerce  from  him  a 
promise  for  further  compensation.  Inadequacy  of  the  contract  price 
which  is  the  result  of  an  error  of  judgment,  and  not  of  some  excusable 
mistake  of  fact,  is  not  sufficient. 

The  cases  of  Meech  v.  City  of  Buffalo  (29  N.  Y.  198),  where  the 
unforeseen  difficulty  in  the  execution  of  the  contract  was  quicksand, 
in  place  of  expected  ordinary  earth  excavation,  and  Michaud  v.  Mac- 
Gregor  (61  Minn.  198),  where  the  unforeseen  obstacles  were  rocks 
below  the  surface  of  the  lots  to  be  excavated,  which  did  not  naturally 
belong  there,  but  were  placed  there. by  a  third  party,  and  of  the  exist- 
ence of  which  both  parties  to  the  contract  were  ignorant  when  the 
contract  was  made,  are  illustrations  of  what  unforeseen  difficulties 
will  take  a  case  out  of  the  general  rule. 

Do  the  allegations  of  fact  contained  in  plaintiff's  first  alleged  cause 
of  action  bring  his  case  within  the  exception  ?  Clearly  not ;  for  elimi- 
nating all  conclusions,  and  considering  only  the  facts  alleged,  there  is 
nothing  to  make  the  case  exceptional,  other  than  the  general  state- 
ment that  the  season  was  so  extraordinary  that  in  order  to  do  the 
stipulated  work  it  would  require  great  and  unusual  expense,  involving 


CONSIDERATION.  225 

a  large  use  of  powder  and  extra  time  and  labor  for  the  purpose  of 
blasting  out  the  frozen  earth  and  other  material  which  was  encoun- 
tered. What  the  character  of  this  material  was  we  are  not  told,  or 
what  the  other  extraordinary  conditions  of  the  ground  were.  The 
court  will  take  judicial  knowledge  of  the  fact  that  frozen  ground  on 
the  Missabe  Eange,  where  the  work  was  to  be  performed,  in  the  month 
of  February,  is  not  unusual  or  extraordinary.  It  was  a  matter  which 
must  have  been  anticipated  by  the  parties,  and  taken  into  consideration 
by  them  when  this  contract  was  made.  The  most  that  can  be  claimed 
from  the  allegations  of  the  complaint  is  that  the  contractors  had 
made  a  losing  bargain,  and  refused  to  complete  their  contract,  and 
the  defendant,  by  its  representative,  promised  them  that  if  they  would 
go  forward  and  complete  their  contract,  it  would  pay  them  an  addi- 
tional compensation,  so  that  the  total  compensation  should  be  equal 
to  the  actual  cost  of  the  work. 

2.  The  second  cause  of  action  is  supported  by  a  different  and  a 
valid  consideration.  It  fairly  appears  from  the  allegations  of  the 
complaint  as  to  this  cause  of  action  that  the  defendant,  by  changing 
its  line  and  by  its  defaults,  had  so  far  delayed  the  work  of  construc- 
tion as  to  legally  excuse  the  contractors  from  their  obligation  to  com- 
plete the  work  within  the  time  originally  agreed  upon,  and  that  to 
execute  the  work  within  such  time  would  involve  an  additional  ex- 
pense. Thereupon,  in  consideration  of  their  waiving  the  defaults  and 
the  delays  occasioned  by  the  defendant,  and  promising  to  complete 
the  work  in  time,  so  that  it  could  secure  the  bonds,  it  promised  to  pay 
or  give  to  them  the  extra  compensation.  This  was  a  legal  consider- 
ation for  such  promise,  and  the  allegations  of  the  second  general  sub- 
division of  the  complaint  state  a  cause  of  action. 

So  much  of  the  order  appealed  from  as  overruled  the  defendant's 
demurrer  to  the  supposed  first  cause  of  action  in  the  plaintiff's  com- 
plaint must  be  reversed,  and  as  to  so  much  of  it  as  overruled  the 
demurrer  to  the  second  cause  of  action  it  must  be  affirmed,  and  the 
case  remanded  to  the  district  court  of  the  county  of  St.  Louis  with 
the  direction  to  modify  the  order  appealed  from  so  as  to  sustain  the 
demurrer  as  to  the  first  cause  of  action,  with  or  without  leave  to  the 
plaintiff  to  amend,  as  such  court  may  deem  to  be  just. 

So  ordered. 


JOHNSON'S  ADM'R  v.  SELLERS'  ADM'R. 
33  ALABAMA,  265.— 1858. 

Appeal  from  the  Circuit  Court  of  Wilcox. 

Johnson  contracted  to  teach  school  at  Camden,  the  trustees  of  the 
school  understanding  that  he  also  engaged  to  bring  his  wife  with  him 


226  FORMATION    OF   CONTRACT. 

as  a  teacher.  Johnson  contended  that  he  did  not  consider  that  he  had 
made  a  contract  to  bring  her.  The  evidence  tended  to  show  that 
thereafter  Sellers  x  agreed  to  pay  Johnson  $2500  if  he  would  bring  Mrs. 
Johnson  with  him  to  teach  at  Camden. 

WALKER,  J.  The  counsel  for  the  appellant  only  contends,  that  the 
first,  fourth,  ninth,  and  tenth  charges  given  are  erroneous;  and  we 
will,  therefore,  confine  our  attention  to  them.  Upon  the  first  charge 
it  is  not  necessary  that  we  should  pass,  as  the  question  made  upon  it 
will  not  probably  again  arise. 

(1.)  The  court  erred  in  giving  the  fourth  charge.  The  contract- 
ing parties  are  not  bound  beyond  the  stipulations  of  the  contract. 
One  of  the  parties  is  not  bound  to  perform  an  act,  not  within  the 
stipulations  of  the  contract,  because  it  was  understood  by  the  other 
party  that  he  would  perform  it,  and  he  knew  of  that  understanding. 
The  effect  of  the  charge  was,  to  hold  Johnson  bound  to  bring  his  wife 
with  him,  although  he  did  not  contract  to  do  so,  because  it  was  known 
to  him  tfiat  the  trustees  understood  that  he  was  to  bring  her  with  him 
to  teach  in  the  school.  In  the  giving  of  that  charge  the  court  erred. 
Sanford  v.  Howard,  29  Ala.  684. 

(2.)  The  ninth  and  tenth  charges  assert  the  proposition,  that  if 
Johnson  contracted  to  bring  and  associate  his  wife  with  him  in  teach- 
ing the  school,  and  then  refused  to  comply  with  that  contract,  a 
promise  by  Sellers  to  give  him  $2500,  in  order  to  induce  him  to  com- 
ply, would  be  without  consideration.  In  our  judgment,  these  charges 
are  correct.  Johnson,  by  his  contract,  was  legally  bound  to  bring  his 
wife  to  teach  in  the  school,  if  the  contract  was  such  as  the  charge  sup- 
poses. He  had  no  right  to  violate  that  contract,  and  compensate  the 
injured  party  in  damages.  It  is  true,  the  law  would  not  interpose  to 
compel  the  performance  of  the  contract ;  but  this  is  not  because  he  had 
a  right  to  violate  his  contract,  but  because  the  law  supposes  the  injury 
done  by  the  violation  of  it  can  be  sufficiently  compensated  in  damages. 
A  man  may  commit  a  trespass,  for  which  the  law  would  merely  give 
an  action  to  recover  damages;  but  it  does  not  therefore  follow,  that 
he  had  a  right  to  commit  the  trespass,  being  responsible  for  the  dam- 
ages, or  that  a  promise  made  to  induce  him  either  to  commit  or  not  to 
commit  it  would  be  valid.  Renfro  v.  Heard,  14  Ala.  23. 

If  two  parties  make  a  contract,  one  of  them  may  waive  the  per- 
formance of  the  contract  by  the  other,  and  assume  some  new  and 
additional  obligation  as  the  consideration  of  the  performance  by  the 
other.  Such  obligation  would  be  binding.  Within  this  principle  fall 
the  cases  of  Stoudenmeier  v.  Williamson,  29  Ala.  558;  Munroe  v. 
Perkins,  9  Pick.  298;  and  Lattimore  v.  Harsen,  14  Johns.  330;  also, 
Spangler  v.  Springer,  22  Penn.  St.  R.  454;  Whiteside  v.  Jennings,  19 

i  Sellers  was  one  of  the  trustees  of  the  school. 


CONSIDERATION.  227 

Ala.  784;  Thomason  v.  Dill,  30  Ala.  444.  Those  cases  rest  upon  the 
ground,  that  it  is  competent  for  the  parties  to  a  contract  to  modify 
or  rescind  it,  or  to  waive  their  rights  growing  out  of  it  as  originally 
made,  and  engraft  upon  it  new  terms.  Here,  while  there  is  a  sub- 
sisting contract  with  the  trustees,  and  a  subsisting  obligation  to  per- 
form it,  the  proposition  of  the  appellant  is,  that  a  promise  by  a  third 
party  to  induce  its  performance,  or  rather  to  prevent  its  breach,  was 
supported  by  a  valid  consideration.  We  do  not  think  the  law  so  re- 
gards such  a  promise. 

We  deem  it  proper  to  remark,  that  the  testimony  found  in  the  bill 
of  exceptions  does  not  conclusively  show  whether  Johnson's  contract 
was  to  bring  his  wife  to  teach  in  the  school  with  him;  and  that  that 
question  of  fact  should  be  left  to  the  determination  of  the  jury  upon 
the  evidence.  The  court  could  not  assume  that  the  resolution  for  the 
election  of  Johnson  as  principal  on  the  17th  of  August,  1850,  contains 
all  the  terms  of  the  contract.  The  question,  what  was  the  contract, 
must  be  left  to  the  decision  of  the  jury,  upon  that  and  the  other  evi- 
dence in  the  case. 

The  judgment  of  the  court  below  is  reversed,  and  the  cause  is  re- 
manded. 

9  Cyc.  349   (54) ;  354   (73-75) ;  W.  P.  209   (19). 


ABBOTT  v.  DOANE. 

163  MASSACHUSETTS,  433.— 1895. 

Contract,  upon  a  promissory  note  for  $500.  Defendant  set  up  want 
of  consideration.  Verdict  for  plaintiff.  Defendant  alleged  excep- 
tions. 

ALLEN,  J.  The  plaintiff  had  given  his  accommodation  note  to  a 
corporation,  which  had  had  it  discounted  at  a  bank,  and  left  it  unpaid 
at  its  maturity.  The  defendant  being  a  stockholder,  director,  and 
creditor  of  the  corporation,  wishing  to  have  the  note  paid  at  once  for 
his  own  advantage,  entered  into  an  agreement  with  the  plaintiff, 
whereby  he  was  to  give  to  the  plaintiff  his  own  note  for  the  amount, 
and  the  plaintiff  was  to  furnish  money  to  enable  the  defendant  to 
take  up  the  note  at  the  bank.  This  agreement  was  carried  out,  and 
the  defendant  now  contends  that  his  note  to  the  plaintiff  was  without 
consideration,  because  the  plaintiff  was  already  bound  in  law  to  take 
up  the  note  at  the  bank. 

It  is  possible  that,  for  one  reason  or  another,  both  the  bank  and  the 
plaintiff  may  have  been  willing  to  wait  awhile,  but  that  the  defendant's 
interests  were  imperiled  by  a  delay,  and  indeed  required  that  the  note 
should  be  paid  at  once,  and  that  the  corporation  whose  duty  it  was 


FORMATION    OF    CONTRACT. 

primarily  to  pay  it  was  without  present  means  to  do  so.  Since  the 
defendant  was  sane,  sui  juris,  was  not  imposed  upon,  nor  under  duress, 
knew  what  he  was  about,  and  probably  acted  for  his  own  advantage, 
it  would  certainly  be  unfortunate  if  the  rules  of  law  required  us  to 
hold  his  note  invalid  for  want  of  a  sufficient  consideration,  when  he  has 
had  all  the  benefit  that  he  expected  to  get  from  it. 

In  this  commonwealth,  it  was  long  ago  decided  that  even  between 
the  original  parties  to  a  building  contract,  if,  after  having  done  a  part 
of  the  work,  the  builder  refused  to  proceed,  but  afterwards,  on  being 
promised  more  pay  by  the  owner,  went  on  and  finished  the  building, 
he  might  recover  the  whole  sum  so  promised.  Munroe  v.  Perkins,  9 
Pick.  298.  See,  also,  Holmes  v.  Doane,  9  Gush.  135 ;  Peck  v.  Kequa, 
13  Gray,  407;  Rogers  v.  Eogers,  139  Mass.  440;  Hastings  v.  Lovejoy, 
140  Mass.  261,  265;  Thomas  v.  Barnes,  156  Mass.  581.  In  other 
States  there  is  a  difference  of  judicial  opinion,  but  the  following  cases 
sanction  a  similar  doctrine:  Lattimore  v.  Harsen,  14  Johns.  330; 
Stewart  v.  Keteltas,  36  N.  Y.  388;  Lawrence  v.  Davey,  28  Yt.  264; 
Osborne  v.  O'Reilly,  42  N.  J.  Eq.  467 ;  Goebel  v.  Linn,  47  Mich.  489 ; 
Cooke  v.  Murphy,  70  111.  96.  In  England  and  in  others  of  the  United 
States  a  different  rule  prevails. 

But  when  one,  who  is  unwilling  or  hesitating  to  go  on  and  perform 
a  contract  which  proves  a  hard  one  for  him,  is  requested  to  do  so  by 
a  third  person,  who  is  interested  in  such  performance,  though  having 
no  legal  way  of  compelling  it  or  of  recovering  damages  for  a  breach, 
and  who  accordingly  makes  an  independent  promise  to  pay  a  sum  of 
money  for  such  performance,  the  reasons  for  holding  him  bound  to 
such  payment  are  stronger  than  where  an  additional  sum  is  promised 
by  the  party  to  the  original  contract. 

Take  an  illustration.  A  enters  into  a  contract  with  B  to  do  some- 
thing. It  may  be  to  pay  money,  to  render  service,  or  to  sell  land  or 
goods  for  a  price.  The  contract  may  be  not  especially  for  the  benefit 
of  B,  but  rather  for  the  benefit  of  others,  as  e.  g.  to  erect  a  monument, 
an  archway,  a  memorial  of  some  kind,  or  to  paint  a  picture  to  be 
placed  where  it  can  be  seen  by  the  public.  The  consideration  moving 
from  B  may  be  executed  or  executory.  It  may  be  money  or  anything 
else  in  law  deemed  valuable.  It  may  be  of  slight  value,  as  compared 
with  what  A  has  contracted  to  do.  Now  A  is  legally  bound  only  to  B, 
and,  if  he  breaks  his  contract,  nobody  but  B  can  recover  damages,  and 
those  damages  may  be  slight.  They  may  even  be  already  liquidated 
at  a  small  sum  by  the  terms  of  the  contract  itself.  Though  A  is 
legally  bound,  the  motive  to  perform  the  contract  may  be  slight.  If 
after  A  has  refused  to  go  on  with  his  undertaking,  or  while  he  is  hesi- 
tating whether  to  perform  it  or  submit  to  such  damages  as  B  may  be 
entitled  to  recover,  other  persons  interested  in  having  the  contract 
performed  intervene.,  and  enter  into  a  new  agreement  with  A,  by 


CONSIDERATION.  229 

which  A  agrees  to  do  that  which  he  was  already  bound  by  his  contract 
with  B  to  do,  and  they  agree  jointly  or  severally  to  pay  him  a  certain 
sum  of  money,  and  give  their  note  or  notes  therefor,  and  A  accordingly 
does  what  he  had  before  agreed  to  do,  but  what  perhaps  he  might  not 
otherwise  have  done,  no  good  reason  is  perceived  why  they  should  not 
be  held  to  fulfill  their  promise.  They  have  got  what  they  bargained 
for,  and  A  has  done  what  otherwise  he  might  not  have  done,  and  what 
they  could  not  have  compelled  him  to  do. 

This  has  been  so  held  in  England,  and  the  view  is  supported  by 
English  text  writers,  though  not  always  for  precisely  the  same  rea- 
sons. Scotson  v.  Pegg,  6  Hurl.  &  N.  295;  Shadwell  v.  Shadwell,  30 
Law  J.  C.  P.  145;  Pol.  Cont.  (6th.  ed.)  175,  177;  Anson,  Cont.  (4th 
ed.)  87,  88;  Leake,  Cont.  (3d  ed.)  540.  In  this  country  the  courts 
of  several  States  have  taken  the  opposite  view,  though  in  some  in- 
stances the  cases  referred  to  as  so  holding,  when  examined,  do  not 
necessarily  lead  to  that  result.  These  cases  are  collected  in  the  de- 
fendant's brief  x  and  in  Williston's  discussion  of  the  subject  in  8  Harv. 
Law  Eev.  27. 

Without  further  dwelling  on  the  reasons  for  the  doctrine,  it  seems 
to  us  better  to  hold,  as  a  general  rule,  that  if  A  has  refused  or  hesi- 
tated to  perform  an  agreement  with  B,  and  is  requested  to  do  so  by  C, 
who  will  derive  a  benefit  from  such  performance,  and  who  promises 
to  pay  him  a  certain  sum  therefor,  and  A  thereupon  undertakes  to 
do  it,  the  performance  by  A  of  his  agreement,  in  consequence  of  such 
request  and  promise  by  C,  is  a  good  consideration  to  support  C's 
promise. 

Exceptions  overruled.2 

9  Cyc.  354  (73-75);  W.  P.  209  (19);  12  H.  L.  R.  519  (Ames);  13 
H.  L.  R.  29  (Ames). 

i  The  American  cases  cited  by  the  defendant  are  Richardson  v.  Williams, 
49  Me.  558;  Putnam  v.  Woodbury,  68  Me.  58;  Ellison  v.  Jackson  Water 
Co.,  12  Cal.  542;  Ritenour  v.  Mathews,  42  Ind.  7;  Gordon  v.  Gordon,  56 
N.  H.  170;  Havana  Press  Drill  Co.  v.  Ashurst,  148  111.  115;  In  re  Godard's 
Estate,  29  Atl.  Rep.  634;  Baker  v.  Wahrmund,  5  Tex.  Civ.  App.  268; 
Ford  v.  Garner,  15  Ind.  298;  Reynolds  v.  Nugent,  25  Ind.  328;  Brownlee 
v.  Rowe,  117  Ind.  420;  Newton  v.  Chicago  &c.  Ry.,  66  Iowa,  422;  Vander- 
bilt  v.  Schreyer,  91  N.  Y.  392;  Seybolt  v.  New  York  &c.  R.,  95  N.  Y.  562; 
Robinson  v.  Jewett,  116  N.  Y.  40;  Sherwin  v.  Brigham,  39  Oh.  St.  137; 
Wimer  v.  Worth  Township,  104  Penn.  St.  317;  Johnson  v.  Sellers,  33  Ala. 
265;  Schuler  v.  Myton,  48  K'ans.  282;  L'Amoreux  v.  Gould,  7  N.  Y.  349; 
Merrick  v.  Giddings,  1  Mackey,  394;  Davenport  v.  First  Cong.  Soc.,  33 
Wis.  387. 

-  In  Arend  v.  Smith,  151  N.  Y.  502,  the  defendant  owed  a  corporation  $1000 
and  the  plaintiff  (president  of  the  corporation)  told  him  that  if  he  would  give 
his  note  for  the  amount  he  (plaintiff)  would  indorse  it  and  would  renew  it 
when  it  fell  due.  The  note  was  given  to  plaintiff,  who  discounted  it  and 
turned  the  proceeds  over  to  the  corporation.  When  it  fell  due  plaintiff  could 


230  FORMATION    OF    CONTRACT. 

Extension  of  debt. 
KELLOGG  v.  OLMSTEAD,  et  al 

25   NEW   YORK,   189.— 1862. 

Action  on  a  note  for  six  hundred  dollars,  made  by  the  defendants 
and  one  John  I.  McPherson,  since  deceased,  dated  October  1,  1855, 
payable  one  year  after  date,  with  interest  semi-annually,  to  one  George 
R.  D.  Covil  or  bearer. 

The  answer  set  up  as  a  defense,  that  on  the  8th  day  of  October, 
1856,  and  after  the  note  became  due,  and  while  Covil  was  the  holder 
of  the  note,  it  was  mutually  agreed  between  Covil  and  the  defendants, 
"that  in  consideration  that  the  defendants  would  keep  the  principal 
sum  of  the  said  note  until  the  1st  day  of  April,  1857,  and  pay  the 
same  with  interest  on  that  day,  he,  the  said  Covil,  would  extend  the 
time  of  payment  of  the  principal  of  said  note  until  the  1st  day  of 
April,  1857 ;  that  the  said  defendants  then  and  there  assented  to  said 
proposition,  and  then  and  there  agreed  to  and  with  said  Covil,  to 
keep  said  principal  sum  of  said  note  until  the  first  day  of  April,  1857, 
and  to  pay  the  same  with  interest  on  that  day" ;  and  that  the  note  was 
transferred  to  the  plaintiff  by  Covil,  after  the  agreement  so  made  by 
him  with  the  defendants;  and  the  plaintiff  took  the  note  with  full 
knowledge  thereof. 

SUTHERLAND,  J.  I  cannot  avoid  thinking  that  this  case  presents 
an  ingenious  attempt  on  the  part  of  the  appellants,  to  avoid  the  appli- 
cation of  the  well  settled  principle,  that  an  agreement  by  a  creditor 
to  postpone  the  payment  of  a  debt  due,  until  a  future  day  certain,  in 
consideration  of  no  other  or  further  consideration  than  the  agreement 
of  the  debtor  to  pay  the  debt  with  interest  on  that  day,  is  void  for 
want  of  consideration. 

It  has  been  decided  over  and  over  again,  if  the  creditor  whose  debt 
is  due,  receives  part  payment  of  it,  and  in  consideration  of  such  pay- 
ment, promises  to  postpone  or  extend  the  time  of  payment  of  the  bal- 
ance, that  such  promise  is  void  for  want  of  consideration.  (Miller  v. 
Holbrook,  1  Wend.  317;  Gibson  v.  Eenne,  19  id.  390;  Pabodie  v. 

not  renew  it,  but  took  it  up  and  brought  action  against  defendant  upon  it. 
Defendant  sets  up  the  breach  of  the  promise  to  renew.  Held,  that  the  promise 
was  without  consideration  since  plaintiff  was  under  a  legal  obligation  to  pay 
the  corporation.  "Although  the  promise  in  this  case  was  made  to  induce  per- 
formance, as  the  act  performed  was  less  than  the  legal  duty  already  resting 
upon  the  defendant,  it  was  incapable  of  sustaining  an  action  or  maintaining 
a  defense." 

The  court  seems  not  to  have  considered  whether  the  act  performed  was  not 
different  from  the  legal  duty  already  resting  upon  defendant.  He  was  under 
an  obligation  to  pay  the  corporation,  but  he  was  under  no  obligation  to  give 
a  negotiable  promissory  note  to  plaintiff,  or  to  the  corporation. 


CONSIDERATION.  231 

King,  12  John.  426;  Reynolds  v.  Ward,  5  Wend.  501;  Fulton  v. 
Mathews  &  Wedge,  15  John.  433.) 

These  cases  certainly  assume,  that  a  promise  by  a  creditor,  no  part 
of  whose  debt  is  paid,  to  extend  the  time  of  payment  of  the  whole 
debt  to  a  future  day  certain,  in  consideration  of  the  promise  of  the 
debtor  to  pay  the  debt  with  interest  on  that  day,  would  be  void. 

A  creditor  promising  to  extend  the  time  of  payment  until  a  certain 
day  would,  not  expect  or  ask  his  debtor  to  make  a  formal  express 
promise  in  consideration  of  such  extension,  to  pay  his  debt  on  that 
day,  and  not  before  that  day;  nor  would  the  debtor,  relying  on  such 
promise  of  extension,  be  very  apt  to  make  any  such  formal  express 
promise ;  but  if  the  promise  of  extension  on  the  part  of  the  creditor  were 
held  valid,  such  a  promise  on  the  part  of  the  debtor  would  necessarily  be 
implied.  It  would  be  implied  from  his  acceptance  of  and  reliance  on 
the  promise  of  the  creditor.  No  court  would  ever  hold  the  promise 
on  the  part  of  the  creditor  valid  and  binding  without  holding  that 
there  was  a  corresponding  obligation  on  the  part  of  the  debtor  to  pay 
at  the  time  fixed  by  the  promise  of  extension,  and  not  to  pay  before; 
that  is,  in  the  language  of  the  defendant's  answer,  to  keep  the  money 
until  the  day  fixed  by  the  promise  of  extension.  Hence  the  cases 
before  cited  necessarily  assume,  that  the  agreement,  or  mutual  agree- 
ments, specially  set  up  in  the  defendant's  answer  would  be  nudum 
pactum  and  void,  and  would  not  have  been  a  defence  if  proved;  for 
these  cases  must  have  been  decided  on  the  assumption,  if  the  promise 
on  the  part  of  the  creditor  to  extend  the  time  of  payment  was  valid, 
or  should  be  held  valid,  that  there  was  or  would  be  a  corresponding 
valid  obligation  or  promise  on  the  part  of  the  debtor  not  only  to  pay 
at  the  time  fixed  by  the  agreement  of  extension,  but  also  not  to  pay 
before.  These  cases  then,  in  effect,  decide,  if  a  creditor  whose  debt 
is  due,  in  consideration  of  the  payment  of  a  part  of  it,  and  of  a 
promise  on  the  part  of  his  debtor  to  pay  the  balance  on  a  certain 
future  day,  and  not  before,  promises  to  extend  the  time  of  payment  of 
such  balance  until  that  day,  that  such  promise  is  without  consider- 
ation and  void. 

In  this  case,  the  defendants  paid  no  part  of  the  debt.  The  sole 
alleged  consideration  of  the  plaintiff's  promise  to  extend  the  time  of 
payment  of  the  whole  debt,  until  the  1st  of  April,  1857,  was  a  promise 
on  the  part  of  the  defendants,  to  pay  the  debt  with  interest  on  that 
day,  and  not  before  that  day.  The  promise  on  the  part  of  the  de- 
fendants is  not  stated  in  the  answer,  in  these  precise  words,  but  is 
substantially  this. 

But  upon  principle,  and  without  reference  to  cases,  the  counsel  for 
the  appellants  concedes,  that  their  promise  to  pay  interest  was  no 
consideration  for  Covil  to  delay  payment,  because,  if  Covil  had  de- 
layed payment  without  such  promise,  he  would  have  been  entitled  to 


232  FORMATION   OF   CONTRACT. 

such  interest;  but  he  insists  that  their  promise  not  to  pay  the  prin- 
cipal until  the  1st  of  April,  and  then  to  pay  it,  was  a  sufficient  con- 
sideration for  the  promise  of  delay  on  the  part  of  Covil,  because  it 
deprived  them  of  the  right  to  pay  the  money  at  any  time,  and  secured 
to  Covil  the  right  to  compel  the  defendants  to  keep  the  money  until 
the  1st  of  April.  This,  I  think,  is  fanciful.  The  appellants  were 
to  pay  only  legal  interest  for  the  use  of  the  money.  The  rate  of 
interest,  or  value  of  the  use  of  money,  being  fixed  by  law,  the  law 
cannot  hold  the  delay  of  payment  to  be  either  a  disadvantage  to  the 
debtor,  or  an  advantage  to  the  creditor;  the  one  paying,  and  the 
other  receiving  the  legal  rate  of  interest  for  the  use  of  the  money 
only.  The  law  cannot  hold  it  to  be  a  disadvantage  to  a  man,  to 
agree  to  keep  the  money  of  another  for  a  time  certain,  for  the  use  of 
which  he  is  only  to  pay  the  rate  of  interest  fixed  by  law. 

My  conclusion  is,  that  the  judgment  of  the  Supreme  Court  should 
be  affirmed,  with  costs.1 

WRIGHT,  GOULD,  ALLEN  and  SMITH,  JJ.,  concurred. 

DAVIES,  J.  and  DENIO,  Ch.  J.,  dissented. 

W.  P.  205  (17)  ;  13  H.  L.  R.  603. 


Payment  of  smaller  sum  in  satisfaction  of  larger. 

J AFFRAY  v.  DAVIS. 
124   NEW   YORK,    164.— 1891. 

POTTER,  J.  The  facts  found  by  the  trial  court  in  this  case  were 
agreed  upon.  They  are  simple  and  present  a  familiar  question  of 
law.  The  facts  are  that  defendants  were  owing  plaintiffs  on  the  8th 
day  of  December,  1886,  for  goods  sold  between  that  date  and  the 
May  previous  at  an  agreed  price,  the  sum  of  $7714.37,  and  that  on 

iSee  Veerhoff  v.  Miller,  30  App.  Div.  (N.  Y.)  355,  where  it  was  held  the 
promise  to  extend  the  time  of  payment  might,  in  some  cases,  be  en- 
forced on  the  ground  of  estoppel. 

And  in  McComb  v.  Kittridge,  14  Ohio,  348,  the  court  held:  "If  the  lender 
of  money,  secured  by  a  note,  after  the  same  becomes  due,  contracts  with  the 
borrower  that  the  time  of  paying  the  same  shall  be  extended  for  one  year,  or 
for  any  other  period,  upon  consideration  that  the  borrower  shall  pay  the  legal 
or  less  rate  of  interest,  why  is  not  that  a  binding  contract?  The  lender,  by 
this  contract,  secures  to  himself  the  interest  on  his  money  for  the  year;  and 
the  borrower  precludes  himself  from  getting  rid  of  the  payment  of  the  interest 
by  discharging  the  principal.  It  is  a  valuable  right  to  have  money  placed  at 
interest,  and  it  is  a  valuable  right  to  have  the  privilege,  at  any  time,  of 
getting  rid  of  the  payment  of  interest,  by  discharging  the  principal.  By  this 
contract,  the  right  to  interest  is  secured  for  a  given  period,  and  the  right  to 
pay  off  the  principal,  and  get  rid  of  paying  the  interest,  is  also  relinquished 
for  such  period.  Here,  then,  are  all  the  elements  of  a  binding  contract." 


CONSIDERATION.  233 

the  27th  of  the  same  December,  the  defendants  delivered  to  the  plain- 
tiffs their  three  promissory  notes,  amounting  in  the  aggregate  to  three 
thousand  four  hundred  and  sixty-two  twenty-four  one-hundredths 
dollars  secured  by  a  chattel  mortgage  on  the  stock,  fixtures,  and  other 
property  of  defendants,  located  in  East  Saginaw,  Michigan,  which 
eaid  notes  and  chattel  mortgage  were  received  by  plaintiffs  under  an 
agreement  to  accept  same  in  full  satisfaction  and  discharge  of  said 
indebtedness.  "That  said  notes  have  all  been  paid  and  said  mortgage 
discharged  of  record." 

The  question  of  law  arising  from  these  facts  and  presented  to  this 
court  for  its  determination  is  whether  such  agreement,  with  full  per- 
formance, constitutes  a  bar  to  this  action,  which  was  brought  after 
such  performance  to  recover  the  balance  of  such  indebtedness  over 
the  sum  so  secured  and  paid. 

One  of  the  elements  embraced  in  the  question  presented  upon  this 
appeal  is,  viz.,  whether  the  payment  of  a  sum  less  than  the  amount  of 
a  liquidated  debt  under  an  agreement  to  accept  the  same  in  satisfac- 
tion of  such  debt  forms  a  bar  to  the  recovery  of  the  balance  of  the 
debt.  This  single  question  was  presented  to  the  English  court  in 
1602,  when  it  was  resolved  (if  not  decided)  in  Pinnel's  case  (5th  Co. 
K.  117)  "that  payment  of  a  lesser  sum  on  the  day  in  satisfaction  of  a 
greater,  cannot  be  any  satisfaction  for  the  whole,"  and  that  this  is 
eo,  although  it  was  agreed  that  such  payment  should  satisfy  the 
whole.  This  simple  question  has  since  arisen  in  the  English  courts 
and  in  the  courts  of  this  country  in  almost  numberless  instances,  and 
has  received  the  same  solution,  notwithstanding  the  courts,  while  so 
ruling,  have  rarely  failed,  upon  any  recurrence  of  the  question,  to 
criticise  and  condemn  its  reasonableness,  justice,  fairness,  or  honesty. 
No  respectable  authority  that  I  have  been  able  to  find  has,  after  such 
unanimous  disapproval  by  all  the  courts,  held  otherwise  than  as  held 
in  Pinnel's  case,  supra,  and  Cumber  v.  Wane,  1  Str.  426.  Foakes  v. 
Beer,  L.  R.  9  App.  Gas.  605;  36  English  Reports,  194;  Goddard  v. 
O'Brien,  L.  R.  9  Q.  B.  Div.  37;  Vol.  21,  Am.  Law  Register,  637,  and 
notes. 

The  steadfast  adhesion  to  this  doctrine  by  the  courts  in  spite  of 
the  current  of  condemnation  by  the  individual  judges  of  the  court, 
and  in  the  face  of  the  demands  and  conveniences  of  a  much  greater 
business  and  more  extensive  mercantile  dealings  and  operations,  dem- 
onstrates the  force  of  the  doctrine  of  stare  decisis.  But  the  doctrine 
of  stare  decisis  is  further  illustrated  by  the  course  of  judicial  de- 
cisions upon  this  subject ;  for  while  the  courts  still  hold  to  the  doc- 
trine of  the  Pinnel  and  Cumber  v.  Wane  cases,  supra,  they  have 
seemed  to  seize  with  avidity  upon  any  consideration  to  support  the 
agreement  to  accept  the  lesser  sum  in  satisfaction  of  the  larger,  or 
in  other  words,  to  extract  if  possible  from  the  circumstances  of  each 


234  FORMATION    OF    CONTRACT. 

case  a  consideration  for  the  new  agreement,  and  to  substitute  the  new 
agreement  in  place  of  the  old,  and  thus  to  form  a  defense  to  the 
action  brought  upon  the  old  agreement.  It  will  serve  the  purpose  of 
illustrating  the  adhesion  of  the  court  to  settled  law  and  at  the  same 
time  enable  us  perhaps  more  satisfactorily  to  decide  whether  there 
was  a  good  consideration  to  support  the  agreement  in  this  case,  to 
refer  to  the  consideration,  in  a  few  of  the  numerous  cases,  which  the 
courts  have  held  to  be  sufficient  to  support  the  new  agreement. 

Lord  Blackburn  said  in  his  opinion  in  Foakes  v.  Beer,  supra,  and 
while  maintaining  the  doctrine,  "that  a  lesser  sum  cannot  be  a  satis- 
faction of  a  greater  sum,"  "but  the  gift  of  a  horse,  hawk  or  robe,  etc., 
in  satisfaction  is  good/*  quite  regardless  of  the  amount  of  the  debt. 
And  it  was  further  said  by  him  in  the  same  opinion,  "that  payment 
and  acceptance  of  a  parcel  before  the  day  of  payment  of  a  larger  sum 
would  be  a  good  satisfaction  in  regard  to  the  circumstance  of  time," 
"and  so  if  I  am  bound  in  twenty  pounds  to  pay  you  ten  pounds  at 
Westminster,  and  you  request  me  to  pay  you  five  pounds  at  the  day 
at  York,  and  you  will  accept  it  in  full  satisfaction  for  the  whole  ten 
pounds,  it  is  a  good  satisfaction."  It  was  held  in  Goddard  v.  O'Brien 
(L.  K.  9  Q.  B.  Div.  37;  21  Am.  L.  Reg.  N.  S.  637) :  "A,  being  in- 
debted to  B  in  125  pounds  7s.  &  9d.  for  goods  sold  and  delivered, 
gave  B  a  check  (negotiable,  I  suppose)  for  100  pounds  payable  on 
demand,  which  B  accepted  in  satisfaction,  was  a  good  satisfaction." 
Huddleston,  B.,  in  Goddard  v.  O'Brien,  supra,  approved  the  language 
of  the  opinion  in  Sibree  v.  Tripp  (15  M.  &W.  26),  "that  a  negotiable 
security  may  operate,  if  so  given  and  taken,  in  satisfaction  of  a  debt 
of  a  greater  amount;  the  circumstance  of  negotiability  making  it  in 
fact  a  different  thing  and  more  advantageous  than  the  original  debt 
which  was  not  negotiable." 

It  was  held  in  Bull  v.  Bull  (43  Conn.  455),  "and  although  the 
claim  is  a  money  demand  liquidated  and  not  doubtful,  and  it  cannot 
be  satisfied  with  a  smaller  sum  of  money,  yet  if  any  other  personal 
property  is  received  in  satisfaction,  it  will  be  good  no  matter  what 
the  value." 

And  it  was  held  in  Cumber  v.  Wane,  supra,  that  a  creditor  can 
never  bind  himself  by  simple  agreement  to  accept  a  smaller  sum  in 
lieu  of  an  ascertained  debt  of  a  larger  amount,  such  agreement  being 
nudum  pactum,  but  if  there  be  any  benefit  or  even  any  legal  possi- 
bility of  benefit  to  the  creditor  thrown  in,  that  additional  weight  will 
turn  the  scale  and  render  the  consideration  sufficient  to  support  the 
agreement. 

It  was  held  in  Le  Page  v.  McCrea  (1  Wend.  164)  and  in  Boyd  v. 
Hitchcock  (20  Johns.  76)  that  "giving  further  security  for  part  of  a 
debt  or  other  security,  though  for  a  less  sum  than  the  debt,  and  ac- 


CONSIDERATION.  235 

ceptance  of  it  in  full  of  all  demands,  make  a  valid  accord  and  satis- 
faction." 

That  "if  a  debtor  gives  his  creditor  a  note  indorsed  by  a  third 
party  for  a  less  sum  that  the  debt  (no  matter  how  much  less),  but 
in  full  satisfaction  of  the  debt,  and  it  is  received  as  such,  the  trans- 
action constitutes  a  good  accord  and  satisfaction/'  Varney  v.  Conery, 
3  East  R.  25.  And  so  it  has  been  held,  "where  by  mode  or  time  of 
part  payment,  different  than  that  provided  for  in  the  contract,  a  new 
benefit  is  or  may  be  conferred  or  a  burden  imposed,  a  new  consider- 
ation arises  out  of  the  transaction  and  gives  validity  to  the  agreement 
of  the  creditor"  (Rose  v.  Hall,  26  Conn.  392),  and  so  "payment  of 
less  than  the  whole  debt,  if  made  before  it  is  due  or  at  a  different 
place  from  that  stipulated,  if  received  in  full,  is  a  good  satisfaction." 
Jones  v.  Bullitt,  2  Lit.  49;  Ricketts  v.  Hall,  2  Bush.  249;  Smith  v. 
Brown,  3  Hawks.  (N.  C.)  580;  Jones  v.  Perkins,  29  Miss.  139;  Schwei- 
der  Y.  Lang,  29  Minn.  254;  43  Am.  R.  202. 

In  Watson  v.  Elliott  (57  N.  H.  511-513)  it  was  held,  "it  is  enough 
that  something  substantial,  which  one  party  is  not  bound  by  law  to 
do,  is  done  by  him  or  something  which  he  has  a  right  to  do  he  abstains 
from  doing  at  the  request  of  the  other  party,"  [and  this]  is  held  a 
good  satisfaction. 

It  has  been  held  in  a  number  of  cases  that  if  a  note  be  surrendered 
(by  the  payee  to  the  maker),  the  whole  claim  is  discharged  and  no 
action  can  afterwards  be  maintained  on  such  instrument  for  the  un- 
paid balance.  Ellsworth  v.  Fogg,  35  Vt.  355;  Kent  v.  Reynolds,  8 
Hun,  559. 

It  has  been  held  that  a  partial  payment  made  to  another,  though 
at  the  creditor's  instance  and  request,  is  a  good  discharge  of  the  whole 
debt.  Harper  v.  Graham,  20  Ohio,  106.  "The  reason  of  the  rule  is 
that  the  debtor  in  such  case  has  done  something  more  than  he  was 
originally  bound  to  do,  or  at  least  something  different.  It  may  be 
more  or  it  may  be  less,  as  a  matter  of  fact." 

It  was  held  by  the  Supreme  Court  of  Pennsylvania  in  Mechanics' 
Bank  v.  Huston  (Feb.  13,  1882,  11  W.  Notes  of  Cases,  389),  the  de- 
cided advantage  which  a  creditor  acquires  by  the  receipt  of  a  negoti- 
able note  for  a  part  of  his  debt,  by  the  increased  facilities  of  recovering 
upon  it,  the  presumption  of  a  consideration  for  it,  the  ease  of  dispos- 
ing of  it  in  market,  etc.,  was  held  to  furnish  ample  reason  why  it 
should  be  a  valid  discharge  of  a  larger  account  or  open  claim  un- 
negotiable. 

It  has  been  held  that  a  payment  in  advance  of  the  time,  if  agreed 
to,  is  full  satisfaction  for  a  larger  claim  not  yet  due.  Brooks  v. 
White,  2  Met.  283;  Bowker  v.  Childs,  3  Allen,  434. 

In  some  States,  notably  Maine  and   Georgia,  the  legislature,   in 


236  FORMATION   OF   CONTRACT. 

order  to  avoid  the  harshness  of  the  rule  under  consideration,  have  by 
statute  changed  the  law  upon  that  subject  by  providing,  "no  action 
can  be  maintained  upon  a  demand  which  has  been  cancelled  by  the 
receipt  of  any  sum  of  money  less  than  the  amount  legally  due 
thereon,  or  for  any  good  and  valuable  consideration  however  small." 
Citing  Weymouth  v.  Babcock,  42  Maine,  42. 

And  so  in  Gray  v.  Barton  (55  N.  Y.  68),  where  a  debt  of  $820  upon 
book  account  was  satisfied  by  the  payment  of  $1  by  calling  the  bal- 
ance a  gift, — though  the  balance  was  not  delivered  except  by  fiction, 
and  the  receipt  was  in  the  usual  form  and  was  silent  upon  the  subject 
of  a  gift;  and  this  case  was  followed  and  referred  to  in  Ferry  v. 
Stephens,  66  N".  Y.  321. 

So  it  was  held  in  Mitchell  v.  Wheaton  (46  Conn.  315 ;  33  Am.  K. 
24)  that  the  debtor's  agreement  to  pay  and  the  payment  of  $150  with 
the  costs  of  the  suit  upon  a  liquidated  debt  of  $299  satisfied  the  prin- 
cipal debt. 

These  cases  show  in  a  striking  manner  the  extreme  ingenuity  and 
assiduity  which  the  courts  have  exercised  to  avoid  the  operation  of 
the  "rigid  and  rather  unreasonable  rule  of  the  old  law,"  as  it  is  char- 
acterized in  Johnston  v.  Brannan  (5  Johns.  268-272),  or  as  it  is 
called  in  Kellogg  v.  Eichards  (14  Wend.  116),  "technical  and  not 
very  well  supported  by  reason,"  or  as  may  be  more  practically  stated, 
a  rule  that  "a  bar  of  gold  worth  $100  will  discharge  a  debt  of  $500, 
while  400  gold  dollars  in  current  coin  will  not."  See  note  to  Goddard 
v.  O'Brien,  supra,  in  Am.  Law  Register,  New  Series,  Vol.  21,  pp. 
640,  641. 

The  state  of  the  law  upon  this  subject,  under  the  modification  of 
later  decisions  both  in  England  and  in  this  country,  would  seem  to  be 
as  expressed  in  Goddard  v.  O'Brien  (Queen's  Bench  Division,  supra}  : 
"The  doctrine  in  Cumber  v.  Wane  is  no  doubt  very  much  qualified  by 
Sibree  v.  Tripp,  and  I  cannot  find  it  better  stated  than  in  1st  Smith's 
Leading  Cases  (7th  ed.),  595,  'The  general  doctrine  in  Cumber  v. 
Wane,  and  the  reason  of  all  the  exceptions  and  distinctions  which  have 
been  engrafted  on  it,  may  perhaps  be  summed  up  as  follows,  viz.: 
That  a  creditor  cannot  bind  himself  by  a  simple  agreement  to  accept 
a  smaller  sum  in  lieu  of  an  ascertained  debt  of  larger  amount,  such 
an  agreement  being  nudum  pactum.  But  if  there  be  any  benefit  or 
even  any  legal  possibility  of  benefit  to  the  creditor  thrown  in,  that 
additional  weight  will  turn  the  scale  and  render  the  consideration 
sufficient  to  support  the  agreement/ ''  Bull  v.  Bull,  43  Conn.  455; 
Fisher  v.  May,  2  Bibb.  449 ;  Keed  v.  Bartlett,  19  Pick.  273 ;  Union 
Bank  v.  Geary,  5  Peters,  99-114;  Le  Page  v.  McCrea,  1  Wend.  164; 
Boyd  v.  Hitchcock,  20  Johns.  76 ;  Brooks  v.  White,  2  Mete.  283 ;  Jones 
v.  Perkins,  29  Miss.  139-141;  Hall  v.  Smith,  15  Iowa,  584;  Bab- 
cock  v.  Hawkins,  23  Vt.  561. 


CONSIDERATION.  237 

In  the  case  at  bar  the  defendants  gave  their  promissory  notes  upon 
time  for  one-half  of  the  debt  they  owed  plaintiffs,  and  also  gave  plain- 
tiffs a  chattel  mortgage  on  the  stock,  fixtures,  and  other  personal 
property  of  the  defendants  under  -an  agreement  with  plaintiffs,  to 
accept  the  same  in  full  satisfaction  and  discharge  of  said  indebted- 
ness. Defendants  paid  the  notes  as  they  became  due,  and  plaintiffs 
then  discharged  the  mortgage.  Under  the  cases  above  cited,  and 
upon  principle,  this  new  agreement  was  supported  by  a  sufficient  con- 
sideration to  make  it  a  valid  agreement,  and  this  agreement  was  by 
the  parties  substituted  in  place  of  the  former.  The  consideration  of 
the  new  agreement  was  that  the  plaintiffs,  in  place  of  an  open  book 
account  for  goods  sold,  got  the  defendants'  promissory  notes,  probably 
negotiable  in  form,  signed  by  defendants,  thus  saving  the  plaintiffs 
perhaps  the  trouble  or  expense  of  proving  their  account,  and  got  se- 
curity upon  all  the  defendants'  personal  property  for  the  payment  of 
the  sum  specified  in  the  notes,  where  before  they  had  no  security. 

It  was  some  trouble,  at  least,  and  perhaps  some  expense  to  the  de- 
fendants to  execute  and  deliver  the  security,  and  they  deprived  them- 
selves of  the  legal  ownership,  or  of  any  exemptions  or  the  power  of 
disposing  of  this  property,  and  gave  the  plaintiffs  such  ownership  as 
against  the  defendants,  and  the  claims  thereto  of  defendants'  creditors, 
if  there  were  any. 

It  seems  to  me,  upon  principle  and  the  decisions  of  this  State 
(save,  perhaps,  Keeler  v.  Salisbury,  33  N.  Y.  653,  and  Platts  v. 
Walrath,  Lalor^s  Supp.  59,  which  I  will  notice  further  on),  and  of 
quite  all  of  the  other  States,  the  transactions  between  the  plaintiffs 
and  the  defendants  constitute  a  bar  to  this  action.  All  that  is  neces- 
sary to  produce  satisfaction  of  the  former  agreement  is  a  sufficient 
consideration  to  support  the  substituted  agreement.  The  doctrine  is 
fully  sustained  in  the  opinion  of  Judge  Andrews  in  Allison  v.  Aben- 
droth  (108  N".  Y.  470),  from  which  I  quote:  "But  it  is  held  that 
where  there  is  an  independent  consideration,  or  the  creditor  receives 
any  benefit  or  is  put  in  a  better  position,  or  one  from  which  there  may 
be  legal  possibility  of  benefit  to  which  he  was  not  entitled  except  for 
the  agreement,  then  the  agreement  is  not  nudum  pactum,  and  the 
doctrine  of  the  common  law  to  which  we  have  adverted  has  no  appli- 
cation." Upon  this  distinction  the  cases  rest  which  hold  that  the 
acceptance  by  the  creditor  in  discharge  of  the  debt  of  a  different  thing 
from  that  contracted  to  be  paid,  although  of  much  less  pecuniary 
value  or  amount,  is  a  good  satisfaction,  as,  for  example,  a  negotiable 
instrument  binding  the  debtor  and  a  third  person  for  a  smaller  sum. 
Curlewis  v.  Clark,  3  Exch.  375.  Following  the  same  principle,  it  is 
held  that  when  the  debtor  enters  into  a  new  contract  with  the  creditor 
to  do  something  which  he  was  not  bound  to  do  by  the  original  con- 
tract, the  new  contract  is  a  good  accord  and  satisfaction  if  so  agreed. 


238  FORMATION    OF    CONTRACT. 

The  case  of  accepting  the  sole  liability  of  one  of  two  joint  debtors 
or  copartners  in  satisfaction  of  the  joint  or  copartnership  debt  is  an 
illustration.  This  is  held  to  be  a  good  satisfaction,  because  the  sole 
liability  of  one  of  two  debtors  "may  be  more  beneficial  than  the  joint 
liability  of  both,  either  in  respect  of  the  solvency  of  the  parties,  or 
the  convenience  of  the  remedy."  Thompson  v.  Percival,  5  B.  &  Adol. 
925.  In  perfect  accord  with  this  principle  is  the  recent  case  in  this 
court  of  Luddington  v.  Bell  (77  N.  Y.  138),  in  which  it  was  held  that 
the  acceptance  by  a  creditor  of  the  individual  note  of  one  of  the 
members  of  a  copartnership  after  dissolution  for  a  portion  of  the  co- 
partnership debt  was  a  good  consideration  for  the  creditor's  agreement 
to  discharge  the  maker  from  further  liability.  Purdee  v.  Wood,  8 
Hun,  581;  Douglass  v.  White,  3  Barb.  Chy.  621-624. 

Notwithstanding  these  later  and  decisive  authorities,  the  plaintiffs 
contend  that  [despite]  the  giving  of  the  defendants'  notes  with  the 
chattel  mortgage  security  and  the  payment,  such  consideration  was 
insufficient  to  support  the  new  or  substituted  agreement,  and  cites  as 
authority  for  such  contention  the  cases  of  Platts  v.  Walrath  (Lalor's 
Supp.  59)  and  Keeler  v.  Salisbury  (33  N.  Y.  648). 

Platts  v.  Walrath  arose  in  justice  court,  and  the  debt  in  controversy 
was  put  forth  as  a  set-off.  The  remarks  of  the  judge  in  the  former 
case  were  quite  obiter,  for  there  were  various  subjects  in  dispute  upon 
the  trial,  and  from  which  the  justice  might  have  reached  the  con- 
clusion that  he  did.  The  judge  in  the  opinion  relied  upon  says: 
"Looking  at  the  loose  and  secondary  character  of  the  evidence  as  stated 
in  the  return,  it  was  perhaps  a  question  of  fact  whether  any  mortgage 
at  all  was  given;  or,  at  least,  whether,  if  given,  it  was  not  in  terms  a 
mere  collateral  security  for  the  large  note,"  "even  the  mortgagee  was 
left  to  parol  proof.  Did  it  refer  to  and  profess  to  be  a  security  for 
the  note  of  $1500,  or  that  sum  less  the  fifty  dollars  agreed  to  be 
thrown  off,  etc.,  etc.?" 

There  is  so  much  confusion  and  uncertainty  in  the  case  that  it  was 
not  thought  advisable  to  publish  the  case  in  the  regular  series  of  re- 
ports. The  case  of  Keeler  v.  Salisbury,  supra,  is  not  to  be  regarded 
as  an  authority  upon  the  question  or  as  approving  the  case  of  Platts  v. 
Walrath,  supra.  In  the  case  of  Keeler  v.  Salisbury,  the  debtor's  wife 
had  joined  in  the  mortgage  given  by  her  husband,  the  debtor,  to  effect 
the  compromise,  thus  releasing  her  inchoate  right  of  dower.  The 
court  held  that  fact  constituted  a  sufficient  consideration  to  support 
the  new  agreement,  though  the  court  in  the  course  of  the  opinion  re- 
marked that  it  had  been  held  that  the  debtor's  mortgage  would  not  be 
sufficient,  and  referred  to  Platts  v.  Walrath.  But  the  court  did  not 
otherwise  indicate  any  approval  of  that  case,  and  there  was  no  occa- 
sion to  do  so,  for,  as  before  stated,  the  court  put  its  decision  upon  the 
fact  that  the  wife  had  joined  in  the  mortgage. 


CONSIDERATION.  239 

In  view  of  the  peculiar  facts  in  these  two  cases  and  the  numerous 
decisions  of  this  and  other  courts  hereinbefore  referred  to,  I  do  not 
regard  them  as  authorities  against  -the  defendants'  contention  that 
the  plaintiffs'  action  for  the  balance  of  the  original  debt  is  barred  by 
reason  of  the  accord  and  satisfaction,  and  that  the  judgment  should 
be  reversed,  with  costs.  All  concur. 

Judgment  reversed.1 

9  Cyc.  354   (76)  ;  355-356  (77-79)  ;  20  L.  R.  A.  785;  W.  P.  844   (53)  ;  211 
(20-21)  ;  13  C.  L.  R.  156;  6  Mich.  L.  R.  169. 


WOODS,  C.  J.,  IN  CLAYTON  v.  CLAEK. 

74  MISSISSIPPI,  499.— 1896. 

[In  this  case  a  note  for  $2789  was  by  agreement  surrendered  upon 
the  payment  of  $1000.  The  payee  subsequently  brought  suit  for  the 
balance.  ] 

It  has  been  held  in  England,  though  not  unbrokenly,  nor  without 
now  and  then  hostile  criticism  from  bench  and  bar,  that  an  agreement 
by  a  creditor  with  his  debtor  to  accept  a  smaller  sum  of  money  in 
satisfaction  of  an  ascertained  debt  of  a  greater  sum,  is  without  con- 
sideration, and  is  not  binding  upon  the  creditor,  even  though  he  has 
received  the  smaller  sum  agreed  upon  in  the  new  contract.  And  in 
the  United  States,  blindly  following  what  was  supposed  to  be  settled 
law  in  England  for  nearly  three  hundred  years,  our  courts  have  uni- 
formly announced  adherence  to  this  rule,  though  in  most  of  the  cases 

i  But  in  New  York,  in  Shanley  v.  Koehler,  80  Appellate  Division,  566  ( af- 
firmed, 178  N.  Y.  556)  it  was  held  that  where  a  person,  against  whom  a 
judgment  for  two  hundred  and  twenty-six  dollars  and  twenty-nine  cents  has 
been  obtained,  makes  an  arrangement  with  the  judgment  creditor,  by  which 
the  latter  agrees  to  satisfy  the  judgment  upon  receiving  from  the  judgment 
debtor  fifty  dollars  in  cash  and  his  unindorsed  promissory  note  for  fifty  dol- 
lars, payable  in  three  months,  with  interest,  and  in  pursuance  of  this  arrange- 
ment, the  judgment  debtor  pays  the  fifty  dollars  in  cash,  gives  the  promissory 
note  and  pays  the  same  at  maturity,  taking  from  the  judgment  creditor  a  re- 
ceipt stating  that  the  payment  was  "in  full  settlement  of  his  account,"  the 
transaction  does  not  constitute  an  accord  and  satisfaction  which  will  prevent 
the  judgment  creditor  from  subsequently  enforcing  the  judgment  for  the 
amount  remaining  unpaid  thereon.  (Syllabus.)  The  note  was  a  negotiable 
promissory  note. 

In  Grant  v.  Porter,  63  N.  H.  229,  the  court  said,  "Ordinarily,  payment  and 
acceptance  of  a  smaller  sum  for  a  larger  one  due  is  no  discharge  of  the  larger. 
Blanchard  v.  Noyes,  3  N.  H.  519;  Mathewson  v.  Bank,  45  N.  H.  104,  107.  But 
payment  by  a  third  person  at  the  request  of  the  debtor,  either  in  money  or 
by  note,  accepted  by  the  creditor  in  full  satisfaction  and  discharge  of  the  debt, 
is  an  exception  to  the  rule,  and  extinguishes  the  debt.  Brooks  v.  White.  2 
Met.  283." 


240  FORMATION    OF    CONTRACT. 

examined  by  us  no  such  announcement  was  necessary  to  their  determi- 
nation. 

The  rule  is,  in  nearly  all  the  cases,  declared  to  have  been  first  an- 
nounced in  Pinnel's  case  (5  Coke's  Rep.  117  )*  whereas  an  examina- 
tion of  that  mischievous  and  misleading  reported  case  will  make  it 
appear  at  once  that  the  question  before  us  was  not  in  any  way  involved. 
Pinnel's 2  plea  was,  that  before  the  maturity  of  his  bond  for  the 
larger  sum,  plaintiff  had  accepted  a  lesser  sum  agreed  upon  between 
the  parties,  in  full  satisfaction  of  the  original  debt.  Now,  all  the 
authorities,  American  and  English,  including  Coke  himself,  agree  that 
this  was  a  good  defense,  and  that  the  plaintiff  was  bound  by  it,  if  de- 
fendant should  properly  plead  it  to  a  suit  for  the  entire  original  debt. 
But  the  hapless  Pinnel 2  in  that  remote  period  when  courts  were  almost 

1  Pinnel  brought  an  action  of  debt  on  a  bond  against  Cole  of  161.  for  pay- 
ment of  SI.  10s.  the  llth  day  of  November,  1600.     The  defendant  pleaded,  that 
at  the  instance  of  the  plaintiff,  before  the  said  day,  soil.  1   Octob.  anno  44, 
apud  W.  solvit  querenti  51.  2s.  2d.  quas  quidem  51.  2s.  2d.  the  plaintiff  ac- 
cepted in  full  satisfaction  of  the  81.  10s.     And  it  was  resolved  by  the  whole 
court,  that  payment  of  a  lesser  sum'  on  the  day  in  satisfaction  of  a  greater, 
cannot  be  any  satisfaction  for  the  whole,  because  it  appears  to  the  judges  that 
by  no  possibility  a  lesser  sum  can  be  a  satisfaction  to  the  plaintiff  for  a 
greater  sum;   but  the  gift  of  a  horse,  hawk,  or  robe,  etc.,  in  satisfaction  is 
good.     For  it  shall  be  intended  that  a  horse,  hawk,  robe,  etc.,  might  be  more 
beneficial  to  the  plaintiff  than  the  money,  in  respect  of  some  circumstance,  or 
otherwise  the   plaintiff  would  not  have  accepted  of   it  in  satisfaction.     But 
when  the  whole  sum  is  due,  by  no  intendment  the  acceptance  of  parcel  can  be 
a  satisfaction  to  the  plaintiff.     But  in  the  case  at  bar  it  was  resolved  that 
the  payment  and  acceptance  of  parcel  before  the  day,  in  satisfaction  of  the 
whole,  would  be  a  good  satisfaction  in  regard  of  circumstance  of  time;   for 
peradventure  parcel  of  it  before  the  day  would  be  more  beneficial  to  him  than 
the  whole  at  the  day,  and  the  value  of  the  satisfaction  is  not  material.     So, 
if  I  am  bound  in  201.  to  pay  you  10Z.  at  Westminster,  and  you  request  me  to 
pay  you  51.  at  the  day  at  York,  and  you  will  accept  it  in  full  satisfaction  of 
the  whole  101.,  it  is  a  good  satisfaction  for  the  whole;  for  the  expenses  to  pay 
it  at  York  is  sufficient  satisfaction. 

But  in  this  case  the  plaintiff  had  judgment  for  the  insufficient  pleading;  for 
he  [defendant]  did  not  plead  that  he  had  paid  the  51.  2s.  2d.  in  full  satis- 
faction (as  by  law  he  ought),  but  pleaded  the  payment  of  part  generally, 
and  that  the  plaintiff  accepted  it  in  full  satisfaction.  And  always  the  man- 
ner of  the  tender  and  of  the  payment  shall  be  directed  by  him  who  made  the 
tender  or  payment,  and  not  by  him  who  accepts  it.  And  for  this  cause  judg- 
ment was  given  for  the  plaintiff. 

See  reader  26  H.  6  Barre,  37,  in  debt  on  a  bond  for  10Z.,  the  defendant 
pleaded  that  one  F  was  bound  by  the  said  deed  with  him,  and  each  in  the 
whole,  and  that  the  plaintiff  had  made  an  acquittance  to  F  bearing  date  be- 
fore the  obligation,  and  delivered  after,  by  which  acquittance  he  did  acknowl- 
edge himself  to  be  paid  20s.  in  full  satisfaction  of  the  101.  And  it  was  ad- 
judged a  good  bar;  for  if  a  man  acknowledges  himself  to  be  satisfied  by  deed, 
it  is  a  good  bar,  without  anything  being  received.  Vide  12  R.  2,  Barre,  243; 
26  H.  6  Barre,  37  and  10  H.  7,  etc. — Pinnel's  case,  5  Coke's  Rep.  117  (1602). 

2  A  slip  for  defendant,  Cole. — EDS. 


CONSIDERATION.  241 

as  jealous  for  the  observance  of  technical  rules  of  special  pleading  as 
for  the  execution  of  justice  according  to  right,  was  adjudged  to  pay 
the  whole  debt,  the  plaintiff  having  judgment  against  him,  because  of 
his  "insufficient  pleading,  for,"  says  Coke,  "he  did  not  plead  that  he 
had  paid  the  £5,  2s.  2d.  in  full  satisfaction  (as  by  law  he  ought),  but 
pleaded  the  payment  of  part  generally,  and  that  the  plaintiff  accepted 
it  in  full  satisfaction."  .  .  . 

The  rule  is  found  in  Pinnel's  case,  but  it  is  bald  dictum,  and,  as 
stated  by  Lord  Blackburn,  in  Foakes  v.  Beer,  before  the  House  of 
Lords  (9  App.  Gas.  605),  for  the  long  period  of  one  hundred  and 
fifteen  years  after  Pinnel's  case  was  decided  no  case  is  to  be  found 
"in  which  the  question  was  raised  whether  payment  of  a  lesser  sum 
would  be  satisfaction  of  a  liquidated  demand."  *  .  .  . 

Turning  now  to  the  holdings  of  the  American  courts  on  this  ques- 
tion, we  are  profoundly  and  painfully  impressed  with  the  slavish  ad- 
herence of  the  legal  and  judicial  mind  to  precedent,  or,  in  many  cases, 
to  what  seems  to  be  precedent  only.  [The  learned  judge  then  dis- 
cusses some  of  the  American  cases.] 

The  absurdity  and  unreasonableness  of  the  rule  seem  to  be  generally 
conceded,  but  there  also  seems  to  remain  a  wavering,  shadowy  belief 
in  the  fact,  falsely  so  called,  that  the  agreement  to  accept,  and  the 
actual  acceptance  of,  a  lesser  sum  in  the  full  satisfaction  of  a  larger 
sum,  is  without  any  consideration  to  support  it — that  is,  that  the  new 
agreement  confers  no  benefit  upon  the  creditor.  However  it  may 
have  seemed  three  hundred  years  ago  in  England,  when  trade  and 
commerce  had  not  yet  burst  their  swaddling  bands,  at  this  day  and  in 
this  country,  where  almost  every  man  is  in  some  way  or  other  engaged 
in  trade  or  commerce,  it  is  as  ridiculous  as  it  is  untrue  to  say  that  the 
payment  of  a  lesser  part  of  an  originally  greater  debt,  cash  in  hand, 
without  vexation,  cost,  and  delay,  or  the  hazard  of  litigation  in  an 
effort  to  collect  all,  is  not  often — nay,  generally — greatly  to  the  benefit 
of  the  creditor.  Why  shall  not  money — the  thing  sought  to  be  se- 
cured by  new  notes  of  third  parties,  notes  where  payment  in  money  is 
designed  to  be  secured  by  mortgage,  and  even  negotiable  notes  of  the 

i  In  that  case  Lord  Blackburn  says :  "What  principally  weighs  with  me 
in  thinking  that  Lord  Coke  made  a  mistake  of  fact  is  my  conviction  that  all 
men  of  business,  whether  merchants  or  tradesmen,  do  every  day  recognize 
and  act  on  the  ground  that  prompt  payment  of  a  part  of  their  demand  may 
be  more  beneficial  to  them  than  it  would  be  to  insist  on  their  rights  and  en- 
force payment  of  the  whole.  Even  where  the  debtor  is  perfectly  solvent,  and 
sure  to  pay  at  last,  this  often  is  so.  Where  the  credit  of  the  debtor  is  doubt- 
ful it  must  be  more  so.  I  had  persuaded  myself  that  there  was  no  such  long- 
continued  action  on  this  dictum  as  to  render  it  improper  in  this  House  to  re- 
consider the  question.  I  had  written  my  reasons  for  so  thinking;  but  as 
they  were  not  satisfactory  to  the  other  noble  and  learned  Lords  who  heard 
the  case,  I  do  not  now  repeat  them  nor  persist  in  them."  (9  App.  Cas.  605, 
622-623.) 


242  FORMATION    OF    CONTRACT. 

debtor  himself — why  shall  not  the  actual  payment  of  money,  cash  in 
hand,  be  held  to  be  as  good  consideration  for  a  new  agreement,  as 
beneficial  to  the  creditor,  as  any  mere  promises  to  pay  the  same 
amount,  by  whomsoever  made  and  however  secured?  And  why  may 
not  men  make  and  substitute  a  new  contract  and  agreement  for  an 
old  one,  even  if  the  old  contract  calls  for  a  money  payment?  And 
why  may  one  accept  a  horse  worth  $100  in  full  satisfaction  of  a 
promissory  note  for  $1000,  and  be  bound  thereby,  and  yet  not  be 
legally  bound  by  his  agreement  to  accept  $999,  and  his  actual  accept- 
ance of  it,  in  full  satisfaction  of  the  $1000  note?  No  reason  can  be 
assigned  except  that  just  adverted  to,  and  this  rests  upon  a  mistake  in 
fact.  And  a  rule  of  law  which  declares  that  under  no  circumstances, 
however  favorable  and  beneficial  to  the  creditor,  or  however  hard  and 
full  of  sacrifice  to  the  debtor,  can  the  payment  of  a  less  sum  of  money 
at  the  time  and  place  stipulated  in  the  original  obligation,  or  after- 
wards, for  a  greater  sum,  though  accepted  by  the  creditor  in  full 
satisfaction  of  the  whole  debt,  ever  amount  in  law  to  satisfaction  of  the 
original  debt,  is  absurd,  irrational,  unsupported  by  reason,  and  not 
founded  in  authority,  as  has  been  declared  by  courts  of  the  highest 
respectability,  and  of  last  resort,  even  when  yielding  reluctant  assent 
to  it.  We  decline  to  adopt  or  to  follow  it,  and  if  there  is  anything 
in  the  cases  of  Jones  v.  Perkins  (29  Miss.  139)  or  Pulliam  v.  Taylor 
(50  Miss.  251)  which  may  be  regarded  as  sanctioning  the  rule  that  the 
payment  of  a  less  sum  of  money,  though  agreed  to  be  received  in  full 
satisfaction  of  a  debt  greater  in  amount  than  such  agreed 
payment,  shall  not  be  so  considered  in  legal  contemplation,  then,  to 
that  extent  those  cases  are  hereby  overruled ;  and  the  case  of  Burrus 
v.  Gordon  (57  Miss.  93),  in  so  far  as  it  sanctions  the  rule  we  are 
combating,  is  hereby  overruled. 

[WHITFIELD,  J.,  specially  concurred  in  the  decision  on  the  ground 
that  the  delivery  up  of  a  note  by  the  holder  to  the  maker  is  a  complete 
discharge.]  * 

9  Cyc.  354-356  (76-79)  ;  W.  P.  211   (21)  ;  11  H.  L.  R.  193;  11  H.  L.  R.  330. 

i  The  doctrine  that  a  part  payment  of  a  liquidated  sum  will  not  discharge 
the  debt  has  been  changed  by  statute  in  the  following  states:  Alabama,  Cali- 
fornia, Georgia,  Maine,  North  Carolina,  North  Dakota,  Oregon,  South  Dakota, 
Tennessee  and  Virginia. 

The  doctrine  has  been  changed  by  judicial  decision  in  Mississippi,  Clayton  v. 
Clark,  supra,  and  apparently  in  New  Hampshire,  Frye  v.  Hubbel,  74  N.  H. 
358.  In  Arkansas,  it  is  held  that  the  giving  of  a  receipt,  in  full,  for  a  partial 
payment,  discharges  the  debt.  Dreyfus  v.  Roberts,  75  Ark.  354.  In  some 
other  States  when  there  is  a  partial  payment  and  the  giving  of  a  receipt  in 
full,  it  is  a  gift  of  the  residue.  Holmes  v.  Holmes,  129  Mich.  412;  Gray  v. 
Barton,  55  N.  Y.  68;  Lamprey  v.  Lamprey,  29  Minn.  151  (Semble).  In  some 
States  a  partial  payment  is  satisfaction  if  the  debtor  is  insolvent.  Engbretson 
v.  Seiberling,  122  la.  522;  Shelton  v.  Jackson,  20  Tex.  Civ.  App.  443;  and 
see,  Mebroy  v.  Kemmerer,  218  Pa.  381. 


CONSIDERATION.  243 

Composition  with  creditors. 
WILLIAMS  v.  CAKRINGTON. 

1  HILTON,  515.— 1867. 
(New  York  Common  Pleas.) 

Action  for  debt.  Defense,  accord  and  satisfaction  by  composi- 
tion. Appeal  from  judgment  of  Marine  Court  in  favor  of  plaintiff. 

Defendant  having  made  a  composition  with  several  of  his  creditors 
at  forty  cents  on  the  dollar,  made  a  similar  agreement  with  plain- 
tiffs by  which  he  agreed  to  pay  them  forty  cents  on  the  dollar,  and  did 
pay  them  such  amount,  and  received  a  receipt  in  full  of  their  account. 
Defendant  at  the  same  time  gave  to  plaintiffs  a  sealed  instrument  by 
which  he  bound  himself  to  pay  to  them  an  additional  forty  per  cent 
as  soon  as  his  compromise  should  be  effected,  on  condition  that  plain- 
tiffs sign  a  paper  purporting  to  compromise  his  indebtedness  to  them 
for  forty  per  cent.  The  composition  was  never  completed,  and  plain- 
tiffs bring  this  action.  There  was  no  evidence  that  plaintiffs  ever 
executed  a  composition  deed,  or  that  other  creditors  were  induced  to 
enter  into  a  compromise  in  consequence  of  the  agreement  with  plain- 
tiffs. 

DALY,  J.  It  was  essential,  in  this  case,  to  show  that  other  creditors 
had  consented  to  accept  the  forty  per  cent  in  discharge  of  their  claims 
in  consequence  of  the  plaintiffs'  consenting  to  do  so.  The  considera- 
tion which  supports  such  an  agreement,  when  it  is  not  under  seal,  is 
the  mutual  understanding,  among  all  who  become  parties  to  it,  that 
each  is  to  take  the  composition  agreed  upon,  and  forbear  further  to 
press  or  insist  upon  their  claims.  It  is  said  in  Good  v.  Cheesman  (2 
Barn.  &  Adolph.  328),  by  Lord  Tenterden,  "that  a  creditor  shall  not 
bring  an  action  where  others  have  been  induced  to  join  him  in  a  com- 
position with  the  debtor;  each  party  giving  the  rest  reason  to  believe 
that,  in  consequence  of  such  engagement,  his  demand  will  not  be  en- 
forced. This  is,  in  fact,  a  new  agreement,  substituted  for  the  original 
contract  with  the  debtor ;  the  consideration  to  each  creditor  being  the 
engagement  of  the  others  not  to  press  their  individual  claims/'  It 
must  appear  that  the  act  of  the  plaintiff,  in  accepting  the  forty  per 
cent,  operated  as  an  inducement  to  other  creditors  to  do  the  same, 
otherwise  it  is  but  the  acceptance  of  a  lesser  sum  for  a  greater,  which 
is  no  satisfaction.  Thus  in  Lowe  v.  Equitar  (7  Price,  604)  the  plain- 
tiff agreed  with  the  defendant  to  execute  a  deed  of  composition  with  the 
other  creditors,  and  take  the  benefit  of  the  composition  with  them, 
in  consideration  that  the  defendant  would  also  deliver  to  him  a  picture 
of  the  value  of  £500.  The  picture  was  delivered  and  accepted  by  the 
plaintiff  in  full  satisfaction  of  his  claim,  and  the  defendant  and  all 
the  other  creditors,  except  the  plaintiff,  signed  the  composition  deed. 


244  FORMATION   OF   CONTRACT. 

The  plaintiff  sued  for  the  original  debt,  and  a  plea  setting  up  these 
facts  was  held  to  be  no  bar.  I  am  inclined  to  think,  from  the  report 
of  this  case,  that  the  picture  was  accepted  in  lieu  of,  or  as  a  payment 
of  the  composition,  and  if  so,  it  was  a  case,  in  its  essential  features, 
like  the  present.  Where  creditors  meet  together,  and  the  terms  of  the 
composition  are  arranged,  as  was  the  case  in  Cockshott  v.  Bennett  (2 
Term  Rep.  763),  or  as  in  Good  v.  Cheesman,  supra,  put  their  names  to 
an  agreement  or  memorandum  of  the  term,  all  the  creditors  present  at 
such  meeting,  or  all. who  sign  the  writing,  enter  into  a  mutual  en- 
gagement, each  with  the  other,  to  accept  the  amount  proposed  by  way 
of  compromise,  and  to  forbear  further  to  insist  upon  their  claims. 
Where  creditors  thus  mutually  agree  with  each  other,  the  beneficial 
consideration  to  each  creditor  is  the  engagement  of  the  rest  to  forbear. 
A  fund  is  thereby  secured  for  the  general  advantage  of  all ;  and  if  any 
one  of  the  parties  were  allowed  afterwards  to  enforce  his  whole  claim, 
it  would  operate  to  the  detriment  of  the  other  creditors  who  have 
relied  upon  his  agreement  to  forbear,  and  might  even  deprive  them 
of  the  sum  it  was  mutually  agreed  they  should  receive,  by  putting 
it  out  of  the  power  of  the  debtor  to  carry  out  the  composition.  I  know 
of  no  case,  however,  in  which  an  acceptance,  by  a  creditor  from  his 
debtor,  of  a  certain  sum  in  discharge  of  his  debt,  where  other  creditors 
have  done  the  same,  has  been  held  to  be  a  satisfaction,  unless  there  was 
something  in  the  case  to  show  that  the  other  creditors  acted  with  the 
knowledge  of  his  concurrence,  and  it  could  be  assumed  that  their  agree- 
ment necessarily  contemplated  and  was  founded  in  the  benefit  and  ad- 
vantage to  be  derived  from  his  agreement  also  to  forbear — in  the 
language  of  Lord  Tenterden,  that  they  "were  induced  to  join  him  in 
the  composition."  It  is  very  probable,  in  this  case,  that  such  was  the 
fact — very  probable  that  the  plaintiffs  signed  the  composition,  but 
nothing  of  the  kind  appears  in  the  evidence.  For  all  that  appears 
in  the  testimony,  the  other  creditors  may  have  accepted  the  forty  per 
cent  without  knowing  that  the  plaintiffs  had  received  that  sum,  or  had 
agreed  to  accept  it.  We  would  not  be  justified  in  presuming,  upon 
this  evidence,  that  they  did,  against  what  must  be  regarded  as  a  direct 
finding  by  the  judge  below,  that  they  did  not.  We  would  have  to 
hold  that  the  judgment  he  gave  was  against  evidence,  and  we  could  not, 
I  think,  go  that  length. 

The  judgment  must  be  affirmed ;  but  as  the  question  is  not  very  fully 
discussed  by  either  party  upon  the  written  argument  submitted,  and 
as  it  is  of  a  good  deal  of  practical  importance,  I  think  the  defendant 
should  be  allowed,  if  he  wishes  it,  to  carry  the  case  to  the  Court  of 
Appeals. 

[INGRAHAM,  F.  J.,  also  read  for  affirmance.] 

BRADY,  J.,  dissented. 

Judgment  affirmed. 

8  Cyc.  419    (34)  ;  419-420   (36-37)  ;  9  Cyc.  356   (80). 


CONSIDERATION.  245 

PEKKINS  v.  LOCKWOOD. 

100   MASSACHUSETTS,    249.— 1868. 

Action  on  a  promissory  note  upon  which  was  the  following  indorse- 
ment: 

"December  14,  1864.  Received  on  the  within  note  $10.38,  being  the  first  in- 
stalment towards  $15.94,  being  ten  per  cent  of  said  note,  which  when  paid  is 
to  be  in  full  satisfaction  and  settlement  of  the  within  note,  provided  that  no 
other  creditor  shall  receive  more  than  ten  per  cent  on  his  claim  against  Lock- 
wood  &  Connell,  and  provided  also  that  if  any  creditor  shall  receive  more  than 
ten  per  cent,  an  amount  equal  to  such  percentage  shall  be  paid  on  the  within 
note." 

WELLS,  J.  An  agreement  to  accept,  in  satisfaction  and  discharge 
of  a  liquidated  debt,  a  sum  less  than  the  full  amount  due,  is  not  valid, 
unless  there  exist  some  consideration  to  support  it  other  than  the  pay- 
ment or  promise  of  the  debtor  to  pay  such  less  sum.  Harriman  v. 
Harriman,  12  Gray,  341.  The  note  or  collateral  promise  of  another 
person  will  support  the  agreement.  Brooks  v.  White,  2  Met.  283.  For 
a  like  reason,  when  -such  an  agreement  forms  part  of  a  composition 
in  which  several  creditors  join,  mutually  stipulating  to  withdraw  or 
withhold  suits  and  that  they  will  release  to  their  common  debtor  a  part 
of  their  claims  upon  payment  of  a  certain  other  part,  the  agreement 
becomes  binding  between  each  creditor  and  the  debtor.  Eaton  v. 
Lincoln,  13  Mass.  424;  Steinman  v.  Magnus,  11  East,  390.  The 
reason  is,  that  the  rights  and  interests  of  other  parties  become  involved 
in  the  arrangement,  and  this  affords  a  new  and  legal  consideration  for 
the  promise.  It  would  be  contrary  to  good  faith  for  a  creditor  who 
has  secured  the  advantage  of  such  an  arrangement  to  disregard  its  ob- 
ligations by  proceeding  to  enforce  the  balance  of  his  demand;  and 
the  debtor  is  entitled  to  avail  himself  of  this  consideration  in  defense. 
Good  v.  Cheesman,  2  B.  &  Ad.  328 ;  Boyd  v.  Hind,  1  H.  &  N.  938. 

In  this  case,  the  exceptions  do  not  show  that  there  was  any  such 
mutual  agreement  between  the  creditors.  The  defense  indicated  by 
the  most  important  ruling  of  the  court  appears  to  be  based  entirely 
upon  the  legal  effect  of  the  agreement  between  the  plaintiff  and  defend- 
ant as  indorsed  upon  the  notes  in  suit.  That  agreement  affects  no 
other  party.  Its  reference  to  the  like  settlement  of  other  debts  is 
merely  in  the  nature  of  a  condition  attached  to  the  plaintiff's  promise 
to  discharge  the  notes.  It  does  not  make  it  any  the  more  binding. 
The  defendant's  undertaking,  that  he  would  not  pay  others  more  than 
the  plaintiff,  would  not  prevent  others  from  enforcing  their  claims 
in  full,  and  is  not  such  a  promise  as  would  afford  any  consideration 
for  the  agreement  of  the  plaintiff.  It  is  neither  a  benefit  to  the  plain- 
tiff nor  disadvantage  to  the  defendant.  So  far  as  the  exceptions  show, 


246  FORMATION  OF   CONTRACT. 

the  release  of  their  claims  by  the  other  creditors  had  no  connection 
with  this  agreement.  The  agreement  itself  shows  no  legal  considera- 
tion to  give  it  effect  as  a  contract. 

As  we  understand  the  exceptions,  the  court  below  ruled  that  the 
agreement  indorsed  upon  the  notes  constituted  of  itself  "a  legal  and 
valid  contract,  binding  on  the  plaintiff."  This  we  think  was  clearly 
wrong ;  and  for  this  cause  the 

Exceptions  are  sustained. 

9  Cyc.  356  (80). 


Mutual  subscriptions. 
THE  PRESBYTERIAN  CHURCH  OF  ALBANY  v.  COOPER. 

112  NEW  YORK,  517.— 1889. 

Appeal  from  order  of  the  General  Term  of  the  Supreme  Court  in 
the  third  judicial  department,  which  reversed  a  judgment  in  favor 
of  plaintiff,  entered  upon  the  report  of  a  referee,  and  ordered  a  new 
trial.  (Reported  below,  45  Hun,  453.) 

This  was  a  reference  under  the  statute  of  a  disputed  claim  against 
the  estate  of  Thomas  P.  Crook,  defendant's  intestate.  The  claim  arose 
under  a  subscription  paper,  of  which  the  following  is  a  copy : 

"We,  the  undersigned,  hereby  severally  promise  and  agree  to  and  with  the 
trustees  of  the  Presbyterian  Church  in  this  city  of  Albany,  in  consideration  of 
one  dollar  to  each  of  us  in  hand  paid  and  the  agreements  of  each  other  in  this 
contract  contained,  to  pay  on  or  before  three  years  from  the  date  hereof 
to  said  trustees  the  sum  set  opposite  to  our  respective  names,  but  upon  the 
express  condition,  and  not  otherwise,  that  the  sum  of  $45,000  in  the  aggre- 
gate shall  be  subscribed  and  paid  in  for  the  purpose  hereinafter  stated;  and  if 
within  one  year  from  this  date  said  sum  shall  not  be  subscribed  or  paid  in  for 
such  purpose,  then  this  agreement  to  be  null  and  of  no  effect.  The  purpose 
of  this  subscription  is  to  pay  off  the  mortgage  debt  of  $45,000,  now  a  lien 
upon  the  church  edifice  of  said  church,  and  the  subscription  or  contribution 
for  that  purpose  must  equal  that  sum  in  the  aggregate  to  make  this  agree- 
ment binding. 

"Dated  May  18,  1884." 

The  defendants'  intestate  made  two  subscriptions  to  this  paper,  one 
of  $5,000  and  the  other  of  $500.  He  paid  upon  the  subscription 
$2,000.  The  claim  was  for  the  balance. 

ANDREWS,  J.  It  is,  we  think,  an  insuperable  objection  to  the  main- 
tenance of  this  action,  that  there  was  no  valid  consideration  to  uphold 
the  subscription  of  the  defendants'  intestate.  It  is,  of  course,  un- 
questionable that  no  action  can  be  maintained  to  enforce  a  gratuitous 
promise,  however  worthy  the  object  intended  to  be  promoted.  The 
performance  of  such  a  promise  rests  wholly  on  the  will  of  the  person 
making  it.  He  can  refuse  to  perform,  and  his  legal  right  to  do  so  can- 


CONSIDERATION.  247 

not  be  disputed,  although  his  refusal  may  disappoint  reasonable  ex- 
pectations, or  may  not  be  justified  in  the  forum  of  conscience.  By 
the  terms  of  the  subscription  paper  the  subscribers  promise  and  agree 
to  and  with  the  trustees  of  the  First  Presbyterian  Church  of  Albany, 
to  pay  to  said  trustees,  within  three  years  from  its  date,  the  sums 
severally  subscribed  by  them,  for  the  purpose  of  paying  off  "the 
mortgage  debt  of  $45,000,  on  the  church  edifice/*  upon  the  condition 
that  the  whole  sum  shall  be  subscribed  or  paid  in  within  one  year.  It 
recites  a  consideration,  viz.,  "in  consideration  of  one  dollar  to  each  of 
us  (subscribers)  in  hand  paid  and  the  agreements  of  each  other  in  tliis 
contract  contained."  It  was  shown  that  the  one  dollar  recited  to  have 
been  paid  was  not  in  fact  paid,  and  the  fact  that  the  promise  of  each 
subscriber  was  made  by  reason  of  and  in  reliance  upon  similar  promises 
by  the  others  constitutes  no  consideration  as  between  the  corporation 
for  whose  benefit  the  promise  was  made  and  the  promisors.  The  reci- 
tal of  a  consideration  paid  does  not  preclude  the  promisor  from  dis- 
puting the  fact  in  a  case  like  this,  nor  does  the  statement  of  a  particu- 
lar consideration  which,  on  its  face,  is  insufficient  to  support  a  promise, 
give  it  any  validity,  although  the  fact  recited  may  be  true. 

It  has  sometimes  been  supposed  that  when  several  persons  promise 
to  contribute  to  a  common  object,  desired  by  all,  the  promise  of  each 
may  be  a  good  consideration  for  the  promise  of  others,  and  this  al- 
though the  object  in  view  is  one  in  which  the  promisors  have  no 
pecuniary  or  legal  interest,  and  the  performance  of  the  promise  by 
one  of  the  promisors  would  not  in  a  legal  sense  be  beneficial  to  the 
others.  This  seems  to  have  been  the  view  of  the  chancellor  as  ex- 
pressed in  Hamilton  College  v.  Stewart  when  it  was  before  the  Court 
of  Errors  (2  Den.  417),  and  dicta  of  judges  will  be  found  to  the  same 
effect  in  other  cases.  Trustees,  &c.,  v.  Stetson,  5  Pick.  508 ;  Watkins  v. 
Eames,  9  Gush.  537.  But  the  doctrine  of  the  chancellor,  as  we  under- 
stand, was  overruled  when  the  Hamilton  College  case  came  before  this 
court  (1  N.  Y.  581),  as  have  been  also  the  dicta  in  the  Massachusetts 
cases,  by  the  court  in  that  State,  in  the  recent  case  of  Cottage  Street 
Methodist  Episcopal  Church  v.  Kendall,  121  Mass.  528.  The  doctrine 
seems  to  us  unsound  in  principle.  It  pfoceeds  on  the  assumption  that 
a  stranger  both  to  the  consideration  and  the  promise,  and  whose  only 
relation  to  the  transaction  is  that  of  donee  of  an  executory  gift,  may 
sue  to  enforce  the  payment  of  the  gratuity  for  the  reason  that  there  has 
been  a  breach  of  contract  between  the  several  promisors  and  a  failure 
to  carry  out  as  between  themselves  their  mutual  engagement.  It  is  in 
no  proper  sense  a  case  of  mutual  promises,  as  between  the  plaintiff  and 
defendant. 

In  the  disposition  of  this  case  we  must,  therefore,  reject  the  con- 
sideration recited  in  the  subscription  paper  as  ground  for  supporting 
the  promise  of  the  defendants'  intestate,  the  money  consideration,  be- 


248  FORMATION   OF    CONTRACT. 

cause  it  had  no  basis  in  fact,  and  the  mutual  promises  between  the  sub- 
scribers, because  there  is  no  privity  of  contract  between  the  plaintiff 
and  the  promisors.  Some  consideration  must,  therefore,  be  found 
other  than  that  expressly  stated  in  the  subscription  paper,  in  order  to 
sustain  the  action.  It  is  urged  that  a  consideration  may  be  found  in 
the  efforts  of  the  trustees  of  the  plaintiff  during  the  year,  and  the  time 
and  labor  expended  by  them  during  that  time,  to  secure  subscriptions 
in  order  to  fulfill  the  condition  upon  which  the  liability  of  the  sub- 
scribers depended.  There  is  no  doubt  that  labor  and  services,  rendered 
by  one  party  at  the  request  of  another,  constitute  a  good  consideration 
for  a  promise  made  by  the  latter  to  the  former,  based  on  the  rendition 
of  the  service.  But  the  plaintiff  encounters  the  difficulty  that  there 
is  no  evidence,  express  or  implied,  on  the  face  of  the  subscription  paper, 
nor  any  evidence  outside  of  it,  that  the  corporation  or  its  trustees  did, 
or  undertook  to  do  anything  upon  the  invitation  or  request  of  the  sub- 
scribers.1 Nor  is  there  any  evidence  that  the  trustees  of  the  plaintiff, 
as  representatives  of  the  corporation,  in  fact  did  anything  in  their  cor- 
porate capacity,  or  otherwise  than  as  individuals,  interested  in  promot- 
ing the  general  object  in  view. 

Leaving  out  of  the  subscription  paper  the  affirmative  statement  of 
the  consideration  (which,  for  reasons  stated,  may  be  rejected),  it  stands 
as  a  naked  promise  of  the  subscribers  to  pay  the  several  amounts  sub- 
scribed by  them  for  the  purpose  of  paying  the  mortgage  on  the  church 
property  upon  a  condition  precedent  limiting  their  liability.  Neither 
the  church  nor  the  trustees  promise  to  do  anything,  nor  are  they  re- 

i  "Nor  need  a  request  to  the  promisee  to  perform  the  services  be  expressed 
in  the  instrument;  it  may  be  implied.  (Trustees  of  Hamilton  College  v. 
Stewart,  1  N.  Y.  581;  Barnes  v.  Ferine,  12  ib.  18;  Presb.  Church  of  Albany  v. 
Cooper,  112  ib.  517.)  In  the  latter  case,  Judge  Andrews  re-asserts  the  doc- 
trine, as  laid  down  in  the  earlier  cases,  that  a  naked  promise  to  pay  money, 
bare  of  any  condition,  accepted  by  the  promisee,  to  do  something,  will  not  be 
sustained;  but  he,  very  distinctly,  recognizes  the  rule  that  where  there  is  a 
request  to  the  promisee  to  go  on  and  render  services,  or  to  incur  liabilities, 
on  the  faith  of  a  subscription,  which  request  is  complied  with,  the  subscrip- 
tion would  be  binding.  It  may  be  observed  that  the  difficulty  in  the  case  last 
mentioned,  and  which  prevented  the  maintenance  of  the  action  upon  the  de- 
fendant's subscription,  was,  as  Judge  Andrews  stated,  that  there  was  'no  evi- 
dence, express  or  implied,  on  the  face  of  the  subscription  paper,  nor  any  evi- 
dence outside  of  it,  that  the  corporation,  or  its  trustees,  did,  or  undertook  to 
do,  anything  on  the  invitation  or  request  of  the  subscribers.'  Now  the  evi- 
dence of  the  witness  Ball  showed  that  the  plaintiff  was  provisionally  chartered 
as  a  college  and  that  it  was  necessary  to  raise  a  certain  sum  of  money  to 
entitle  it  to  a  full  charter;  that  a  large  sum  had  been  promised,  conditionally 
upon  $20,000  being  raised  by  a  certain  time  from  others,  and  that  the  defend- 
ant's promise  to  pay  $500  was  a  step  in  the  plaintiff's  proceeding,  which  in- 
vited it  to  continue  its  efforts  and  whereby  it  was,  impliedly,  requested  to  do 
so  and  to  expend  the  incidental  time  and  money  in  accomplishing  the  pur- 
pose."—Keuka  College  v.  Ray,  167  N.  Y.  96. 


CONSIDERATION.  249 

quested  to  do  anything,  nor  can  such  a  request  be  implied.  It  was 
held  in  Hamilton  College  v.  Stewart  (1  N.  Y.  581)  that  no  such  request 
could  be  implied  from  the  terms  of  the  subscription  in  that  case,  in 
which  the  ground  for  such  an  implication  was,  to  say  the  least,  as 
strong  as  in  this  case.  It  may  be  assumed  from  the  fact  that  the  sub- 
scriptions were  to  be  paid  to  the  trustees  of  the  church  for  the  pur- 
pose of  paying  the  mortgage,  that  it  was  understood  that  the  trustees 
were  to  make  the  payment  out  of  the  moneys  received.  But  the  duty  to 
make  such  payment,  in  case  they  accepted  the  money,  would  arise  out 
of  their  duty  as  trustees.  This  duty  would  arise  upon  the  receipt  of 
the  money,  although  they  had  no  antecedent  knowledge  of  the  sub- 
scription. They  did  not  assume  even  this  obligation  by  the  terms  of 
the  subscription,  and  the  fact  that  the  trustees  applied  money,  paid 
on  subscriptions,  upon  the  mortgage  debt,  did  not  constitute  a  con- 
sideration for  the  promise  of  the  defendants'  intestate. 

We  are  unable  to  distinguish  this  case  in  principle  from  Hamilton 
College  v.  Stewart,  1.  N".  Y.  581.  There  is  nothing  that  can  be  urged 
to  sustain  this  subscription  that  could  not,  with  equal  force,  have  been 
urged  to  sustain  the  subscription  in  that  case.  In  both  the  promise 
was  to  the  trustees  of  the  respective  corporations.  In  each  case  the 
defendant  had  paid  part  of  his  subscription  and  resisted  the  balance.  * 
In  both,  part  of  the  subscription  had  been  collected  and  applied  by 
the  trustees  to  the  purpose  specified.  In  the  Hamilton  College  case 
(which  in  that  respect  is  unlike  the  present  one)  it  appeared  that  the 
trustees  had  incurred  expense  in  employing  agents  to  procure  subscrip- 
tions to  make  up  the  required  amount,  and  it  was  shown,  also,  that 
professors  had  been  employed  upon  the  strength  of  the  fund  subscribed. 
That  case  has  not  been  overruled,  but  has  been  frequently  cited  with 
approval  in  the  courts  of  this  and  other  States. 

The  cases  of  Barnes  v.  Ferine  (12  N.  Y.  18)  and  Roberts  v.  Cobb 
(103  Id.  600)  are  not  in  conflict  with  that  decision.  There  is,  we 
suppose,  no  doubt  that  a  subscription,  invalid  at  the  time  for  want 
of  consideration,  may  be  made  valid  and  binding  by  a  consideration 
arising  subsequently  between  the  subscribers  and  the  church  or  cor- 
poration for  whose  benefit  it  is  made.  Both  of  the  cases  cited,  as  we 
understand  them,  were  supported  on  this  principle.  There  was,  as 
was  held  by  the  court  in  each  of  these  cases,  a  subsequent  request  by 
the  subscriber  to  the  promisee  to  go  on  and  render  service  or  incur 
liabilities  on  the  faith  of  the  subscription,  which  request  was  complied 
with,  and  services  were  rendered  or  liabilities  incurred  pursuant 
thereto.  It  was  as  if  the  request  was  made  at  the  very  time  of  the 
subscription,  followed  by  performance  of  the  request  by  the  promisor. 
Judge  Allen,  in  his  opinion  in  Barnes  v.  Ferine,  said,  "the  request  and 
promise  were,  to  every  legal  effect,  simultaneous,"  and  he  expressly 
disclaims  any  intention  to  interfere  with  the  decision  in  the  Hamilton 


250  FORMATION   OF   CONTRACT. 

College  case.  In  the  present  case  it  was  shown  that  individual  trustees 
were  active  in  procuring  subscriptions.  But,  as  has  been  said,  they 
acted  as  individuals,  and  not  in  their  official  capacity.  They  were 
deeply  interested,  as  was  Mr.  Crook,  in  the  success  of  the  effort  to 
pay  the  debt  on  the  church,  and  they  acted  in  unison.  But  what  the 
trustees  did  was  not  prompted  by  any  request  from  Mr.  Crook.  They 
were  co-laborers  in  promoting  a  common  object.  We  can  but  regret 
that  the  intention  of  the  intestate  in  respect  to  a  matter  in  which  he 
was  deeply  interested,  and  whose  interest  was  manifested  up  to  the  very 
time  of  his  death,  is  thwarted  by  the  conclusion  we  have  reached. 
But  we  think  there  is  no  alternative,  and  that  the  order  should  be 
affirmed.  All  concur. 

Order  affirmed  and  judgment  accordingly. 
37  Cyc.  485-492    (29-51);  esp.,  485    (29)    and  490    (37);  W.  P.  186   (3). 


SHERWIN  v.  FLETCHER. 
168  MASSACHUSETTS,  413.— 1897. 
Contract  on  the  following  agreement: 

"We,  the  undersigned  subscribers,  do  hereby  agree  to  pay  the  sum  act 
against  our  respective  names,  the  same  to  be  payable  under  and  in  accord- 
ance with  the  following  conditions,  namely: 

"1.  The  money  by  us  subscribed  is  to  be  used  for  the  purpose  of  erecting  a 
building  in  the  town  of  Ayer,  to  be  used  for  the  manufacture  of  boots  and 
shoes. 

"2.  The  details  regarding  the  plan  under  which  the  subscribers  hereto 
shall  organize  themselves,  and  upon  which  said  building  shall  be  erected  and 
rented,  shall  be  hereafter  fixed  and  determined  by  a  majority  in  numbers 
and  interest  of  the  subscribers  hereto,  at  a  meeting  to  be  duly  called  for  that 
purpose. 

"3.  No  subscriptions  hereto  shall  be  binding  until  the  sum  of  twelve  thou- 
sand (12,000)  dollars  shall  have  been  raised. 

"SAMUEL  W.   FLETCHEB.    $200." 

It  is  alleged  that  the  $12,000  was  fully  subscribed ;  that  at  a  meet- 
ing, duly  called,  a  majority  in  number  and  interest  of  the  subscribers 
organized  the  "Ayer  Building  Association,"  elected  the  plaintiffs 
trustees,  and  authorized  the  purchase  of  land  and  the  erection  of  a 
building ;  that  relying  upon  defendant's  promise  the  trustees  purchased 
the  land  and  erected  the  building;  that  defendant  refuses  to  pay,  etc. 

Defendant  demurred  on  the  ground  that  no  promise  was  made  to 
these  plaintiffs  and  that  there  was  no  consideration  for  the  promise. 

Demurrer  overruled.     Defendant  appeals. 

ALLEN,  J.  The  demurrer  to  the  declaration  was  rightly  overruled. 
The  written  agreement  signed  by  the  defendant  was  virtually  a  promise 
to  pay  to  such  person  or  persons  as  should  be  fixed  at  a  meeting  of  the 


CONSIDERATION.  251 

subscribers.  This  promise  was  at  the  outset  an  offer,  but  when  steps 
were  taken  in  pursuance  of  Article  2,  and  a  plan  was  fixed  and  deter- 
mined as  therein  provided,  and  the  plaintiffs  were  chosen  trustees, 
they  became  the  promisees ;  and  when  they  proceeded  to  erect  a  build- 
ing in  reliance  upon  the  subscriptions  of  defendant  and  others,  and 
before  any  withdrawal  or  retraction  by  him,  that  supplied  a  good  con- 
sideration, and  the  promise  became  valid  and  binding  in  law.  Athol 
Music  Hall  Co.  v.  Carey,  116  Mass.  471;  Davis  v.  Smith  American 
Organ  Co.,  117  Mass.  456;  Cottage  Street  Church  v.  Kendall,  121 
Mass.  528 ;  Hudson  Real  Estate  Co.  v.  Tower,  156  Mass.  82 ;  S.  C.  161 
Mass.  10. 

Judgment  affirmed. 
37  Cyc.  487   (33) ;  W.  P.  186   (3)  ;  15  H.  L.  R.  312. 


MAETIN,  and  Others  v.  MELES,  and  Others. 
179    MASSACHUSETTS,    114.— 1901. 

HOLMES,  C.  J.  This  is  an  action  to  recover  the  contribution 
promised  by  the  following  paper,  which  was  signed  by  the  defendants 
and  others, — "January  21,  1896.  We,  the  undersigned  manufacturers 
of  leather,  promise  to  contribute  the  sum  of  five  hundred  (500)  dollars 
each,  and  such  additional  sums  as  a  committee  appointed  by  the 
Massachusetts  Morocco  Manufacturers  Association  may  require;  in 
no  case  shall  the  Committee  demand  from  any  manufacturer  or  firm 
a  total  of  subscriptions  to  exceed  the  sum  of  two  thousand  (2,000) 
dollars,  such  sum  to  be  employed  for  legal  and  other  expenses,  under 
the  direction  of  the  Committee,  in  defending  and  protecting  our 
interests  against  any  demands  or  suits  growing  out  of  Letters  Patent 
for  Chrome  Tanning,  and  in  case  of  suit  against  any  of  us,  the 
Committee  shall  take  charge  thereof  and  apply  as  much  of  the  fund 
as  may  be  needed  to  the  expense  of  the  same." 

The  plaintiffs  are  the  committee  referred  to  in  the  agreement,  and 
subscribers  to  it.  They  were  appointed  and  did  some  work  before  the 
date  of  the  agreement,  and  then  prepared  the  agreement  which  was 
signed  by  nine  members  of  the  association  mentioned,  and  by  the 
defendants  who  were  not  members.  They  went  on  with  their  work, 
undertook  the  defence  of  suits,  and  levied  assessments  which  were 
paid,  the  defendants  having  paid  $750.  In  November,  1896,  the 
defendants'  firm  was?  dissolved,  and  two  members  of  it,  Meles  and 
Auerbach,  ceased  tanning  leather.  The  defendants  notified  the  plain- 
tiffs of  the  dissolution,  and  on  June  23,  1897,  upon  demand  for  the  rest 
of  their  subscription  refused  to  pay  the  same.  The  main  questions 
insisted  upon,  raised  by  demurrer  and  by  various  exceptions,  are 


252  FORMATION   OF    CONTRACT. 

whether  the  defendants'  promise  is  to  be  regarded  as  entire  and  as 
supported  by  a  sufficient  consideration. 

It  will  be  observed  that  this  is  not  a  subscription  to  a  charity.  It 
is  a  business  agreement  for  purposes  in  which  the  parties  had  a  com- 
mon interest,  and  in  which  the  defendants  still  had  an  interest  after 
going  out  of  business,  as  they  still  were  liable  to  be  sued.  It  con- 
templates the  undertaking  of  active  and  more  or  less  arduous  duties 
by  the  committee,  and  the  making  of  expenditures  and  incurring  of 
liabilities  on  the  faith  of  it.  The  committee  by  signing  the  agreement 
promised  by  implication  not  only  to  accept  the  subscribers'  money  but 
to  perform  those  duties.  It  is  a  mistaken  construction  to  say  that 
their  promise,  or  indeed  their  obligation,  arose  only  as  the  promise  of 
the  subscribers  was  performed  by  payments  of  money. 

If  then  the  committee's  promise  should  be  regarded  as  the  considera- 
tion, as  in  Institute  v.  French,  16  Gray,  196,  201  (see  Institute  v. 
Haskell,  71  Me.  487),  its  sufficiency  hardly  would  be  open  to  the  ob- 
jection which  has  been  urged  against  the  doctrine  of  that  case,  that 
the  promise  of  trustees  to  apply  the  funds  received  for  a  mere  be- 
nevolence to  the  purposes  of  the  trust  imposes  no  new  burden  upon 
them.  Johnson  v.  University,  41  Ohio  St.  527,  531.  See  Prebyterian 
Church  v.  Cooper,  112  N.  Y.  517,  20  N.  E.  352.  Neither  would  it 
raise  the  question  whether  the  promise  to  receive  a  gift  was  a  considera- 
tion for  a  promise  to  make  one.  The  most  serious  doubt  is  whether 
the  promise  of  the  committee  purports  to  be  the  consideration  for  the 
subscriptions  by  a  true  interpretation  of  the  contract. 

In  the  later  Massachusetts  cases  more  weight  has  been  laid  on  the 
incurring  of  other  liabilities  and  making  expenditures  on  the  faith 
of  the  defendant's  promise  than  on  the  counter-promise  of  the  plain- 
tiff. Cottage  St.  Church  v.  Kendall,  121  Mass.  528,  23  Am.  Eep. 
286;  Sherwin  v.  Fletcher,  168  Mass.  413,  47  N.  E.  197.  Of  course 
the  mere  fact  that  a  promisee  relies  upon  a  promise  made  without  other 
consideration  does  not  impart  validity  to  what  before  was  void. 
Bragg  v.  Danielson,  141  Mass.  195,  196,  4  N.  E.  622.  There  must  be 
some  ground  for  saying  that  the  acts  done  in  reliance  upon  the  promise 
were  contemplated  by  the  form  of  the  transaction  either  impliedly  or 
in  terms  as  the  conventional  inducement,  motive  and  equivalent  for 
the  promise.  But  courts  have  gone  very  great  lengths  in  discovering 
the  implication  of  such  an  equivalence,  sometimes  perhaps  even  having 
found  it  in  matters  which  would  seem  to  be  no  more  than  condi- 
tions or  natural  consequences  of  the  promise.  There  is  the  strongest 
reason  for  interpreting  a  business  agreement  in  the  sense  which  will 
give  it  a  legal  support,  and  such  agreements  have  been  so  interpreted. 
Sherwin  v.  Fletcher,  ubi  supra. 

What  we  have  said  justifies,  in  our  opinion,  the  finding  of  a  con- 
sideration either  in  the  promise  or  in  the  subsequent  acts  of  the  com- 


CONSIDERATION.  253 

mittee,  and  it  may  be  questioned  whether  a  nicer  interpretation  of  the 
contract  for  the  purpose  of  deciding  which  of  the  two  was  the  true 
one  is  necessary.  It  is  true  that  it  is  urged  that  the  acts  of  the  com- 
mittee would  have  been  done  whether  the  defendants  had  promised  or 
not,  and  therefore  lose  their  competence  as  consideration  because  they 
cannot  be  said  to  have  been  done  in  reliance  upon  the  promise.  But 
that  is  a  speculation  upon  which  courts  do  not  enter.  When  an  act 
has  been  done,  to  the  knowledge  of  another  party,  which  purports  ex- 
pressly to  invite  certain  conduct  on  his  part,  and  that  conduct  on 
his  part  follows,  it  is  only  under  exceptional  and  peculiar  circum- 
stances that  it  will  be  inquired  how  far  the  act  in  truth  was  the  motive 
for  the  conduct,  whether  in  case  of  consideration,— Williams  v.  Car- 
wardine,  4  Barn.  &  Adol.  621  (see  Institute  v.  Haskell,  71  Me.  487), 
• — or  of  fraud.  Windram  v.  French,  151  Mass.  547,  553,  24  N".  E. 
914,  8  L.  K.  A.  750.  In  Cottage  St.  Church  v.  Kendall,  121  Mass. 
528,  the  form  of  the  finding  in  terms  excluded  subsequent  acts  as 
consideration,  and  therefore  it  did  not  appear  whether  the  facts  were 
such  that  reliance  upon  the  promise  would  be  presumed.  In  Academy 
v.  Gilbert,  2  Pick.  579,  13  Am.  Dec.  457,  the  point  was  that  merely 
signing  a  subscription  paper  without  more  did  not  invite  expenditure 
on  the  faith  of  it.  See  Academy  v.  Cowls,  6  Pick,  427,  438,  17  Am. 
Dec.  387 ;  Ives  v.  Sterling,  6  Mete.  310,  316.  In  this  case  the  paper 
indisputably  invited  the  committee  to  proceed. 

A  more  serious  difficulty  if  the  acts  are  the  consideration  is  that  it 
seems  to  lead  to  the  dilemma  that  either  all  acts  to  be  done  by  the  com- 
mittee must  be  accomplished  before  the  consideration  is  furnished, 
or  else  that  the  defendant's  promise  is  to  be  taken  distributively  and 
divided  up  into  distinct  promises  to  pay  successive  sums  as  successive 
steps  of  the  committee  may  make  further  payments  necessary  and  may 
furnish  consideration  for  requiring  them.  The  last  view  is  artificial 
and  may  be  laid  on  one  side.  In  the  most  noticeable  cases  where  a 
man  has  been  held  entitled  to  stop  before  he  has  finished  his  payments, 
the  ground  has  not  been  the  divisibility  of  his  undertaking  but  the  ab- 
sence of  consideration,  which  required  the  court  to  leave  things  where 
it  found  them.  In  re  Hudson,  54  Law  J.  Ch.  811;  Presbyterian 
Church  v.  Cooper,  112  N.  Y.  517,  20  N.  E.  352.  As  against  the 
former  view,  if  necessary,  we  should  assume  that  the  first  substantial 
act  done  by  the  committee  was  all  that  was  required  in  the  way  of  acts 
to  found  the  defendant's  obligation.  See  Academy  v.  Cowls,  6  Pick. 
427,  438,  17  Am.  Dec.  387.  But  if  that  were  true,  it  would  follow 
that  as  to  the  future  conduct  of  the  committee  their  promise  not  their 
performance  was  the  consideration,  and  when  we  have  got  as  far  as 
that,  it  may  be  doubted  whether  it  is  not  simpler  and  more  reasonable 
to  set  the  defendants'  promise  against  the  plaintiffs'  promise  alone. 
We  are  inclined  to  this  view,  but  do  not  deem  a  more  definitive  deci- 


254  FORMATION   OF    CONTRACT. 

sion  necessary,  as  we  are  clearly  of  opinion  that,  one  way  or  the  other, 
the  defendants  must  pay.  ... 

Before  leaving  the  case  it  is  interesting  to  remark  that  the  notion 
rightly  exploded  in  Cottage  St.  Church  v.  Kendall,  121  Mass.  528,  530, 
531,  23  Am.  Rep.  286,  that  the  subscription  of  others  than  the  plain- 
tiff may  be  a  consideration,  seems  to  have  remained  unquestioned  with 
regard  to  agreements  of  creditors  to  accept  a  composition.  Compare 
the  remarks  of  Wells,  J.,  in  Perkins  v.  Lockwood,  100  Mass.  249,  250, 
1  Am.  Rep.  103  (Farrington  v.  Hodgdon,  119  Mass.  453,  457;  Trecy 
v.  Jefts,  149  Mass.  211,  212,  21  N.  E.  360;  Emerson  v.  Gerber  [Mass.] 
59  N".  E.  666),  with  what  he  says  in  Music  Hall  Co.  v.  Carey,  116 
Mass.  471,  474. 

It  is  not  argued  that  whatever  contract  was  made  was  not  made 
with  the  plaintiffs.  Sherwin  v.  Fletcher,  168  Mass.  413,  47  N.  E. 
197. 

Demurrer  overruled. 

Exceptions  overruled. 

37  Cyc.  486    (32-33);   489    (38);  W.  P.   187    (4);   361    (14). 


(Hi.)  Consideration  must  be  legal. 

NOTE. — For  cases  on  legality  of  consideration,  see  cases  on  "Legality  of 
Object,"  post,  Part  I.  Ch.  IV. 


(iv.)  Consideration  may  be  executory  or  executed,  it  must  not  be 
past. 

DEARBORN  v.  BOWMAN. 

3  METCALF    (MASS.),   155.— 1841. 

Assumpsit  on  a  note  in  these  terms:  "June  17,  1839.  I  promise 
to  pay  Dearbon  &  Bellows  sixty  dollars  in  ninety  days,  value  received. 
Bowman."  Defense,  want  of  consideration. 

SHAW,  C.  J.  The  defense  to  the  action  to  recover  the  amount  of 
this  note  is  want  of  consideration.  It  is  manifest  from  the  note  itself, 
that  it  is  not  a  negotiable  instrument,  being  payable  neither  to  order 
nor  to  bearer;  indeed,  it  appears  by  the  case,  that  the  defendant  de- 
clined making  it  negotiable.  But  total  want  of  consideration  is  a 
good  defense  even  to  an  action  on  a  negotiable  note,  when  brought  by 
the  promisee  against  the  maker.  Then  the  question  is,  whether  upon 
the  facts  shown,  any  consideration  appears  for  this  promise.  The  note 
was  given  in  consequence  of  services  before  that  time  performed  by 
the  plaintiffs,  in  printing  and  circulating  extra  papers  and  docu- 
ments, previously  to  an  election  of  state  senators,  at  which  the  de- 


CONSIDERATION.  255 

fendant  was  a  candidate.  Such  services  imposed  no  obligations,  legal 
or  moral,  on  the  defendant;  and  it  would  be  somewhat  dangerous  to 
hold  that  they  created  any  honorary  obligation  on  him  to  pay  for 
them.  Nor  would  it  be  aided  in  a  legal  view,  by  a  previous  custom, 
if  proved,  for  candidates  to  contribute  to  the  payment  of  similar  ex- 
penses, whether  successful  or  otherwise  in  the  election. 

Nor  were  these  services  performed  at  the  request  of  the  defendant. 
On  the  contrary,  it  appears  by  the  evidence  that  they  were  performed 
by  General  Staples,  chairman  of  the  county  committee,  who  alone  was 
responsible  for  the  payment,  and  between  whom  and  the  defendant 
there  was  no  privity,  nor  even  any  communication,  until  long  after  the 
services  had  been  performed.  The  rule  of  law  seems  to  be  now  well 
settled — though  it  may  have  formerly  been  left  in  doubt — that  the  past 
performance  of  services  constitutes  no  consideration  even  for  an  express 
promise,  unless  they  were  performed  at  the  express  or  implied  request 
of  the  defendant,  or  unless  they  were  done  in  performance  of  some  duty 
or  obligation  resting  on  the  defendant.  Mills  v.  Wyman,  3  Pick.  207 ; 
Loomis  v.  Newhall,  15  Pick.  159 ;  Dodge  v.  Adams,  19  Pick.  429.  As 
the  services  performed  by  the  plaintiffs  were  not  done  at  the  request 
of  the  defendant,  as  they  were  not  done  in  the  fulfilment  of  any  duty 
or  obligation  resting  on  him,  there  was  no  consideration  to  convert 
the  express  promise  of  the  defendant  into  a  legal  obligation. 

Another  ground,  however,  was  taken  in  behalf  of  the  plaintiffs, 
which  was,  that  the  discharge  by  the  plaintiffs,  of  their  legal  demand 
against  Staples,  was  a  good  consideration  for  the  defendant's  promise 
to  them.  If  such  discharge  was  in  fact  given,  and  given  at  the  defen- 
dant's request,  or  if  the  defendant  had  promised  to  pay  if  they  would 
discharge  Staples  pro  tanto,  and  they  did  discharge  him,  it  would 
have  been  a  good  consideration  for  the  defendant's  promise.  But 
there  is  no  evidence  to  establish  the  fact. 

The  court  are  of  opinion  that  there  was  no  legal  consideration  for 
the  defendant's  promise,  and  that  no  action  can  be  maintained  upon 
it.  Plaintiffs  nonsuit. 

9  Cyc.  368   (90);  359   (92).     W.  P.  199   (11);  200  (13). 


MILLS  v.  WYMAN. 
3  PICKERING    (MASS.),  207.— 1826. 

Action  of  assumpsit  to  recover  compensation  for  the  board  and  care 
of  defendant's  adult  son  who  fell  sick  among  strangers,  and  was  pro- 
vided for  under  these  circumstances  by  the  plaintiff,  the  defendant  hav- 
ing afterwards  written  to  the  plaintiff  promising  to  pay  him  for  ex- 
penses incurred. 

PARKER,  C.  J.     General  rules  of  law  established  for  the  protection 


256  FORMATION    OF   CONTRACT. 

and  security  of  honest  and  fair-minded  men,  who  may  inconsiderately 
make  promises  without  any  equivalent,  will  sometimes  screen  men  of 
a  different  character  from  engagements  which  they  are  bound  in  foro 
conscientice  to  perform.  This  is  a  defect  inherent  in  all  human 
systems  of  legislation.  The  rule  that  a  mere  verbal  promise,  without 
any  consideration,  cannot  be  enforced  by  action,  is  universal  in  its  ap- 
plication, and  cannot  be  departed  from  to  suit  particular  cases  in  which 
a  refusal  to  perform  such  a  promise  may  be  disgraceful. 

The  promise  declared  on  in  this  case  appears  to  have  been  made  with- 
out any  legal  consideration.  The  kindness  and  services  towards  the 
sick  son  of  the  defendant  were  not  bestowed  at  his  request.  The  son 
was  in  no  respect  under  the  care  of  the  defendant.  He  was  twenty- 
five  years  old,  and  had  long  left  his  father's  family.  On  his  return 
from  a  foreign  country,  he  fell  sick  among  strangers,  and  the 
plaintiff  acted  the  part  of  the  good  Samaritan,  giving  him  shelter  and 
comfort  until  he  died.  The  defendant,  his  father,  on  being  informed  of 
this  event,  influenced  by  a  transient  feeling  of  gratitude,  promises  in 
writing  to  pay  the  plaintiff  for  the  expenses  he  had  incurred.  But  he 
has  determined  to  break  this  promise,  and  is  willing  to  have  his  case 
appear  on  record  as  a  strong  example  of  particular  injustice  sometimes 
necessarily  resulting  from  the  operation  of  general  rules. 

It  is  said  a  moral  obligation  is  a  sufficient  consideration  to  support  an 
express  promise,  and  some  authorities  lay  down  the  rule  thus  broadly; 
but  upon  examination  of  the  cases  we  are  satisfied  that  the  universality 
of  the  rule  cannot  be  supported,  and  that  there  must  have  been  some 
pre-existing  obligation,  which  has  become  inoperative  by  positive  law, 
to  form  a  basis  for  an  effective  promise.  The  cases  of  debts  barred  by 
the  statute  of  limitations,  of  debts  incurred  by  infants,  of  debts  of 
bankrupts,  are  generally  put  for  illustration  of  the  rule.  Express 
promises  founded  on  such  pre-existing  equitable  obligations  may  be  en- 
forced ;  there  is  a  good  consideration  for  them ;  they  merely  remove  an 
impediment  created  by  law  to  the  recovery  of  debts  honestly  due,  but 
which  public  policy  protects  the  debtors  from  being  compelled  to  pay. 
In  all  these  cases  there  was  originally  a  quid  pro  quo;  and  according  to 
the  principles  of  natural  justice,  the  party  receiving  ought  to  pay; 
but  the  legislature  has  said  he  shall  not  be  coerced;  then  comes 
the  promise  to  pay  the  debt  that  is  barred,  the  promise  of 
the  man  to  pay  the  debt  of  the  infant,  of  the  discharged  bankrupt 
to  restore  to  his  creditor  what  by  the  law  he  had  lost.  In 
all  these  cases  there  is  a  moral  obligation  founded  upon  an  antecedent 
valuable  consideration.  These  promises,  therefore,  have  a  sound  legal 
basis.  They  are  not  promises  to  pay  something  for  nothing ;  not  naked 
pacts ;  but  the  voluntary  revival  or  creation  of  obligation  which  before 
existed  in  natural  law,  but  which  has  been  dispensed  with,  not  for  the 
benefit  of  the  party  obliged  solely,  but  principally  for  the  public  con- 


CONSIDERATION.  257 

venience.  If  moral  obligation,  in  its  fullest  sense,  is  a  good  sub- 
stratum for  an  express  promise,  it  is  not  easy  to  perceive  why  it  is  not 
equally  good  to  support  an  implied  promise.  What  a  man  ought  to 
do,  generally  he  ought  to  be  made  to  do,  whether  he  promise  or  refuse. 
But  the  law  of  society  has  left  most  of  such  obligations  to  the  interior 
forum,  as  the  tribunal  of  conscience  has  been  aptly  called.  Is  there 
not  a  moral  obligation  upon  every  son  who  has  become  affluent  by 
means  of  the  education  and  advantages  bestowed  upon  him  by  his 
father,  to  relieve  that  father  from  pecuniary  embarrassment,  to  pro- 
mote his  comfort  and  happiness,  and  even  to  share  with  him  his  riches, 
if  thereby  he  will  be  made  happy?  And  yet  such  a  son  may,  with 
impunity,  leave  such  a  father  in  any  degree  of  penury  above  that 
which  will  expose  the  community  in  which  he  dwells  to  the  danger  of 
being  obliged  to  preserve  him  from  absolute  want.  Is  not  a  wealthy 
father  under  strong  moral  obligation  to  advance  the  interest  of  an 
obedient,  well-disposed  son,  to  furnish  him  with  the  means  of  acquir- 
ing and  maintaining  a  becoming  rank  in  life,  to  rescue  him  from  the 
horrors  of  debt  incurred  by  misfortune?  Yet  the  law  will  uphold 
him  in  any  degree  of  parsimony,  short  of  that  which  would  reduce  his 
son  to  the  necessity  of  seeking  public  charity. 

Without  doubt,  there  are  great  interests  of  society  which  justify 
withholding  the  coercive  arm  of  the  law  from  these  duties  of  imper- 
fect obligation,  as  they  are  called ;  imperfect,  not  because  they  are 
less  binding  upon  the  conscience  than  those  which  are  called  perfect, 
but  because  the  wisdom  of  tbe  social  law  does  not  impose  sanctions 
upon  them. 

A  deliberate  promise,  in  writing,  made  freely  and  without  any  mis- 
take, one  which  may  lead  the  party  to  whom  it  is  made  into  contracts 
and  expenses,  cannot  be  broken  without  a  violation  of  moral  duty. 
But  if  there  was  nothing  paid  or  promised  for  it,  the  law,  perhaps 
wisely,  leaves  the  execution  of  it  to  the  conscience  of  him  who  makes 
it.  It  is  only  when  the  party  making  the  promise  gains  something, 
or  he  to  whom  it  is  made  loses  something,  that  the  law  gives  the  prom- 
ise validity.  And  in  the  case  of  the  promise  of  the  adult  to  pay  the 
debt  of  the  infant,  of  the  debtor  discharged  by  the  statute  of  limita- 
tions or  bankruptcy,  the  principle  is  preserved  by  looking  back  to  the 
origin  of  the  transaction,  where  an  equivalent  is  to  be  found.  An 
exact  equivalent  is  not  required  by  the  law ;  for  there  being  a  consider- 
ation, the  parties  are  left  to  estimate  its  value :  though  here  the  courts 
of  equity  will  step  in  to  relieve  from  gross  inadequacy  between  the 
consideration  and  the  promise. 

These  principles  are  deduced  from  the  general  current  of  decided 
cases  upon  the  subject,  as  well  as  from  the  known  maxims  of  the  com- 
mon law.  The  general  position,  that  moral  obligation  is  a  sufficient 
consideration  for  an  express  promise,  is  to  be  limited  in  its  application, 


258  FORMATION   OF    CONTRACT. 

to  cases  where  at  some  time  or  other  a  good  or  valuable  consideration 
has  existed. 

A  legal  obligation  is  always  a  sufficient  consideration  to  support 
either  an  express  or  an  implied  promise;  such  as  an  infant's  debt  for 
necessaries,  or  a  father's  promise  to  pay  for  the  support  and  education 
of  his  minor  children.  But  when  the  child  shall  have  attained  to 
manhood,  and  shall  have  become  his  own  agent  in  the  world's  busi- 
ness, the  debts  he  incurs,  whatever  may  be  their  nature,  create  no 
obligation  upon  the  father;  and  it  seems  to  follow,  that  his  promise 
founded  upon  such  a  debt  has  no  legally  binding  force. 

The  cases  of  instruments  under  seal  and  certain  mercantile  con- 
tracts, in  which  considerations  need  not  be  proved,  do  not  contradict 
the  principles  above  suggested.  The  first  import  a  consideration  in 
themselves,  and  the  second  belong  to  a  branch  of  the  mercantile  law, 
which  has  found  it  necessary  to  disregard  the  point  of  consideration 
in  respect  to  instruments  negotiable  in  their  nature  and  essential  to 
the  interests  of  commerce. 

Instead  of  citing  a  multiplicity  of  cases  to  support  the  positions  I 
have  taken,  I  will  only  refer  to  a  very  able  review  of  all  the  cases  in 
the  note  in  3  Bos.  &  Pull.  249.  The  opinions  of  the  judges  had  been 
variant  for  a  long  course  of  years  upon  this  subject,  but  there  seems 
to  be  no  case  in  which  it  was  nakedly  decided  that  a  promise  to  pay 
the  debt  of  a  son  of  full  age,  not  living  with  his  father,  though  the 
debt  were  incurred  by  sickness  which  ended  in  the  death  of  the  son, 
without  a  previous  request  by  the  father  proved  or  presumed,  could  be 
enforced  by  action. 

It  has  been  attempted  to  show  a  legal  obligation  on  the  part  of  the 
defendant  by  virtue  of  our  statute,  which  compels  lineal  kindred  in 
the  ascending  or  descending  line  to  support  such  of  their  poor  rela- 
tions as  are  likely  to  become  chargeable  to  the  town  where  they  have 
their  settlement.  But  it  is  a  sufficient  answer  to  this  position,  that 
such  legal  obligation  does  not  exist  except  in  the  very  cases  provided 
for  in  the  statute,  and  never  until  the  party  charged  has  been  adjudged 
to  be  of  sufficient  ability  thereto.  We  do  not  know  from  the  report 
any  of  the  facts  which  are  necessary  to  create  such  an  obligation. 
Whether  the  deceased  had  a  legal  settlement  in  this  commonwealth  at 
the  time  of  his  death,  whether  he  was  likely  to  become  chargeable  had 
he  lived,  whether  the  defendant  was  of  sufficient  ability,  are  essential 
facts  to  be  adjudicated  by  the  court  to  which  is  given  jurisdiction  on 
this  subject.  The  legal  liability  does  not  arise  until  these  facts  have 
all  been  ascertained  by  judgment,  after  hearing  the  party  intended  to 
be  charged. 

For  the  foregoing  reasons  we  are  all  of  opinion  that  the  nonsuit  di- 
rected by  the  Court  of  Common  Pleas  was  right,  and  that  judgment  be 
entered  thereon  for  costs  for  the  defendant. 

9  Cyc.  358  (90);  359  (92);  W.  P.  199  (11).  Moral  obligation:  9  Cyc. 
356  (82)  ;  53  L.  R.  A.  353;  26  L.  R.  A.  (N.  s.)  520. 


CONSIDERATION.  259 

Consideration  moved  by  previous  request. 
HICKS  v.  BURHANS. 

10  JOHNSON    (N.  Y.),  242.— 1813. 

In  error,  on  certiorari,  from  a  justice's  court.  B.  and  others  brought 
an  action  of  assumpsit  against  Hicks,  before  the  justice.  The  cause 
was  tried  by  a  jury.  The  plaintiffs  gave  in  evidence  a  writing  dated 
the  16th  of  January,  1808,  signed  by  the  defendant  and  ten  others, 
reciting  that  whereas  the  plaintiffs  had,  previous  to  the  date  of  the 
writing,  been  in  pursuit  of  several  persons  who  had  absconded  and 
were  in  debt  to  the  subscribers,  they,  the  subscribers,  promised  to  pay 
to  the  plaintiffs,  or  either  of  them,  an  equal  proportion  of  all  the  ex- 
penses which  the  plaintiffs  had  been  at,  in  pursuing  such  fugitive 
debtors,  and  also  promised  to  pay  their  equal  proportion  of  all  further 
expenses  the  plaintiffs  should  be  at  in  further  pursuing  the  said  per- 
sons, etc.  The  plaintiffs  proved  an  account  of  the  expenses,  amounting 
to  about  one  hundred  and  thirty-eight  dollars ;  and  that  the  defendant 
examined  the  account  when  presented  to  the  creditors,  and  made  no 
objection  to  it,  except  to  a  charge  of  twenty  dollars. 

The  jury  gave  a  verdict  for  the  plaintiffs  for  seventeen  dollars,  on 
which  the  justice  gave  judgment. 

Per  Curiam.  The  written  promise  to  pay,  if  founded  on  a  past 
consideration,  may  be  good,  if  the  past  service  be  laid  to  have  been 
done  on  request;  and  if  not  so  laid,  a  request  may  be  implied  from 
the  beneficial  nature  of  the  consideration,  and  the  circumstances  of 
the  transaction.  1  Games'  Rep.  585,  586.  Here  the  past  service  con- 
sisted in  an  expensive  pursuit,  by  the  plaintiffs,  of  certain  fugitive 
debtors,  who  were  indebted  to  the  defendant  and  others;  and  it  ap- 
peared that  the  plaintiffs  had  exhibited  their  accounts,  at  a  meeting 
of  the  creditors,  and  that  the  defendant  examined  them,  and  made  no 
objection,  except  to  a  single  item  of  the  charges.  A  request,  in  this 
case,  might  have  been  implied;  and  we  ought  to  intend  it  to  have 
been  proved  upon  trial.  There  are  no  formal  pleadings  in  the  case, 
and  the  return  does  not  negative  the  fact  of  a  request. 

There  was  no  other  objection  raised  that  merits  notice.  The  judg- 
ment must  be  affirmed. 

Judgment  affirmed.1 

9  Cyc.  360-361    (97-99,  1-4)  ;  W.  P.  200    (13). 

i  "Where  the  evidence  or  circumstances  do  not  clearly  show  that  the  ex- 
ecuted consideration  was  a  gratuity,  or  was  something  else  which  cast  no 
legal  obligation  on  the  promisor,  and  out  of  which  the  law  created  no  promise, 
the  jury  under  the  direction  of  the  court  may  infer,  as  of  fact  or  law,  a  previ- 
ous request,  to  satisfy  the  justice  of  the  particular  case." — Bishop  on  Cont. 
(1887),  §  92. 


260  FORMATION   OF    CONTRACT. 

Voluntarily  doing  what  another  was  legally  bound  to  do. 
THOMSON  v.  THOMSON. 

76  N.  Y.  APPELLATE  DIVISION,  178.— 1902. 

KELLOGG,  J.  The  record  shows  that  defendant  was  indebted  to 
Campbell,  Sprague  &  Co.  in  the  sum  of  thirty-six  dollars  and  seventy 
cents  for  materials  purchased.  The  plaintiffs  being  under  no  obliga- 
tion to  Campbell,  Sprague  &  Co.  on  account  of  this  claim,  nevertheless 
paid  it  without  any  previous  request  on  the  part  of  defendant.  After 
the  plaintiffs  had  paid  the  claim,  they  applied  to  defendant  and  he 
promised  to  pay  them  the  sum  so  by  them  expended  for  his  benefit. 
The  circumstances  are  such  that  no  implied  request  to  pay  the  claim 
can  be  found  other  than  such  as  can  be  based  upon  the  subsequent 
express  promise  of  defendant  to  repay  the  plaintiffs.  On  this  express 
promise  the  action  is  brought,  and  the  action  is  defended  on  the 
ground  that  the  express  promise  is  not  supported  by  a  sufficient  con- 
sideration to  make  it  enforcible  at  law.  The  question  here  presented 
was  much  discussed  in  the  earlier  cases,  and  the  cases  disclose  a  great 
difference  of  opinion  in  the  minds  of  eminent  jurists.  Among  the 
earliest  is  the  case  of  Wennall  v.  Adney  (3  B.  &  P.  249,  252,  note) 
which  announced  the  proper  rule  to  be  that  an  express  promise  "can 
only  revive  a  precedent  good  consideration  which  might  have  been 
enforced  at  law  through  the  medium  of  an  implied  promise,  had  it  not 
been  suspended  by  some  positive  rule  of  law ;  but  can  give  no  original 
right  of  action,  if  the  obligation  on  which  it  is  founded  never  could 
have  been  enforced  at  law  though  not  barred  by  any  legal  maxim  or 
statute  provision."  Under  this  rule  express  promises  of  infants  after 
age,  and  that  of  bankrupts  after  discharge,  of  married  women  after 
coverture  has  ceased,  have  been  held  to  be  good  when  the  original 
debt  was  of  their  own  contracting. 

Subsequently  the  court  in  the  case  of  Lee  v.  Muggeridge  (55  Taunt. 
37)  went  farther,  and  the  rule  was  laid  down  by  Mansfield,  Ch.  J.,  and 
his  associates  in  broad  terms:  "It  has  been  long  established  that 
where  a  person  is  bound  morally  and  conscientiously  to  pay  a  debt 
though  not  legally  bound,  a  subsequent  promise  to  pay  will  give  a 
right  of  action."  This  rule  seems  to  have  prevailed  in  the  English 

In  Moore  v.  Elmer,  180  Mass.  15,  the  court  said,  "the  modern  authorities 
which  speak  of  services  rendered  upon  a  request  as  supporting  a  promise 
must  be  confined  to  cases  where  the  request  implies  an  undertaking  to  pay, 
and  do  not  mean  that  what  was  done  as  a  mere  favor  can  be  turned  into  a 
consideration  at  a  later  time  by  the  fact  that  it  was  asked  for.  See  Lang- 
dell,  Contracts,  §§  92  4t  seq.;  Ohamberlin  v.  Whitford,  102  Mass.  448,  450; 
Dearborn  v.  Bowman,  3  Met.  155,  158;  Johnson  v.  Kimball,  172  Mass.  398, 
400." 


CONSIDERATION.  261 

courts  until  the  case  of  Eastwood  v.  Kenyon  (11  Ad.  &  El.  438)  in 
which  Lord  Denman,  Ch.  J.,  criticises  the  rule  laid  down  in  Lee  v. 
Muggeridge  and  declares  in  substance  that  a  beneficial  service  or  pe- 
cuniary benefit  conferred  without  request  and  adopted  by  a  beneficiary 
is  not  such  a  consideration  as  will  support  an  action  on  the  subsequent 
express  promise  of  the  beneficiary  to  reimburse.  So  far  as  I  have  been 
able  to  discover  this  rule  of  law  as  laid  down  by  Lord  Denman  has 
since  prevailed  in  the  English  courts. 

In  Mills  v.  Wyman  (3  Pick.  209)  Parker,  Ch.  J.,  says:  "It  is 
said  a  moral  obligation  is  a  sufficient  consideration  to  support  an  ex* 
press  promise,  and  some  authorities  lay  down  the  rule  thus  broadly; 
but  upon  examination  of  the  cases,  we  are  satisfied  that  the  universality 
of  the  rule  cannot  be  supported,  and  that  there  must  have  been  some 
pre-existing  obligation  which  has  become  inoperative  by  positive  law 
to  form  a  basis  for  an  effective  promise.  The  cases  of  debts  barred 
by  the  statute  of  limitations,  of  debts  incurred  by  infants,  of  debts 
of  bankrupts,  are  generally  put  for  illustration  of  the  rule.  Express 
promises  founded  on  such  pre-existing  equitable  obligations  may  be 
enforced/'  This  is  the  rule  as  laid  down  in  the  Supreme  Court  of 
Massachusetts  in  1825,  and  I  do  not  find  that  it  has  since  been  de- 
parted from  in  the  courts  of  that  State. 

Among  the  first  cases  in  the  courts  of  this  State,  where  the  question 
was  necessarily  decided,  is  Hicks  v.  Burhans  (10  Johns.  243).  The 
court  in  that  case  says :  "The  written  promise  to  pay,  if  founded  on 
a  past  consideration,  may  be  good  if  the  past  service  be  laid  to  have 
been  done  on  request ;  and  if  not  so  laid,  a  request  may  be  implied  from 
the  beneficial  nature  of  the  consideration  and  the  circumstances  of 
the  transaction.  .  .  .  Here  the  past  service  consisted  in  an  expensive 
pursuit  by  the  plaintiffs  of  certain  fugitive  debtors  who  were  indebted 
to  the  defendant  and  others."  In  this  case  the  court  held  that  a  re- 
quest to  do  the  service  might  be  implied,  though  the  service  had  been 
already  rendered. 

The  next  case  is  that  of  Doty  v.  Wilson  (14  Johns.  378).  The 
plaintiff  as  sheriff  held  the  defendant  on  a  body  execution,  and  allowed 
him  to  go  at  large.  Judgment  was  had  against  the  sheriff  for  the 
amount  the  defendant  was  held  for,  and,  after  payment,  the  defendant 
promised  to  reimburse  the  sheriff.  This  promise  was  held  to  be  sup- 
ported by  a  sufficient  consideration.  The  court,  by  Thompson,  Ch.  J., 
says:  "We  may  here  refer  to  the  cases  as  well  collected  in  1  Saund. 
264,  n.  1.  [Osborne  v.  Rogers,  1  Saund.  (3d  Am.  ed.)  *  264,  n.  l.J 
It  is  there  laid  down  as  the  result  of  all  of  them,  that  where  a  party 
derives  a  benefit  from  the  consideration,  it  is  sufficient  because  equiva- 
lent to  a  previous  request.  As  where  a  man  pays  a  sum  of  money  for 
me,  without  my  request,  and  I  afterwards  agree  to  the  payment,  this 
is  equivalent  to  a  previous  request  to  do  so.  ...  The  benefit  to  the 


262  FORMATION    OF    CONTRACT. 

defendant  connected  with  his  express  promise  to  pay  must  be  deemed 
equivalent  to  a  previous  request.  *  It  was  an  adoption  of  the  payment 
as  made  for  the  benefit  of  the  defendant,  and  a  subsequent  ratification 
is  equivalent  to  an  original  command."  The  case  of  Bentley  v. 
Morse  (14  Johns.  468)  was  one  where  the  consideration  for  the  ex- 
press promise  was  solely  a  moral  one.  The  case  of  Nixon  v.  Jenkins 
(1  Hilt.  318)  is  an  action  on  an  express  promise  supported  only  by  a 
beneficial  past  consideration.  The  plaintiff,  by  mistake,  paid  de- 
fendant's taxes,  and  subsequently  defendant  promised  to  refund  the 
amount  to  plaintiff.  The  court  said :  "The  money  paid  was  for  the 
defendant  Porter's  benefit,  to  which  he  assented  by  promising  to  pay. 
He  derived  a  benefit  from  it,  and  that  was  equivalent  to  a  previous 
request."  And  in  support  of  this  rule  of  law  the  court  cites  Doty  v. 
Wilson,  supra. 

If  the  cases  above  cited  correctly  express  the  rule  of  law  as  observed 
in  the  courts  of  this  State,  then  the  plaintiff  in  the  case  before  us 
should  hold  the  judgment  of  the  Justice  Court,  and  the  County  Court 
should  be  reversed.  But  it  would  seem  that  the  rule  as  expressed  in  a 
long  line  of  later  cases  fails  to  go  so  far.  In  Chilcott  v.  Trimble  (13 
Barb.  508)  the  court  says:  "These  cases  must  be  taken  with  some 
qualification";  and  approves  the  rule  as  laid  down  in  Wennall  v. 
Adney  (3  B.  &  P.  249,  supra).  This  is  again  said  in  Ehle  v.  Judson 
(24  Wend.  98)  by  Bronson,  J.,  in  referring  to  Doty  v.  Wilson :  "This 
rule  must  be  taken  with  some  qualifications.  The  moral  obligation  to 
pay  a  debt  barred  by  the  statute  of  limitations,  or  an  insolvent's  dis- 
charge, or  to  pay  a  debt  contracted  during  infancy  or  coverture,  and 
the  like,  will  be  a  good  consideration  for  an  express  promise.  But  a 
merely  moral  or  conscientious  obligation,  unconnected  with  any  prior 
legal  or  equitable  claim,  is  not  enough." 

Ingraham  v.  Gilbert  (20  Barb.  154)  :  "The  rule  in  Eastwood  v. 
Kenyon  (11  Ad.  &  Ellis,  438)  is  decisive  of  this  case.  It  is  there  held 
that  *a  pecuniary  benefit  voluntarily  conferred  by  the  plaintiff  and 
adopted  by  the  defendant,  is  not  such  a  consideration  as  will  support 
an  action  of  assumpsit  on  a  subsequent  express  promise.' " 

In  Goulding  v.  Davidson  (26  N.  Y.  604  )the  rule  as  laid  down  in 
Ehle  v.  Judson,  supra,  is  stated  with  approval. 

From  all  the  cases,  I  am  of  the  opinion  that  the  broad  rule  declared 
in  Doty  v.  Wilson  is  not  the  rule  of  law  accepted  by  the  courts  of  this 
State,  but  rather  that  the  rule  laid  down  in  Eastwood  v.  Kenyon  is 
the  adopted  rule,  and  that  rule  applied  to  the  facts  in  the  case  before 
us  prevents  a  recovery  by  the  plaintiff. 

The  contention  of  the  learned  counsel  for  appellant,  that  a  judg- 
ment in  favor  of  plaintiff  might  be  supported  on  the  theory  of  a  ratifi- 
cation by  the  principal  of  the  acts  of  an  agent,  is  not  tenable  for  the 
reason  that  such  ratification  of  an  agent's  acts  only  makes  the  agent's 


CONSIDERATION.  263 

acts  the  acts  of  the  principal,  and  does  not  create  any  liability  to  the 
agent  himself. 

The  judgment  of  the  County  Court  should  be  affirmed. 

9  Cyc.  365   (30-32). 


WRIGHT  v.  THE  FARMER'S  NATIONAL  BANK. 
31  TEXAS  CIVIL  APPEALS,  406.— 1903. 

CONNER,  Chief  Justice.  Appellee,  who  was  plaintiff  below,  insti- 
tuted this  suit  in  the  county  court  of  Clay  county  to  recover  $320.41, 
because  of  a  payment  of  that  sum  in  satisfaction  of  a  judgment  and 
execution  against  appellant,  and  which  it  was  alleged  appellant  subse- 
quently promised  to  pay. 

The  petition,  charge  of  the  court,  and  trial  all  evidently  were  predi- 
cated on  the  theory  of  the  subsequent  promise.  Hence  the  exceptions 
to  the  petition  and  to  the  charge  of  the  court  and  to  the  refusal  of 
special  charges,  based  on  appellant's  theory  that  the  payment  was 
voluntary,  seem  immaterial.  Voluntary  though  appellee's  payment 
may  have  been,  if,  as  alleged  and  proven,  the  judgment  was  thereby 
wholly  discharged,  appellant's  resultant  benefit  constituted  a  sufficient 
consideration  for  a  subsequent  promise  to  repay  appellee  the  amount 
paid  in  satisfaction  of  the  judgment.  1  Pars,  on  Cont.,  8  ed.,  p.  473 ; 
Tied,  on  Com.  Paper,  sec.  162.  .  .  . 

9  Cyc.  365   (30-32). 


Reviving  agreement  barred  by  some  rule  of  law. 

DUSENBURY,  Executor,  v.  HOYT. 

53  NEW  YORK,  521.— 1873. 

The  action  was  upon  a  promissory  note.  The  defendant  pleaded 
his  discharge  in  bankruptcy.  Upon  the  trial,  after  proof  of  the  dis- 
charge, plaintiff  offered  to  prove  subsequent  promise  of  the  defendant 
to  pay  the  note.  Defendant  objected  upon  the  ground  that  the  action 
was  upon  the  note,  not  upon  the  new  promise.  The  court  sustained 
the  objection,  and  directed  a  verdict  for  defendant,  which  was  ren- 
dered accordingly.  Plaintiff  appeals. 

ANDREWS,  J.  The  34th  section  of  the  bankrupt  law  declares  that 
a  discharge  in  bankruptcy  releases  the  bankrupt  from  all  debts  provable 
under  the  act,  and  that  it  may  be  pleaded  as  a  full  and  complete  bar 
to  all  suits  brought  thereon. 

The  legal  obligation  of  the  bankrupt  is  by  force  of  positive  law  dis- 
charged, and  the  remedy  of  the  creditor  existing  at  the  time  the 
discharge  was  granted  to  recover  his  debt  by  suit  is  barred.  But  the 


264  FORMATION    OF    CONTRACT. 

debt  is  not  paid  by  the  discharge.  The  moral  obligation  of  the  bank- 
rupt to  pay  it  remains.  It  is  due  in  conscience,  although  discharged 
in  law,  and  this  moral  obligation,  uniting  with  a  subsequent  promise 
by  the  bankrupt  to  pay  the  debt,  gives  a  right  of  action.  It  was  held 
in  Shippy  v.  Henderson  (14  J.  E.  178)  that  it  was  proper  for  the 
plaintiff,  when  the  bankrupt  had  promised  to  pay  the  debt  after  his 
discharge,  to  bring  his  action  upon  the  original  demand,  and  to  reply 
the  new  promise  in  avoidance  of  the  discharge  set  out  in  the  plea. 
The  court,  following  the  English  authorities,  said  that  the  replication 
of  the  new  promise  was  not  a  departure  from  the  declaration,  but  sup- 
ported it  by  removing  the  bar  interposed  by  the  plea,  and  that  in  point 
of  pleading  it  was  like  the  cases  where  the  defense  of  infancy  or  the 
statute  of  limitations  was  relied  upon.  The  case  of  Shippy  v.  Hen- 
derson was  followed  in  subsequent  cases,  and  the  doctrine  declared  in 
it  became,  prior  to  the  Code,  the  settled  law.  McNair  v.  Gilbert,  3 
Wend.  344;  Wait  v.  Morris,  6  Id.  394;  Fitzgerald  v.  Alexander,  19 
Id.  402. 

The  question  whether  the  new  promise  is  the  real  cause  of  action, 
and  the  discharged  debt  the  consideration  which  supports  it,  or  whether 
the  new  promise  operates  as  a  waiver  by  the  bankrupt  of  the  defense 
which  the  discharge  gives  him  against  the  original  demand,  has  occa- 
sioned much  diversity  of  judicial  opinion.  The  former  view  was  held 
by  Marcy,  J.,  in  Depuy  v.  Swart  (3  Wend.  139),  and  is  probably  the 
one  best  supported  by  authority.  But,  after  as  before  the  decision  in 
that  case,  the  court  held  that  the  original  demand  might  be  treated  as 
the  cause  of  action,  and  for  the  purpose  of  the  remedy,  the  decree  in 
bankruptcy  was  regarded  as  a  discharge  of  the  debt  sub  modo  only,  and 
the  new  promise  as  a  waiver  of  the  bar  to  the  recovery  of  the  debt 
created  by  the  discharge.  We  are  of  opinion  that  the  rule  of  pleading, 
so  well  settled  and  so  long  established,  should  be  adhered  to.  The 
original  debt  may  still  be  considered  the  cause  of  action  for  the  purpose 
of  the  remedy.  The  objection  that,  as  no  replication  is  now  required, 
the  pleadings  will  not  disclose  the  new  promise,  is  equally  applicable 
where  a  new  promise  is  relied  upon  to  avoid  the  defense  of  infancy  or 
the  statute  of  limitations,  and  in  these  cases  the  plaintiff  may  now,  as 
before  the  Code,  declare  upon  the  original  demand.  Esselstyn  v. 
Weeks,  12  N.  Y.  635. 

The  offer  of  the  plaintiff  to  prove  an  unconditional  promise  by  the 
defendant,  after  his  discharge,  to  pay  the  debt,  was  improperly  over- 
ruled, and  the  judgment  should,  for  this  reason,  be  reversed,  and  a 
new  trial  ordered,  with  costs  to  abide  the  event. 

All  concur,  except  Folger,  J.,  not  voting. 

Judgment  reversed.1 
9  Cyo.  363   (20). 

i  Action  barred  by  statute  of  limitations. — In  Ilsley  v.  Jewett,  3  Met.  439, 


CONSIDERATION.  265 

SHEPARD  v.  RHODES. 

7  RHODE  ISLAND,  470.— 1863. 

Assumpsit.     Demurrer  to  declaration. 

BULLOCK,  J.  The  count  demurred  to  states,  in  substance,  that  the 
plaintiffs  had  discharged  the  defendants  from  a  certain  debt,  then  due 
and  owing  from  them  to  the  plaintiffs,  in  consideration  of  dividends  to 
be  received  from  the  proceeds  of  certain  effects  assigned  by  the  de- 
fendants; and  that,  subsequent  to  such  discharge,  the  defendants  feel- 
ing themselves  honorably  bound  to  pay  to  the  plaintiffs  this  debt,  in 
consideration  thereof  and  of  one  dollar  to  them  paid,  made  the  follow- 
ing new  promise,  to  wit,  to  pay  to  the  plaintiffs  in  one  year  after  a 
final  dividend,  any  difference  that  might  exist  between  their  full  debt 
and  interest  and  the  amount  of  any  dividend  or  dividends  the  plain- 
tiffs might  have  previously  received.  The  count  further  states,  that 
more  than  one  year  has  elapsed  since  the  plaintiffs  received  notice  that 
no  dividend  would  be  paid  them  from  the  assigned  effects. 

This  statement  of  the  cause  of  action  shows,  in  effect,  two  separate 
and  distinct  considerations,  as  the  foundation  of  the  new  promise : 
first,  a  moral  consideration,  that  the  defendants,  notwithstanding  their 
discharge,  felt  themselves  in  honor  bound  to  pay  the  plaintiffs'  debt ; 
and,  second,  the  valuable  consideration  of  one  dollar,  paid  to  the 
defendants  by  the  plaintiffs  when  the  new  promise  was  made. 

Are  these  considerations,  as  stated,  sufficient  in  law  to  sustain  the 
promise?  Passing  by  the  earlier  cases,  referred  to  at  length  in  a 
note  to  the  report  of  Wennall  v.  Adney  (3  Bos.  &  Pull.  249),  and 
some  of  which  hold  to  the  opposite,  it  may  now  be  deemed  settled, 
that  no  action  can  be  maintained  upon  a  promise  founded  upon  a 
mere  moral  consideration.  Mills  v.  Wyman,  3  Pick.  207;  Eastwood 
v.  Kenyon,  11  Ad.  &  Ell.  438 ;  Beaumont  v.  Reeve,  8  Ad.  &  Ell.  (N. 
S.)  483;  S.  C.  55  Eng.  C.  L.  483.  It  has  been  said,  that  such  a  doc- 

the  court  said,  "a  payment,  or  new  promise,  or  an  admission  from  which  a 
new  promise  may  be  inferred,  is  considered  as  removing  out  of  the  way  a  bar 
arising  from  the  statute  of  limitations,  so  as  to  enable  the  creditor  to  re- 
cover notwithstanding  the  limitation ;  and  not  as  the  creation  of  a  new  sub- 
stantive contract,  which  is  to  be  the  basis  of  the  judgment." 

In  Ireland  v.  Mackintosh,  22  Utah,  296,  the  court  said,  "the  note  in  ques- 
tion upon  the  expiration  of  the  statutory  period  ceased  to  have  any  binding 
efficacy  in  this  State  other  than  that  moral  obligation  which,  though  it  might 
constitute  a  sufficient  consideration  for  a  new  promise  would  not  in  the  face 
of  the  statute  support  an  action  on  the  original  obligation  to  pay.  A  new 
promise,  however,  does  not  revive  the  former  obligation,  but  creates  a  new 
one,  and  no  recovery  can  be  had  except  in  an  action  based  upon  the  new 
promise,  instituted  within  the  period  prescribed  by  the  statute.  Anthony  v. 
Savage,  2  Utah,  466;  Gruenberg  v.  Buerhing,  5  Utah,  414;  Kuhn  v.  Mount,  13 
Utah,  108." 


266  FORMATION   OF   CONTRACT. 

trine  is  not  creditable  to  the  common  law ;  but  the  rule  has  its  origin 
in  the  widely  diversified  character  of  moral  duties,  and  the  consequent 
difficulty  of  measuring  them  with  exactness,  and  determining  which 
are  so  high  and  obligatory  in  their  nature  as  to  demand,  in  their  per- 
formance, the  payment  of  money. 

There  is  a  class  of  cases  which  for  the  most  part  have  been  re- 
garded as  not  falling  within  the  rule,  that  a  mere  moral  consideration 
will  not  support  a  promise.  Of  such  is  the  case  of  a  promise  barred 
by  the  statute  of  limitations,  where  the  party  is  under  no  legal  lia- 
bility to  pay  when  the  promise  is  made.  And  so,  of  the  promise  of 
an  infant,  made  after  he  becomes  of  age,  to  pay  a  debt  incurred  dur- 
ing his  minority,  and  which  debt  he  is  then  at  liberty  to  ratify  or 
avoid.  Upon  the  same  principle,  a  promise  to  pay  a  debt  originally 
usurious,  where  usury  avoids  the  contract,  but  freed  from  all  usury 
at  the  time  the  new  promise  is  made,  is  binding,  because  the  original 
contract  is  not  void,  but  voidable  only  at  the  election  of  the  borrower. 
And  so,  the  promise  of  a  bankrupt,  made  after  certificate  of  discharge 
granted  may  be  enforced,  although  now,  in  England,  by  statute  (6 
Geo.  IV.  c.  16)  the  promise  must  be  in  writing.  But  it  is  settled, 
that  such  considerations  as  love,  friendship,  natural  affection,  even 
the  close  relation  existing  between  parent  and  child,  are  not,  of  them- 
selves, sufficient  to  support  an  express  promise.  Whether  the  promise 
of  a  feme  covert,  after  coverture  ended,  to  pay  a  debt  contracted 
during  coverture,  falls  within  the  limit  of  the  exception,  has  been 
a  subject  of  frequent  discussion,  and  of  decisions  somewhat  con- 
trariant.  In  Lee  v.  Muggeridge  (5  Taunt.  36)  an  action  was  upheld 
against  her  executors,  upon  the  bond  of  a  feme  covert,  followed  by 
her  promise  to  pay,  dum  sola.  But  this  case  can  hardly  be  deemed 
authority  since  the  decision  in  Eastwood  v.  Kenyon,  supra;  and  in 
New  York  an  action  was  maintained  against  a  woman,  upon  a  con- 
tract of  retainer  entered  into  by  her  before  a  divorce.  Wilson  v. 
Burr,  25  Wend.  386.  A  more  leading  case,  in  the  same  State,  affirm- 
ing the  validity  of  such  a  promise,  is  that  of  Goulding  v.  Davidson 
(3  Am.  L.  Reg.  N".  S.  34;  26  IS.  Y.  604),  recently  decided  in  the 
Court  of  Appeals.  The  facts  were,  that  a  feme  covert  represented 
herself  as  unmarried  and  as  trading  on  her  own  account,  and  so  pro- 
cured credit,  and  purchased  goods,  for  which  she  gave  her  note.  Her 
coverture  was  not  known  to  the  creditor.  After  the  death  of  her 
husband,  she  promised  to  pay  this  debt,  and  an  action  was  brought 
upon  this  promise.  The  decision  proceeds,  mainly,  upon  the  ground, 
that  being  guilty  of  fraud  in  the  original  undertaking,  trover  or  re- 
plevin might  have  been  brought  against  her  and  her  husband  at  any 
time  after  the  supposed  purchase  was  made,  and  since  this  cause  of 
action  existed  against  her  during  coverture,  a  promise  by  her,  after 
coverture,  rested  upon  this  as  a  sufficient  consideration. 


CONSIDERATION.  267 

The  principle  recognized  in,  and  which,  almost  without  exception, 
has  controlled  this  class  of  cases,  is  this:  that  when  the  precedent 
original  consideration  was  sufficient  to  sustain  the  promise,  but  the 
right  of  action  was  suspended  or  barred  by  some  positive  rule  of  statu- 
tory or  common  law,  the  debtor  might,  by  a  subsequent  promise, 
waive  the  exemption  which  the  law  has  interposed  indirectly  for  his 
benefit,  but,  mainly,  from  reasons  of  sound  policy. 

The  case  here  is  one  where  the  original  right  of  action  was  extin- 
guished, not  by  the  act  of  the  law,  but  by  the  act  of  the  parties.  It 
was  a  voluntary  release  of  the  debt  by  the  creditor  to  the  debtor.  In 
Willing  v.  Peters  (12  S.  &  K.  179)  the  question  arose,  how  far  a 
promise  to  pay  a  debt,  thus  discharged,  might  be  enforced;  and  be- 
cause of  the  analogy  between  waiving  a  discharge  created  by  act  of 
law  and  one  created  by  act  of  the  parties,  the  court  upheld  the  action. 
Shaw,  C.  J.,  in  Valentine  v.  Foster  (1  Mete.  522),  admits  the  close- 
ness of  the  analogy,  and  suggests,  if  the  rule  be  not  narrow,  that 
allows  the  waiver  in  the  one  case  to  bind  the  party,  and  rejects  it  in 
the  other;  but  he  adds,  that  the  Pennsylvania  authority  is  the  only 
one  he  has  been  able  to  find  in  support  of  the  doctrine;  and  in  the 
case  then  before  him,  ruled,  that  when  a  creditor  released  a  debtor 
to  make  him  a  witness,  the  subsequent  promise  of  the  debtor  was  not 
binding.  Considering  his  own  decision,  and  that  the  case  of  Willing 
v.  Peters  was  subsequently  overruled  in  the  same  court,  in  Snevily  v. 
Read  (9  Watts,  396),  while  in  other  courts  it  has  been  repeatedly 
adjudicated,  that  after  the  voluntary  release  of  a  debt,  an  express 
promise  does  not  revive  it,  nor  does  it  form  a  sufficient  consideration 
to  support  the  new  promise,  we  may  affirm  that  such,  at  present,  is 
the  settled  law.  Warren  v.  Whitney,  24  Maine,  561 ;  Stafford  v. 
Bacon,  1  Hill,  533. 

But  the  plaintiffs  aver  an  additional  consideration  for  the  de- 
fendants' promise,  and  this  raises  another  question;  because  the 
former  consideration  not  being  illegal,  but  only  insufficient,  the  latter 
may  sustain  the  promise  declared  upon.  This  additional  consider- 
ation is  one  dollar,  for  which,  it  is  alleged,  the  defendants  promised, 
etc.,  to  pay  a  sum  greater  than  $1000. 

Ordinarily,  courts  do  not  go  into  the  question  of  equality  or  in- 
equality of  considerations ;  but  act  upon  the  presumption  that  parties 
capable  to  contract  are  capable,  as  well,  of  regulating  the  terms  of 
their  contracts,  granting  relief  only  when  the  inequality  is  shown 
to  have  arisen  from  mistake,  misrepresentation,  or  fraud.  A  different 
rule  would,  in  every  case,  impose  upon  the  court  the  necessity  of  in- 
quiring into,  and  of  determining  the  value  of  the  property  received 
by  the  party  giving  the  promise.  Such  a  course  is  obviously  imprac- 
ticable. In  all  cases,  therefore,  where  the  assumption  or  undertaking 
is  founded  upon  the  sale  or  exchange  of  merchandise  or  property,  or 


268  FORMATION   OF   CONTRACT. 

upon  other  than  a  money  consideration,  and  the  promise  has  been  de- 
liberately made,  the  law  looks  no  further  than  to  see  that  the  obli- 
gation rests  upon  a  consideration,  that  is,  one  recognized  as  legal,  and 
of  some  value.  But  the  leason  of  the  rule  ceases,  and  hence  the  rule 
ceases,  when  applied  to  contracts  to  pay  money  and  founded  solely 
upon  a  money  consideration.  How  far  a  forbearance  to  sue,  or  the 
giving  of  time,  or  the  mere  waiver  of  some  right,  may  support  a 
promise,  we  do  not  consider,  since  the  question  does  not  arise.  Nor, 
for  the  like  reason,  do  we  consider  how  far  the  rule  is  qualified  or 
limited  by  special  statutes  regulating  interest;  or  in  that  class  of 
contracts  peculiar  to  the  law  merchant,  as  bottomry,  respondentia, 
and  the  course  of  exchange.  Aside  from  these  and  some  other  ex- 
ceptions, at  common  law  a  contract  for  the  exchange  of  unequal  sums 
of  money  at  the  same  time,  or  at  different  times,  when  the  element 
of  time  is  no  equivalent,  is  not  binding ;  and  in  such  cases  courts  may 
and  do  inquire  into  the  equality  of  the  contract ;  for  its  subject-matter, 
upon  both  sides,  has  not  only  a  fixed  value,  but  is  itself  the  standard 
of  all  values ;  and  so,  for  the  difference  of  value,  there  is  no  consider- 
ation. In  this  principle,  the  earliest  prohibitions — earlier  even  than 
the  time  of  Alfred — and  the  later  legislative  enactments  against  usury, 
both  in  England  and  in  this  country,  have  their  origin.  The  rule  is 
deemed  to  be  founded  in  good  policy. 

In  the  case  before  us,  the  only  legal  consideration  the  defendants 
received  was  one  dollar,  for  which  they  engaged  to  pay  a  much  larger 
sum.  The  case,  therefore,  falls  within  the  principle  adverted  to. 
The  consideration  was  not  only  unequal,  but  grossly  so.  It  was  a 
mere  nominal  consideration;  if  even  received  by  the  defendants,  it 
was,  no  doubt,  regarded  as  such  by  them,  and  intended  as  such  by 
the  promisees.  It  was,  at  best,  purely  technical  and  colorable,  and 
obviously  is  wanting  in  that  degree  of  equitable  equality  sufficient  to 
support  the  promise  declared  upon. 

The  demurrer  to  the  first  count  is  therefore  sustained. 

9  Cyc.  363   (18)  ;  359  (93)  ;  W.  P.  193  (4)  ;  199  (12). 


CHAPTER  III. 

BEAUTY  OF  CONSENT. 

Mistake. 

(t.)  Non-agreement  in  terms. 

EUPLEY  et  al.,  v.  DAGGETT. 
74  ILLINOIS,  351.— 1874. 

This  was  an  action  of  replevin,  brought  by  John  F.  Daggett  against 
Abram  Eupley  and  Jacob  Eupley,  to  recover  a  mare  which  the  de- 
fendants claimed  they  had  bought  of  the  plaintiff. 

It  appears  that  at  the  first  conversation  about  the  sale  of  the  mare, 
Eupley  asked  the  plaintiff  his  price,  the  plaintiff  swearing  that  he 
replied  $165,  while  the  defendant  testified  that  he  said  $65,  and  that 
he  did  not  understand  him  to  say  $165.  In  the  second  conversation 
Eupley  says  he  told  Daggett,  that  if  the  mare  was  what  he  represented 
her  to  be,  they  would  give  $65,  and  Daggett  said  he  would  take  him 
down  next  morning  to  see  her.  Daggett  denied  this,  and  says  that 
Eupley  said  to  him,  "Did  I  understand  you  sixty-five?"  Daggett 
states  that  he  supposed  Eupley  referred  to  the  fraction  of  the  $100, 
and  meant  sixty-five  as  coupled  with  the  price  named  at  the  previous 
interview.  He  answered,  "Yes,  sixty-five."  Both  parties,  from  this, 
supposed  the  price  was  fixed,  Eupley  supposing  it  was  $65,  and  Dag- 
gett supposing  it  was  $165,  and  the  only  thing  remaining  to  be  done, 
as  each  thought,  was  for  Eupley  to  see  the  mare  and  decide  whether 
she  suited  him.  The  next  day  Eupley  came,  saw  the  mare  and  took 
her  home  with  him.  The  plaintiff  recovered  in  the  court  below,  and 
the  defendants  appealed. 

SCOTT,  J.,  delivered  tho  opinion  of  the  court. 

It  is  very  clear,  from  the  evidence  in  this  case,  there  was  no  sale 
of  the  property  understandingly  made.  Appellee  supposed  he  was 
selling  for  $165,  and  it  may  be  appellant  was  equally  honest  in  the 
belief  that  he  was  buying  at  the  price  of  $65.  There  is,  however, 
some  evidence  tending  to  show  that  appellant  Eupley  did  not  act 
with  entire  good  faith.  He  was  told,  before  he  removed  the  mare 
from  appellee's  farm,  there  must  be  some  mistake  as  to  the  price  he 
was  to  pay  for  her.  There  is  no  dispute  this  information  was  given 
to  him.  He  insisted,  however,  the  price  was  $65,  and  expressed  his 
belief  he  would  keep  her  if  there  was  a  mistake.  On  his  way  home 

269 


270  FORMATION   OF    CONTRACT. 

with  the  mare  in  his  possession,  he  met  appellant,  but  never  intimated 
to  him  he  had  been  told  there  might  be  a  misunderstanding  as  to  the 
price  he  was  to  pay  for  her.  This  he  ought  to  have  done,  so  that,  if 
there  had  been  a  misunderstanding  between  them,  it  could  be  cor- 
rected at  once.  If  the  price  was  to  be  $165,  he  had  never  agreed  to 
pay  that  sum,  and  was  under  no  sort  of  obligation  to  keep  the  property 
at  that  price.  It  was  his  privilege  to  return  it.  On  the  contrary, 
appellee  had  never  agreed  to  sell  for  $65,  and  could  not  be  compelled 
to  part  with  his  property  for  a  less  sum  than  he  chose  to  ask.  It  is 
according  to  natural  justice,  where  there  is  a  mutual  mistake  in  regard 
to  the  price  of  an  article  of  property,  there  is  no  sale,  and  neither  party 
is  bound.  There  has  been  no  meeting  of  the  minds  of  the  contracting 
parties,  and  hence  there  can  be  no  sale.  This  principle  is  so  elemen- 
tary it  needs  no  citation  of  authorities  in  its  support.  Any  other 
rule  would  work  injustice  and  might  compel  a  person  to  part  with 
his  property  without  his  consent,  or  to  take  and  pay  for  property  at  a 
price  he  had  never  contracted  to  pay.  .  .  . 

Judgment  affirmed.1 
9  Cyc.  398  (7-8)  ;  W.  P.  599  (54)  ;  605  (63)  ;  32  L.  R.  A.  (N.  s.)  429. 

i  In  Rovegno  v.  Defferari,  40  Cal.  459,  the  court  said :  "A  sale  of  this  in- 
terest was  supposed  to  have  been  made  by  Cassinelli  to  Defferari;  but  it 
turned  out  afterwards  that  the  parties  to  that  transaction  (Cassinelli  and 
Defferari)  had  entirely  misunderstood  each  other  as  to  the  price  to  be  paid. 
Cassinelli  thought  that  he  was  selling  for  $850,  and  Defferari  supposed  him- 
self to  be  purchasing  at  $750.  Upon  discovery  of  this  mistake  the  latter 
refused  to  take  the  interest  at  $850.  .  .  .  Upon  the  ascertained  fact  that 
Cassinelli  and  Defferari  were  each  mistaken  as  to  the  purchase  price  of  this 
copartnership  interest,  and  each  was,  therefore,  assenting  to  a  supposed  con- 
tract which  had  no  real  existence,  it  results  that  there  was  no  valid  agree- 
ment, notwithstanding  the  apparent  assent  of  each." 

In  Stoddard  v.  Ham,  129  Mass.  383,  the  court  said:  "It  is  elementary  in 
the  law  governing  contracts  of  sale  and  all  other  contracts,  that  the  agree- 
ment is  to  be  ascertained  exclusively  from  the  conduct  of  the  parties  and  the 
language  used  when  it  is  made,  as  applied  to  the  subject-matter  and  to 
known  usages.  The  assent  must  be  mutual,  and  the  union  of  minds  is  ascer- 
tained by  some  medium  of  communication.  A  proposal  is  made  by  one  party, 
and  is  acceded  to  by  the  other  in  some  kind  of  language  mutually  intelligible, 
and  this  is  mutual  assent.  Met.  Con.  14.  A  party  cannot  escape  the  natural 
and  reasonable  interpretation  which  must  be  put  on  what  he  says  and  does, 
by  showing  that  his  words  were  used  and  his  acts  done  with  a  different  and 
undisclosed  intention.  Foster  v.  Ropes,  111  Mass.  10,  16;  Daley  v.  Carney, 
117  Mass.  288;  Wright  v.  Willis,  2  Allen,  191.  2  Chit.  Con.  (llth  Am.  ed.) 
1022.  It  is  not  the  secret  purpose,  but  the  expressed  intention,  which  must 
govern,  in  the  absence  of  fraud  and  mutual  mistake.  A  party  is  estopped  to 
deny  that  the  intention  communicated  to  the  other  side  was  not  his  real  in- 
tention." 


REALITY   OF   CONSENT:   MISTAKE. 


(M.)  Mistake  as  to  the  nature,  or  as  to  the  existence  of  the  contract. 
WALKEE  v.  EBERT. 

29   WISCONSIN,   194.—  1871. 

Action  on  a  promissory  note,  by  a  holder,  who  claims  to  have  pur- 
chased it  for  full  value,  before  maturity.  Verdict  for  plaintiff.  De- 
fendant appeals. 

DIXON,  C.  J.  The  defendant,  having  properly  alleged  the  same 
facts  in  his  answer,  offered  evidence  and  proposed  to  prove  by  himself 
as  a  witness  on  the  stand,  that  at  the  time  he  signed  the  supposed 
note  in  suit,  he  was  unable  to  read  or  write  the  English  language; 
that  when  he  signed  the  same,  it  was  represented  to  him  as,  and  he 
believed  it  was,  a  certain  contract  of  an  entirely  different  character, 
which  contract  he  also  offered  to  produce  in  evidence;  that  the  con- 
tract offered  to  be  produced  was  a  contract  appointing  him,  defendant, 
agent  to  sell  a  certain  patent  right,  and  no  other  or  different  con- 
tract, and  not  the  note  in  question;  and  that  the  supposed  note  was 
never  delivered  by  the  defendant  to  any  one.  It  was  at  the  same 
time  stated  that  the  defendant  did  not  claim  to  prove  that  the  plain- 
tiff did  not  purchase  the  supposed  note  before  maturity  and  for  value. 
To  this  evidence  the  plaintiff  objected,  and  the  objection  was  sus- 
tained by  the  court,  and  the  evidence  excluded,  to  which  the  defendant 
excepted  ;  and  this  presents  the  only  question. 

We  think  it  was  error  to  reject  the  testimony.  The  two  cases  cited 
by  counsel  for  the  defendant  (Foster  v.  McKinnon,  L.  R.  4  C.  P. 
704,  and  Whitney  v.  Snyder,  2  Lansing,  477)  are  very  clear  and 
explicit  upon  the  point,  and  demonstrate,  as  it  seems  to  us,  beyond 
any  rational  doubt,  the  invalidity  of  such  paper,  even  in  the  hands 
of  a  holder  for  value,  before  maturity,  without  notice.  The  party 
whose  signature  to  such  a  paper  is  obtained  by  fraud  as  to  the  char- 
acter of  the  paper  itself,  who  is  ignorant  of  such  character,  and  has 
no  intention  of  signing  it,  and  who  is  guilty  of  no  negligence  in  affix- 
ing his  signature,  or  in  not  ascertaining  the  character  of  the  instru- 
ment, is  no  more  bound  by  it  than  if  it  were  a  total  forgery,  the  signa- 
ture included. 

The  reasoning  of  the  above  cases  is  entirely  satisfactory  and  con- 
clusive upon  this  point.  The  inquiry  in  such  cases  goes  back  of  all 
questions  of  negotiability,  or  of  the  transfer  of  the  supposed  paper 
to  a  purchaser  for  value,  before  maturity  and  without  notice.  It 
challenges  the  origin  or  existence  of  the  paper  itself  ;  and  the  propo- 
sition is,  to  show  that  it  is  not  in  law  or  in  fact  what  it  purports  to 
be,  namely,  the  promissory  note  of  the  supposed  maker.  For  the 
purpose  of  setting  on  foot  or  pursuing  this  inquiry,  it  is  immaterial 


272  FORMATION   OF    CONTRACT. 

that  the  supposed  instrument  is  negotiable  in  form,  or  that  it  may 
have  passed  to  the  hands  of  a  bona  fide  holder  for  value.  Negotia- 
bility in  such  cases  presupposes  the  existence  of  the  instrument  as 
having  been  made  by  the  party  whose  name  is  subscribed;  for,  until 
it  has  been  so  made  and  has  such  actual  legal  existence,  it  is  absurd 
to  talk  about  a  negotiation,  or  transfer,  or  bona  fide  holder  of  it, 
within  the  meaning  of  the  law  merchant.  That  which,  in  contem- 
plation of  law,  never  existed  as  a  negotiable  instrument,  cannot  be 
held  to  be  such;  and  to  say  that  it  is,  and  has  the  qualities  of  ne- 
gotiability, because  it  assumes  the  form  of  that  kind  of  paper,  and 
thus  to  shut  out  all  inquiry  into  its  existence,  or  whether  it  is  really 
and  truly  what  it  purports  to  be,  is  petitio  principii — begging  the 
question  altogether.  It  is,  to  use  a  homely  phrase,  putting  the  cart 
before  the  horse,  and  reversing  the  true  order  of  reasoning,  or  rather 
preventing  all  correct  reasoning  and  investigation, '  by  assuming  the 
truth  of  the  conclusion,  and  so  precluding  any  inquiry  into  the  ante- 
cedent fact  or  premise,  which  is  the  first  point  to  be  inquired  of  and 
ascertained.  For  the  purposes  of  this  first  inquiry,  which  must  be 
always  open  when  the  objection  is  raised,  it  is  immaterial  what  may 
be  the  nature  of  the  supposed  instrument,  whether  negotiable  or  not, 
or  whether  transferred  or  negotiated,  or  to  whom  or  in  what  manner, 
or  for  what  consideration  or  value  paid  by  the  holder.  It  must  al- 
ways be  competent  for  the  party  proposed  to  be  charged  upon  any 
written  instrument,  to  show  that  it  is  not  his  instrument  or  obliga- 
tion. The  principle  is  the  same  as  where  instruments  are  made  by 
persons  having  no  capacity  to  make  binding  contracts;  as,  by  infants, 
married  women,  or  insane  persons;  or  where  they  are  void  for  other 
cause,  as,  for  usury;  or  where  they  are  executed  as  by  an  agent,  but 
without  authority  to  bind  the  supposed  principal.  In  these  and  all 
like  cases,  no  additional  validity  is  given  to  the  instrument  by  putting 
them  in  the  form  of  negotiable  paper.  See  Veeder  v.  Town  of  Lima, 
19  AVis.  297  to  299,  and  authorities  there  cited.  See  also  Thomas  v. 
Watkins,  16  Wis.  549. 

And  identical  in  principle,  also,  are  those  cases  under  the  registry 
laws  where  the  bona  fide  purchaser  for  value  of  land  has  been  held 
not  to  be  protected  when  the  recorded  deed  under  which  he  purchased 
and  claims  turns  out  to  have  been  procured  by  fraud  as  to  the  signa- 
ture, or  purloined  or  stolen,  or  was  a  forgery  and  the  like.  See  Everts 
v.  Agnes,  4  Wis.  343,  and  the  remarks  of  this  court,  pp.  351-353, 
inclusive. 

In  the  case  first  above  cited,  the  defendant  was  induced  to  put  his 
name  upon  the  back  of  a  bill  of  exchange  by  the  fraudulent  represen- 
tation of  the  acceptor  that  he  was  signing  a  guaranty.  In  an  action 
against  him  as  indorser,  at  the  suit  o'f  a  bona  fide  holder  for  value, 
the  Lord  Chief  Justice,  Boville,  directed  the  jury  that,  "If  the  de- 


REALITY   OF    CONSENT  I    MISTAKE.  273 

fendant's  signature  to  the  document  was  obtained  upon  a  fraudulent 
representation  that  it  was  a  guaranty,  and  the  defendant  signed  it 
without  knowing  that  it  was  a  bill,  and  under  the  belief  that  it  was 
a  guaranty,  and  if  he  was  not  guilty  of  any  negligence  in  so  signing 
the  paper,  he  was  entitled  to  the  verdict";  and  this  direction  was 
held  proper.  In  delivering  the  judgment  of  the  court  upon  a  rule 
nisi  for  a  new  trial,  Byles,  J.,  said : 

"The  case  presented  by  the  defendant  is  that  he  never  made  the  contract 
declared  on;  that  he  never  saw  the  face  of  the  bill;  that  the  purport  of  the 
contract  was  fraudulently  misdescribed  to  him;  that  when  he  signed  one 
thing,  he  was  told  and  believed  he  was  signing  another  and  entirely  differ- 
ent thing;  and  that  his  mind  never  went  with  his  act.  It  seems  plain  on 
principle  and  on  authority  that  if  a  blind  man,  or  a  man  who  cannot  read, 
or  for  some  reason  (not  implying  negligence)  forbears  to  read,  has  a  writ- 
ten contract  falsely  read  over  to  him,  the  reader  misreading  to  such  a  de- 
gree that  the  written  contract  is  of  a  nature  altogether  different  from  the 
contract  pretended  to  be  read  from  the  paper,  which  the  blind  or  illiterate 
man  afterwards  signs,  then  at  least,  if  there  be  no  negligence,  the  signa- 
ture so  obtained  is  of  no  force;  and  it  is  invalid  not  merely  on  the  ground 
of  fraud,  where  fraud  exists,  but  on  the  ground  that  the  mind  of  the  signer 
did  not  accompany  the  signature;  in  other  words,  that  he  never  intended 
to  sign,  and  therefore,  in  contemplation  of  law,  never  did  sign  the  con- 
tract to  which  his  name  is  appended." 

And  again,  after  remarking  the  distinction  between  the  case  under 
consideration  and  those  where  a  party  has  written  his  name  upon  a 
blank  piece  of  paper,  intending  that  it  should  afterwards  be  filled  up, 
and  it  is  improperly  so  filled,  or  for  a  larger  sum,  or  where  he  has 
written  his  name  upon  the  back  or  across  the  face  of  a  blank  bill- 
stamp,  as  indorser  or  acceptor,  and  that  has  been  fraudulently  or 
improperly  filled,  or  in  short,  where,  under  any  circumstances,  the 
party  has  voluntarily  affixed  his  signature  to  commercial  paper,  know- 
ing what  he  was  doing  and  intending  the  same  to  be  put  in  circulation 
as  a  negotiable  security,  and  after  also  showing  that  in  all  such  cases 
the  party  so  signing  will  be  liable  for  the  full  amount  of  the  note  or 
bill,  when  it  has  once  passed  into  the  hands  of  an  innocent  indorsee  or 
holder,  for  value  before  maturity,  and  that  such  is  the  limit  of  the 
protection  afforded  to  such  an  indorsee  or  holder,  the  learned  judge 
proceeded : 

"But  in  the  case  now  under  consideration,  the  defendant,  according  to 
the  evidence,  if  believed,  and  the  finding  of  the  jury,  never  intended  to  in- 
dorse a  bill  of  exchange  at  all,  but  intended  to  sign  a  contract  of  an  entirely 
different  nature.  It  was  not  his  design,  and,  if  he  were  guilty  of  no  negli- 
gence, it  was  not  even  his  fault  that  the  instrument  he  signed  turned  out  to 
be  a  bill  of  exchange.  It  was  as  if  he  had  written  his  name  on  a  sheet  of 
paper  for  the  purpose  of  franking  a  letter,  or  in  a  lady's  album,  or  an  order 
for  admission  to  Temple  Church,  or  on  the  fly-leaf  of  a  book,  and  there  had 
already  been  without  his  knowledge  a  bill  of  exchange  or  a  promissory  note 
payable  to  order  inscribed  on  the  other  side  of  the  paper.  To  make  the 


274  FORMATION   OF   CONTRACT. 

case  clearer,  suppose  the  bill  or  note  on  the  other  side  of  the  paper  in  each 
of  these  cases  to  be  written  at  a  time  subsequent  to  the  signature,  then  the 
fraudulent  misapplication  of  that  genuine  signature  to  a  different  purpose 
would  have  been  a  counterfeit  alteration  of  a  writing  with  intent  to  de- 
fraud, and  would  therefore  have  amounted  to  a  forgery.  In  that  case  the 
signer  would  not  have  been  bound  by  his  signature  for  two  reasons;  first, 
that  he  never  in  fact  signed  the  writing  declared  on,  and  secondly,  that  he 
never  intended  to  sign  any  such  contract. 

"In  the  present  case  the  first  reason  does  not  apply,  but  the  second  does 
apply.  The  defendant  never  intended  to  sign  that  contract,  or  any  such 
contract.  He  never  intended  to  put  his  name  to  any  instrument  that  then 
was  or  thereafter  might  become  negotiable.  He  was  deceived  not  merely 
as  to  the  legal  effect,  but  as  to  the  actual  contents  of  the  instrument." 

The  other  case  first  above  cited,  Whitney  v.  Snyder,  was  in  all  re- 
spects like  the  present,  a  suit  upon  a  promissory  note  by  the  purchaser 
before  maturity,  for  value,  against  the  maker;  and  the  facts  offered 
to  be  proved  in  defense  were  the  same  as  here;  and  it  was  held  that 
the  evidence  should  have  been  admitted. 

In  Nance  v.  Lary  (5  Ala.  370)  it  was  held  that  where  one  writes 
his  name  on  a  blank  piece  of  paper,  of  which  another  takes  possession 
without  authority  therefor,  and  writes  a  promissory  note  above  the 
signature,  which  he  negotiates  to  a  third  person,  who  is  ignorant  of 
the  circumstances,  the  former  is  not  liable  as  the  maker  of  the  note 
to  the  holder.  In  that  case  the  note  was  written  over  the  signature 
by  one  Langford,  and  by  him  negotiated  to  the  plaintiff  in  the  action, 
who  sued  the  defendant  as  maker.  Collier,  C.  J.,  said : 

"The  making  of  the  note  by  Langford  was  not  a  mere  fraud  upon  the  de- 
fendant; it  was  something  more.  It  was  quite  as  much  a  forgery  as  if  he 
had  found  the  blank  or  purloined  it  from  the  defendant's  possession.  If  a 
recovery  were  allowed  upon  such  a  state  of  facts,  then  every  one  who  ever 
indulges  in  the  idle  habit  of  writing  his  name  for  mere  pastime,  or  leaves 
sufficient  space  between  a  title  and  his  subscription,  might  be  made  a  bank- 
rupt by  having  promises  to  pay  money  written  over  his  signature.  Such 
a  decision  would  be  alarming  to  the  community,  has  no  warrant  in  law,  and 
cannot  receive  our  sanction." 

And  in  Putnam  v.  Sullivan  (4  Mass.  54)  Chief  Justice  Parsons 
said: 

"The  counsel  for  the  defendants  agree  that  generally  an  indorsement  ob- 
tained by  fraud  will  hold  the  indorsers  according  to  the  terms  of  it,  but 
they  make  a  distinction  between  the  cases  where  the  indorser,  through 
fraudulent  pretenses,  has  been  induced  to  indorse  the  note  he  is  called  on 
to  pay,  and  where  he  never  intended  to  indorse  a  note  of  that  description, 
but  a  different  note  and  for  a  different  purpose.  Perhaps  there  may  be 
cases  in  which  this  distinction  ought  to  prevail.  As,  if  a  blind  man  had  a 
note  falsely  and  fraudulently  read  to  him,  and  he  indorsed  it,  supposing 
it  to  be  the  note  read  to  him.  But  we  are  satisfied  that  an  indorser  cannot 
avail  himself  of  this  distinction,  but  in  cases  where  he  is  not  chargeable 
with  any  laches  or  neglect  or  misplaced  confidence  in  others." 


REALITY   OF    CONSENT:    MISTAKE.  275 

See  also  1  Parsons  on  Notes  and  Bills,  110  to  114,  and  cases  cited  in 
notes. 

The  judgment  below  must  be  reversed,  and  a  venire  de  novo 
awarded.  By  the  court.  It  is  so  ordered.1 

9  Cyc.  390-391    (61-62);  W.  P.  585    (30);   23  H.  L.  R.  571. 

i  In  Lewis  v.  Clay,  67  L.  J.  Q.  B.  224,  an  action  was  brought  by  payee 
against  defendant  as  one  of  two  makers  of  two  joint  and  several  promissory 
notes,  for  £3,113,  15s.,  and  £8,000  respectively.  It  was  admitted  that  de- 
fendant's signatures  were  genuine  and  that  his  signatures  to  two  letters  au- 
thorizing plaintiff  to  pay  the  proceeds  to  Lord  William  Nevill,  the  other 
maker,  were  also  genuine.  Plaintiff  gave  value  in  good  faith  for  the  notes. 
Defendant's  signatures  to  the  notes  and  letters  were  procured  by  Lord  William 
Nevill  in  this  wise:  The  latter  came  to  defendant  and  asked  him  to 
witness  some  documents,  producing  a  roll  of  papers  covered  by  blotting  or 
other  paper  in  which  there  were  four  openings;  defendant  asked  what  the 
documents  were  and  was  answered  that  they  concerned  private  family  mat- 
ters, that  defendant  could  see  them  if  he  insisted,  but  it  was  preferred  that 
he  should  not;  defendant  did  not  insist  and  signed  his  name  four  times 
through  the  openings.  Lord  William  Nevill  also  signed,  and  defendant 
believed  he  was  signing  as  witness  to  the  former's  signatures.  Defendant 
had  just  come  of  age,  had  known  Lord  Nevill  intimately  for  some  years, 
and  had  no  reason  to  doubt  his  honor.  Lord  Russell  of  Killowen,  C.  J., 
said:  "Did  the  defendant  make  the  promissory  notes  in  question?  If  he 
did  not,  then  the  finding  of  the  jury  that  defendant  was  not  guilty  of  any 
want  of  due  care  establishes  that  he  is  not  precluded  from  saying  so.  ... 
Can  it  be  said  that  in  this  case  the  defendant  contracted  to  pay  the  plain- 
tiff? His  mind  never  went  with  such  a  transaction;  for  all  that  appears 
he  had  never  heard  of  the  plaintiff,  and  his  mind  was  fraudulently  directed 
into  a  different  channel  by  the  statement  that  he  was  merely  witnessing  a 
deed  or  other  document.  He  had  no  contracting  mind,  and  his  signature 
obtained,  by  untrue  statements  fraudulently  made,  to  a  document  of  the 
existence  of  which  he  had  no  knowledge,  cannot  bind  him.  It  is  as  if  he 
had  written  his  name  for  an  autograph  collector,  or  in  an  album.  The 
case  differs  in  no  material  respect  from  one  in  which  a  genuine  signature 
is  deftly  transferred  by  delicate  contrivance  from  one  document  to  another, 
and  so  skillfully  as  to  escape  notice  under  ordinary  examination.  Or,  again, 
if  the  body  of  the  promissory  notes  had  been  fraudulently  written  above, 
and  after  his  signature  had  been  made,  it  would  have  been  forgery,  and  in 
such  case  it  is  clear  that  no  recourse  could  be  had  upon  it.  Can  it  maku 
any  difference  as  to  resulting  contractual  obligation  that  the  body  of  the 
note  was,  without  his  knowledge,  filled  up  before  he  was  fraudulently  in- 
duced to  put  his  name  in  the  belief  that  it  was  something  wholly  different? 
I  think  not.  In  plain  reason  it  must  be  said  that  the  use  to  which  the 
defendant's  signature  was  applied  was  in  substance  and  effect,  forgery, 
whether  or  not  it  amounted  to  the  criminal  offence  of  forgery." 

In  Page  v.  Krekey,  137  N.  Y.  307,  the  court  said:  "The  judgment  from 
which  this  appeal  is  taken  was  recovered  upon  a  guaranty,  signed  by  the 
defendant  and  sent  to  the  plaintiff,  a  resident  of  Vermont,  by  mail.  The 
plaintiff  had  business  transactions  with  one  Bernard  Thinnes  prior  to  the 
guaranty.  The  latter  was  a  tanner  in  Brooklyn,  and  the  plaintiff,  a  dealer 
in  green  calf  skins,  had  shipped  to  him  skins  at  various  times  to  tan  and, 
unless  he  elected  to  buy  them  at  a  certain  price,  then  to  return  them,  so 


276  FORMATION   OF   CONTRACT. 

ALEXANDER  v.  BROGLEY. 

63  NEW  JERSEY  LAW,  307.— 1899. 

Action  by  Hamil  M.  Alexander  against  John  Brogley  and  others 
and  John  0.  Bedford.  Judgments  for  defendants  were  affirmed  by 
the  Supreme  Court  and  plaintiff  brings  error. 

DIXON,  J.  These  suits  were  brought  by  the  plaintiff  as  assignee 
of  the  Biographical  Publishing  Company.  In  the  first  of  the  suits 
the  testimony  before  the  trial  court  tended  to  prove  that  an  agent  of 
the  company,  engaged  for  it  in  collecting  data  and  obtaining  sub- 
scriptions for  a  book  of  biographies,  applied  to  the  defendant  for  the 
purpose  of  preparing  a  sketch  of  his  life,  and,  after  getting  from  him 
some  details  of  the  history  of  his  family  and  himself,  handed  him  a 
paper,  with  the  request  that  he  would  sign,  his  name  upon  it,  so  that 
in  the  sketch  his  name  might  be  spelled  correctly.  Thereupon  the 
defendant,  not  noticing  anything  upon  the  paper,  signed  his  name. 
The  paper  thus  signed  contained  a  printed  form  of  contract,  purport- 
ing to  bind  the  subscriber  to  take  a  copy  of  the  book,  and  pay  the 
publishing  company  $15  therefor.  On  this  alleged  agreement  the  suit 

tanned  to  the  plaintiff,  or  deliver  them  according  to  his  order.     The  follow- 
ing is  the  instrument  upon  which  the  action  was  brought : 

BROOKLYN,  N.  Y.,  March  14,  1889. 
Mr.  C.  8.  Page,  Hyde  Park,  Vt.: 

I  am  well  acquainted  with  B.  A.  Thinnes,  tanner,  of  this  place.  I  be- 
lieve him  to  be  a  good  tanner,  honorable  and  straightforward  in  his  deal- 
ings and  attentive  to  business,  find  if  you  will  from  time  to  time  send  hides 
and  skins  to  him,  I  hereby  guarantee  that  he  will  not  convert  or  misappro- 
priate them,  but  will  well  and  faithfully  tan  them,  and,  if  he  does  not  buy 
and  pay  you  for  them  within  the  time  agreed  upon  between  you,  I  agree 
that  he  shall  deliver  them  at  Rose,  McAlpine  &  Co.,  New  York  City,  N.  Y. 

Notice  of  your  acceptance  is  hereby  waived. 

JOSEPH  KBEKEY. 
P.  O.  address:   248  Freeman  St. 

It  was  shown  at  the  trial  that  the  "defendant  was  an  illiterate  man,  who 
could  not  read  nor  write,  except  possibly  to  sign  his  name.  That  he  signed 
the  paper  at  the  request  of  Thinnes  when  in  a  state  of  intoxication,  and 
under  a  false  representation  that  it  was  an  application  for  a  license  under 
the  excise  law.  The  principal  part  of  the  instrument  was  in  print,  probably 
prepared  by  the  plaintiff,  or  under  his  direction.  At  all  events  it  was  pre- 
sented to  the  defendant  by  Thinnes,  the  representations  as  to  its  character 
were  made  by  him,  and  when  he  procured  the  defendant's  signature,  he 
sent  it  the  plaintiff,  who  so  far  as  appears,  never  met  or  had  any  personal 
transaction  with  the  defendant.  ...  If  this  instrument  had  been  a  negotiable 
promissory  note  the  defendant's  liability  to  the  plaintiff  would  depend  upon 
the  question  of  negligence  and  there  does  not  appear  to  be  any  sound  reason 
for  a  different  rule  in  this  case.  Chapman  v.  Rose,  56  N.  Y.  137;  Whitney 
v.  Snyder,  2  Lans.  477 ;  National  Exchange  Bank  v.  Veneman.  43  Hun,  241 ; 
Fenton  v.  Robinson,  4  Id.  252." 


REALITY   OF    CONSENT:    MISTAKE.  277 

was  brought,  and  at  the  trial  the  judge  charged  the  jury,  in  effect, 
that,  if  the  defendant  was  by  the  fraud  of  the  agent  led  to  believe  that 
he  was  signing  his  name  only  for  the  purpose  of  showing  how  it  was 
spelled,  then  he  was  not  bound.  The  court  also  refused  to  charge 
that,  if  the  defendant  by  his  own  negligence  in  any  way  contributed 
to  the  perpetration  of  the  fraud,  he  could  not  set  up  the  defense  of 
fraud.  The  circumstances  of  the  second  suit  are  substantially  the 
same,,  except  that,  instead  of  being  asked  to  sign  his  name  in  order 
to  show  how  it  was  spelled,  the  defendant  was  requested  to  sign  his 
name  as  an  autograph  to  be  used  with  the  sketch  of  his  life.  The  de- 
fendants have  obtained  verdicts  and  judgments,  the  plaintiff  insists 
that  the  cases  were  wrongly  submitted  to  the  jury,  in  the  respects 
above  indicated.  The  plaintiff  does  not  claim  that,  in  the  absence  of 
negligence,  the  fraudulent  representations  implied  in  the  requests 
made  by  the  agent  were  insufficient  to  defeat  the  alleged  contracts,  but 
he  urges  that  as  the  defendants  were  able  to  read,  and  had  the  printed 
papers  placed  in  their  hands,  they  had  no  right  to  act  upon  the  repre- 
sentations, but  were  bound  to  inform  themselves  of  the  purport  of  the 
documents,  and  that  their  negligence  on  this  point  should  preclude  the 
proposed  defense. 

No  doubt,  there  are  many  decisions  which  hold  that,  under  certain 
circumstances,  a  person  may  be  debarred  by  his  negligence  from  de- 
feating what  appears  to  be  his  contract,  on  the  ground  of  fraud. 
Some  of  these  decisions  rest  upon  the  desirability  of  preserving  gen- 
eral confidence  in  commercial  paper;  others  upon  the  legal  maxim, 
"Caveat  emptor";  others  upon  the  equitable  doctrine  that,  when  one 
of  two  persons  otherwise  innocent  must  suffer,  he  should  suffer  whose 
negligence  has  allowed  the  loss  to  occur ;  and  still  others  upon  the  rule 
of  evidence,  that,  when  contracting  parties  execute  a  writing  supposed 
to  express  their  contract,  that  writing  becomes  the  conclusive  proof 
of  the  terms  of  their  agreement,  and  hence  there  is  cast  upon  the 
parties  a  stringent  duty  to  inform  themselves  of  the  real  meaning  of 
the  instrument  signed. 

The  last  two  classes  approach  the  case  in  hand,  but  neither  of  them 
includes  it.  In  the  first  place,  the  defendants  did  not  know  they  were 
signing  contracts,  and  therefore  were  not  called  upon  to  exercise  that 
vigilance  which  such  a  transaction  reasonably  demands.  They  were 
doing  acts  which  were  not  intended  to  have,  and,  if  the  representations 
of  the  agent  had  been  honest,  could  not  have,  any  obligatory  force  or 
legal  effect  whatever,  and  as  to  which,  consequently,  there  was  no 
legal  duty  of  care.  In  the  second  place,  the  plaintiff  does  not  stand 
in  the  position  of  an  innocent  person.  As  assignee,  he  is  entitled  only 
to  the  rights  of  his  assignor ;  and  the  assignor  is,  in  legal  contempla- 
tion, implicated  in  the  fraud  of  the  agent,  so  far  as  relates  to  the 
enforcement  of  the  alleged  contracts  from  which  the  defendants  have 


278  FORMATION   OF    CONTRACT. 

hitherto  accepted  no  benefit.  Said  Mr.  Justice  Story  in  his  work  on 
Agency  (section  139),  it  is  a  "sound  and  perfectly  well-settled  princi- 
ple that,  if  a  principal  seeks  to  enforce  a  contract  made  by  his  agent, 
he  is  as  much  bound  by  any  material  misrepresentation  made  therein 
by  the  agent  as  if  made  by  himself."  A  fortiori,  it  would  seem,  a 
person  cannot  enforce  as  a  contract  that  which  in  truth  never  was  in- 
tended to  have  even  the  form  of  a  contract,  but  which  has  assumed 
such  a  form  through  the  fraud  of  his  agent.  We  know  of  no  just 
principle,  nor  have  we  been  referred  to  any  judicial  decision,  sanction- 
ing the  notion  that,  in  circumstances  like  these  before  us,  a  person 
can,  out  of  the  fraud  of  his  own  agent  and  the  negligence  of  a  third 
party,  create  a  contract  legally  binding  upon  the  latter. 

Our  conclusion,  therefore,  is  that  there  was  no  error  in  submitting 
these  cases  to  the  jury,  and  that  the  judgment  should  be  affirmed. 

9  Cyc.  390-391    (61-62) ;  W.  P.  583   (27)  ;  585   (30). 


'(iii.)  Mistake  as  to  the  identity  of  the  person  with  whom  the  con- 
tract is  made. 

BOSTON  ICE  CO.  v.  POTTER. 
123  MASSACHUSETTS,  28.— 1877. 

Contract  on  an  account  annexed,  for  ice  sold  and  delivered  between 
April  1,  1874,  and  April  1,  1875.  Answer,  a  general  denial.  Judg- 
ment for  defendant.  Plaintiff  alleged  exceptions. 

ENDICOTT,  J.  To  entitle  the  plaintiff  to  recover,  it  must  show 
some  contract  with  the  defendant.  There  was  no  express  -contract, 
and  upon  the  facts  stated  no  contract  is  to  be  implied.  The  defendant 
had  taken  ice  from  the  plaintiff  in  1873,  but,  on  account  of  some  dis- 
satisfaction with  the  manner  of  supply,  he  terminated  his  contract, 
and  made  a  contract  for  his  supply  with  the  Citizens'  Ice  Company. 
The  plaintiff  afterward  delivered  ice  to  the  defendant  for  one  year 
without  notifying  the  defendant,  as  the  presiding  judge  has  found, 
that  it  had  bought  out  the  business  of  the  Citizens'  Ice  Company,  until 
after  the  delivery  and  consumption  of  the  ice. 

The  presiding  judge  has  decided  that  the  defendant  had  a  right  to 
assume  that  the  ice  in  question  was  delivered  by  the  Citizens'  Ice 
Company,  and  has  thereby  necessarily  found  that  the  defendant's  con- 
tract with  that  company  covered  the  time  of  the  delivery  of  the  ice. 

There  was  no  privity  of  contract  established  between  the  plaintiff 
and  defendant,  and  without  such  privity  the  possession  and  use  of  the 
property  will  not  support  an  implied  assumpsit.  Hills  v.  Snell,  104 
Mass.  173,  177.  And  no  presumption  of  assent  can  be  implied  from 
the  reception  and  use  of  the  ice,  because  the  defendant  had  no  kcowl- 


REALITY    OF    CONSENT:    MISTAKE.  279 

edge  that  it  was  furnished  by  the  plaintiff,  but  supposed  that  he  re- 
ceived it  under  the  contract  made  with  the  Citizens'  Ice  Company. 
Of  this  change  he  was  entitled  to  be  informed. 

A  party  has  a  right  to  select  and  determine  with  whom  he  will  con- 
tract, and  cannot  have  another  person  thrust  upon  him  without  his  con- 
sent. It  may  be  of  importance  to  him  who  performs  the  contract,  as 
when  he  contracts  with  another  to  paint  a  picture,  or  write  a  book,  or 
furnish  articles  of  a  particular  kind,  or  when  he  relies  upon  the  char- 
acter or  qualities  of  an  individual,  or  has,  as  in  this  case,  reasons  why 
he  does  not  wish  to  deal  with  a  particular  party.  In  all  these  cases, 
as  he  may  contract  with  whom  he  pleases,  the  sufficiency  of  his  reasons 
for  so  doing  cannot  be  inquired  into.  If  the  defendant,  before  receiv- 
ing the  ice,  or  during  its  delivery,  had  received  notice  of  the  change, 
and  that  the  Citizens'  Ice  Company  could  no  longer  perform  its  con- 
tract with  him,  it  would  then  have  been  his  undoubted  right  to  have 
rescinded  the  contract  and  to  decline  to  have  it  executed  by  the  plain- 
tiff. But  this  he  was  unable  to  do,  because  the  plaintiff  failed  to  in- 
form him  of  that  which  he  had  a  right  to  know.  Orcutt  v.  Nelson,  1 
Gray,  536,  542;  Winchester  v.  Howard,  97  Mass.  303;  Hardman  v. 
Booth,  1  H.  &  C.  803;  Humble  v.  Hunter,  12  Q.  B.  310;  Robson  v. 
Drummond,  2  B.  &  Ad.  303.  If  he  had  received  notice  and  continued 
to  take  the  ice  as  delivered,  a  contract  would  be  implied.  Mudge  v. 
Oliver,  1  Allen,  74;  Orcutt  v.  Nelson,  ubi  supra;  Mitchell  v.  Lapage, 
Holt  N.  P.  253. 

There  are  two  English  cases  very  similar  to  the  case  at  bar.  In 
Schmaling  v.  Thomlinson  (6  Taunt.  147)  a  firm  was  employed  by 
the  defendants  to  transport  goods  to  a  foreign  market,  and  transferred 
the  entire  employment  to  the  plaintiff,  who  performed  it  without  the 
privity  of  the  defendants,  and  it  was  held  that  he  could  not  recover 
compensation  for  his  services  from  the  defendants. 

The  case  of  Boulton  v.  Jones  (2  H.  &  N.  564)  was  cited  by  both 
parties  at  the  argument.  There  the  defendant,  who  had  been  in  the 
habit  of  dealing  with  one  Brocklehurst,  sent  a  written  order  to  him 
for  goods.  The  plaintiff,  who  had  on  the  same  day  bought  out  the 
business  of  Brocklehurst,  executed  the  order  without  giving  the  defen- 
dant notice  that  the  goods  were  supplied  by  him  and  not  by  Brockle- 
hurst. And  it  was  held  that  the  plaintiff  could  not  maintain  an 
action  for  the  price  of  the  goods  against  the  defendant.  It  is  said 
in  that  case  that  the  defendant  had  a  right  of  set-off  against  Brockle- 
hurst, with  whom  he  had  a  running  account,  and  that  is  alluded  to 
in  the  opinion  of  Baron  Bramwell,  though  the  other  judges  do  not  men- 
tion it. 

The  fact  that  a  defendant  in  a  particular  case  has  a  claim  in  set- 
off  against  the  original  contracting  party  shows  clearly  the  injustice  of 
forcing  another  person  upon  him  to  execute  the  contract  without  his 


280  FORMATION   OF    CONTRACT. 

consent,  against  whom  his  set-off  would  not  be  available.  But  the 
actual  existence  of  the  claim  in  set-off  cannot  be  a  test  to  determine 
that  there  is  no  implied  assumpsit  or  privity  between  the  parties.  Nor 
can  the  non-existence  of  a  set-off  raise  an  implied  assumpsit.  If  there 
is  such  a  set-off,  it  is  sufficient  to  state  that  as  a  reason  why  the  defend- 
ant should  prevail ;  but  it  by  no  means  follows  that  because  it  does  not 
exist  the  plaintiff  can  maintain  his  aption.  The  right  to  maintain  an 
action  can  never  depend  upon  whether  the  defendant  has  or  has  not  a 
defense  to  it. 

The  implied  assumpsit  arises  upon  the  dealings  between  the  parties 
to  the  action,  and  cannot  arise  upon  the  dealings  between  the  de- 
fendant' and  the  original  contractor,  to  which  the  plaintiff  was  not  a 
party.  At  the  same  time,  the  fact  that  the  right  of  set-off  against  the 
original  contractor  could  not,  under  any  circumstances,  be  availed  of 
in  an  action  brought  upon  the  contract  by  the  person  to  whom  it  was 
transferred  and  who  executed  it,  shows  that  there  is  no  privity  be- 
tween the  parties  in  regard  to  the  subject  matter  of  this  action. 

It  is,  therefore,  immaterial  that  the  defendant  had  no  claim  in 
set-off  against  the  Citizens'  Ice  Company. 

We  are  not  called  upon  to  determine  what  other  remedy  the  plain- 
tiff has,  or  what  would  be  the  rights  of  the  parties  if  the  ice  were 
now  in  existence. 

Exceptions  overruled. 

9  Cyc.  403  (19-20)  ;  W.  P.  591  (c)  ;  16  H.  L.  R.  381;  20  H.  L.  R.  424; 
Costigan,  The  doctrine  of  Boston  Ice  Co.  v.  Potter,  7  C.  L.  R.  32. 


EDMUNDS  v.  MERCHANTS'  DESPATCH  TRANSP.  CO. 
135    MASSACHUSETTS,    283.— 1883. 

Three  actions  of  tort,  with  counts  in  contract,  against  a  common 
carrier,  to  recover  the  value  of  goods  intrusted  to  it  for  carriage  to 
Dayton,  Ohio.  Verdict  for  plaintiffs ;  defendant  alleges  exceptions. 

MORTON,  C.  J.  These  three  cases  were  tried  together.  In  some 
features  they  resemble  the  case  of  Samuel  v.  Cheney  [135  Mass.  278]. 
In  other  material  features  they  differ  from  it.  They  also  in  some 
respects  differ  from  each  other.  In  two  of  the  cases  a  swindler,  rep- 
resenting himself  to  be  Edward  Pape  of  Dayton,  Ohio,  who  is  a  repu- 
table and  responsible  merchant,  appeared  personally  in  Boston,  and 
bought  of  the  plaintiffs  the  goods  which  are  the  subject  of  the  suits 
respectively.  In  those  cases,  we  think  it  clear,  upon  principle  and 
authority,  that  there  was  a  sale,  and  the  property  in  the  goods  passed 
to  the  purchaser.  The  minds  of  the  parties  met  and  agreed  upon  all 
the  terms  of  the  sale,  the  thing  sold,  the  price  and  time  of  payment, 
the  person  selling,  and  the  person  buying.  The  fact  that  the  seller 


REALITY   OF    CONSENT:    MISTAKE.  281 

was  induced  to  sell  by  fraud  of  the  buyer  made  the  sale  voidable,  but 
not  void.  He  could  not  have  supposed  that  he  was  selling  to  any 
other  person;  his  intention  was  to  sell  to  the  person  present,  and 
identified  by  sight  and  hearing ;  it  does  not  defeat  the  sale  because  the 
buyer  assumed  a  false  name,  or  practiced  any  other  deceit  to  induce 
the  vendor  to  sell. 

In  Cundy  v.  Lindsay,  3  App.  Cas.  459,  464,  where  the  question  was 
whether  a  man,  who  in  good  faith  had  bought  chattels  of  a  swindler 
who  had  obtained  possession  of  them  by  fraud,  could  hold  them  against 
the  former  owner,  Lord  Chancellor  Cairns  states  the  rule  to  be  that, 
"if  it  turns  out  that  the  chattel  has  come  into  the  hands  of  the  person 
who  professed  to  sell  it,  by  a  de  facto  contract — that  is  to  say,  a  con- 
tract which  has  purported  to  pass  the  property  to  him  from  the  owner 
of  the  property,  there  the  purchaser  will  obtain  a  good  title." 

In  the  cases  before  us,  there  was  a  de  facto  contract,  purporting, 
and  by  which  the  plaintiffs  intended,  to  pass  the  property  and  posses- 
sion of  the  goods  to  the  person  buying  them;  and  we  are  of  opinion 
that  the  property  did  pass  to  the  swindler  who  bought  the  goods.  The 
sale  was  voidable  by  the  plaintiffs;  but  the  defendant,  the  carrier  by 
whom  they  were  forwarded,  had  no  duty  to  inquire  into  its  validity. 
The  person  who  bought  them,  and  who  called  himself  Edward  Pape, 
owned  the  goods,  and  upon  their  arrival  in  Dayton  had  the  right  to 
demand  them  of  the  carrier.  In  delivering  them  to  him,  the  carrier 
was  guilty  of  no  fault  or  negligence.  It  delivered  them  to  the  person 
who  bought  and  owned  them,  who  went  by  the  name  of  Edward  Pape, 
and  thus  answered  the  direction  upon  the  packages,  and  who  was  the 
person  to  whom  the  plaintiffs  sent  them.  Dunbar  v.  Boston  &  Provi- 
dence Railroad,  110  Mass.  26.  The  learned  judge  who  tried  the  cases 
in  the  Superior  Court  based  his  charge  upon  a  different  view  of  the 
law ;  and,  as  the  three  cases  were  tried  together,  there  must  be  a  new 
trial  in  each. 

It  seems  to  have  been  assumed  that  the  same  questions  are  raised 
in  each  case.  It  is  proper  that  we  should  add  that  the  third  case 
differs  materially  from  the  others.  In  that  case,  the  contract  did  not 
purport,  nor  the  plaintiffs  intend,  to  sell  to  the  person  who  was 
present  and  ordered  the  goods.  The  swindler  introduced  himself 
as  a  brother  of  Edward  Pape  of  Dayton,  0.,  buying  for  him.  By 
referring  to  the  mercantile  agency,  he  tacitly  represented  that  he  was 
buying  for  the  Edward  Pape  who  was  there  recorded  as  a  man  of 
means.  The  plaintiffs  understood  that  they  were  selling,  and  in- 
tended to  sell,  to  the  real  Edward  Pape.  There  was  no  contract  made 
with  him,  because  the  swindler  who  acted  as  his  agent  had  no  author- 
ity, but  there  was  no  contract  of  sale  made  with  any  one  else.  The 
relation  of  vendor  and  vendee  never  existed  between  the  plaintiffs 
and  the  swindler.  The  property  in  the  goods,  therefore,  did  not  pass 


282  FORMATION   OF    CONTRACT. 

to  the  swindler;  and  the  defendant  cannot  defend,  as  in  the  other  cases, 
upon  the  ground  that  it  has  delivered  the  goods  to  the  real  owner. 
Hardman  v.  Booth,  32  L.  J.  (N.  S.)  Ex.  105;  Kingsford  v.  Merry,  26 
L.  J.  (N.  S.)  Ex.  83;  Barker  v.  Dinsmore,  72  Penn.  St.  427. 

Whether  the  defendant  has  any  other  justification  or  excuse  for 
delivering  the  goods  to  the  swindler  is  a  question  not  raised  by  this 
bill  of  exceptions,  and  not  considered  at  the  trial;  and  therefore  we 
cannot  express  an  opinion  upon  it. 

Exceptions  sustained.1 

9  Cyc.  402  (18)  ;  W.  P.  592  (42)  ;  718  (45)  ;  6  Mich.  L.  R.  184;  Ashley,  in 
his  Mutual  assent  in  contract,  3  C.  L.  R.  71. 

i  In  Douglass  v.  Scott,  130  N.  Y.  Appellate  Division,  322,  the  action  was 
brought  to  recover  damages  for  the  alleged  conversion  of  135  bushels  of 
buckwheat.  The  complaint  alleged  that  the  defendant  falsely  and  fraudu- 
lently represented  to  the  plaintiff  that  he  was  the  agent  for  "Hewett  Bros."; 
that  the  plaintiff  relied  upon  the  representation  and  was  thereby  induced  to 
part  with  and  deliver  to  the  defendant  13J5  bushels  of  buckwheat  of  the 
value  6f  $110;  that  the  representation  was  false,  and  was  then  known  to  be 
false,  and  was  made  by  the  defendant  with  intent  to  deceive  and  defraud 
the  plaintiff;  that  the  defendant,  having  so  obtained  the  possession  of  the 
buckwheat  from  the  plaintiff,  unlawfully  converted  and  disposed  of  it  to  his 
own  use.  "Wherefore  plaintiff  demands  judgment  against  the  defendant  for 
$110  damages  for  the  wrongful  taking  and  detention  of  said  buckwheat,  with 
interest  thereon  from  the  15th  day  of  November,  1907."  The  court  held: 

"The  ordinary  rule  undoubtedly  is  that,  where  a  party  seeks  to  rescind  a 
contract  on  the  ground  of  fraud,  he  must  tender  a  return  of  what  he  has 
received  under  it  before  he  can  maintain  an  action  at  law;  but  that  is  not 
this  case.  The  plaintiff  does  not  claim  that  he  was  induced  by  fraud  to 
make  a  contract  with  the  defendant,  nor  does  he  seek  to  rescind  or  avoid  a 
contract  obtained  by  fraud,  but  to  recover  the  value  of  property  obtained 
by  fraud.  The  claim  of  the  plaintiff  is  that  he  did  not  assent  to  a  sale  to 
the  defendant,  and  that  the  agreement  with  him  was  a  nullity.  The  im- 
portant and  material  allegation  of  the  complaint  is  that  the  defendant  se- 
cured possession  of  the  property  in  question  by  artifice  and  fraud,  and  con- 
verted it  to  his  own  use,  and  we  must  assume  that  the  justice  so  found. 
This  case  is  therefore  not  within  the  rule  laid  down  in  Gould  v.  Cayuga 
County  Nat.  Bank,  86  N.  Y.  75,  and  kindred  cases,  cited  by  the  learned 
county  judge  in  support  of  his  position.  It  is  an  action  for  the  wrongful 
conversion  of  property  obtained  from  the  owner  by  fraud.  The  wrongdoer, 
in  such  a  case,  is  not  entitled  to  a  return  of  the  amount  paid  by  him  to 
effectuate  his  fraud  and  obtain  possession  of  the  property.  The  law  cares 
very  little  what  a  fraudulent  party's  loss  may  be  and  exacts  nothing  for 
his  sake.  Masson  v.  Bovet,  1  Denio,  74,  43  Am.  Dec.  651." 

As  to  the  evidence  of  the  identity  of  a  party  contracting  over  the  telephone, 
see  Wells  v.  Silverman,  125  N.  Y.  Supplement,  457;  11  Col.  L.  Rev.  182. 


REALITY   OF    CONSENT:    MISTAKE.  283 

(iv.)  Mistake  as  to  the  subject  matter. 

a.  Mistake  of  identity  as  to  the  thing  contracted  for. 

KYLE  v.  KAVANAGH. 

103  MASSACHUSETTS,  356.— 1869. 

Contract  to  recover  the  price  of  land  sold  and  conveyed  to  the  de- 
fendant, pursuant  to  the  following  agreement: 

"Boston,  July  2,  1868.  I  hereby  agree  to  sell  to  E.  Kavanagh  four  lots  of 
land  in  Waltham  on  Prospect  Street,  so  called,  for  50  shares  of  Mitchell 
Granite  stock,  9000  shares  of  Revenue  Gold  stock,  also  $150  in  lawful  money 
for  said  land.  Said  Kyle  is  to  give  said  Kavanagh  a  good  title,  if  the  title 
is  in  said  Kyle,  so  he  can  give  deed;  if  said  Kyle  cannot  give  a  good  title, 
then  this  agreement  is  null  and  void." 

The  defendant  contended  and  introduced  evidence  tending  to  show 
that,  either  by  the  fraud  or  misrepresentation  of  the  plaintiff,  or  by 
mistake,  the  land  conveyed  by  the  deed  was  not  the  land  which  he 
bargained  for,  and  that  what  he  had  agreed  to  purchase  was  a  lot  of 
land  on  another  Prospect  Street  in  Waltham,  in  no  way  connected  with 
that  mentioned  in  the  deed,  and  a  long  way  off ;  and  he  also  contended 
that  he  was  entitled  to  a  warranty  deed.  Verdict  for  defendant. 

MORTON,  J.  .  .  .  The  other  exception  taken  by  the  plaintiff  can- 
not be  sustained.  The  instructions  given  were,  in  substance,  that,  if 
the  defendant  was  negotiating  for  one  thing  and  the  plaintiff  was 
selling  another  thing,  and  their  minds  did  not  agree  as  to  the  subject 
matter  of  the  sale,  there  would  be  no  contract  by  which  the  defendant 
would  be  bound,  though  there  was  no  fraud  on  the  part  of  the  plaintiff. 
This  ruling  is  in  accordance  with  the  elementary  principles  of  the 
law  of  contracts,  and  was  correct.  Spurr  v.  Benedict,  99  Mass.  463. 

Exception  sustained.1 

9  Cyc.  398    (8);  W.  P.  599    (53). 

i  (To  the  ruling  as  to  defendant's  right  to  a  warranty  deed.)  In  Hazard 
v.  New  England  Marine  Ins.  Co.  (1  Sumner,  218),  Mr.  Justice  Story  charged 
that  if  in  a  policy  of  insurance  the  insured  used  the  term  "coppered  ship" 
in  one  sense  and  the  underwriter  in  another,  "plainly  it  would  be  a  contract 
founded  in  mutual  mistake;  and  therefore  neither  party  would  be  bound  by 
it.  They  would  not  have  contracted  ad  idem.  There  would  never  have 
been  an  agreement  to  the  same  subject  matter  in  the  same  sense.  This 
principle  is  so  well  known  and  so  familiar,  that  it  may  now  be  deemed  to 
be  treasured  up  among  the  elements  of  jurisprudence." 


284  FORMATION   OF   CONTRACT. 

6.  Mistake  as  to  the  existence  of  the  thing  contracted  for. 
GIBSON  v.  PELKIE. 

37  MICHIGAN,  380.— 1877. 

Assumpsit. 

GRAVES,  J.  The  right  Gibson  asserts  is  based  solely  on  an  alleged 
special  agreement  entitling  him  to  collect  so  much  as  he  might  of  a 
specific  judgment,  and  to  retain  one-half  of  the  sum  collected.  Ac- 
cording to  his  own  statement  of  his  case,  the  judgment  was  the  ex- 
clusive subject  matter  of  the  agreement  relied  on.  No  other  demand 
or  form  of  demand  entered  into  the  bargain.  The  parties  had  noth- 
ing else  in  their  minds.  They  did  not  assume  to  contract  about  an 
unliquidated  claim  or  an  unadjudicated  cause  of  action,  the  enforce- 
ment of  which  in  Pelkie's  name  might  involve  him  in  a  much  larger 
liability 'than  would  be  likely  to  attend  the  collection  of  a  judgment. 
It  was  a  judgment  which  formed  the  subject  matter  of  the  bargain. 
Such  was  the  claim  made  by  the  declaration  and  such  was  the  case  in 
issue.  No  other  ground  for  recovery  appears.  Now,  there  was  no 
proof  of  a  judgment;  but  there  was  evidence  concerning  one,  and  it 
seems  to  have  been  in  effect  conceded  that  there  was  something  which 
had  been  taken  to  be  a  judgment,  but  which  was  so  defective  that  it 
could  not  avail  anything. 

The  case  must  be  viewed  as  it  is.  It  is  not  admissible  to  arbitrarily 
admit  one  part  and  reject  another.  If  what  there  is  to  show  that  the 
supposed  judgment  was  void  is  rejected,  then  all  there  is  to  make  out 
the  existence  of  any  such  judgment  will  be  stricken  out,  and  if  that  be 
done,  there  will  be  no  proof  whatever  of  the  essence  of  the  cause  of 
action  set  up.  There  will  be  no  showing  that  there  was  any  subject 
matter  for  the  alleged  agreement,  and  no  proof  to  maintain  the  actual 
averments  of  the  declaration.  The  cause  is  presented  here  by  both 
sides  upon  the  theory  that  there  was  something  which  was  intended  as 
a  judgment,  but  which  was  void  and  hence  uncollectible,  and  the  plain- 
tiff in  error  cannot  ask  a  more  favorable  view  of  the  record.  If,  then, 
there  was  a  proceeding  which  was  meant  to  be  a  judgment,  but  which 
was  void,  there  was  nothing  to  which  the  actual  bargaining  could 
attach.  There  was  no  subject  matter.  The  parties  supposed  there 
was  a  judgment,  and  negotiated  and  agreed  on  that  basis,  but  there 
was  none.  Where  they  assumed  there  was  substance,  there  was  no 
substance.  They  made  no  contract  because  the  thing  they  supposed 
to  exist,  and  the  existence  of  which  was  indispensable  to  the  institution 
of  the  contract,  had  no  existence.  Allen  v.  Hammond,  11  Pet.  63; 
Suydam  v.  Clark,  2  Sandf.  Sup'r  Court  Rep.  133;  Gove  v.  Wooster, 
Lalor's  Supp.  to  Hill  &  Den.  30 ;  Smidt  v.  Tiden,  L.  R.  9  Q.  B.  446 ; 


REALITY    OF    CONSENT:    MISTAKE.  285 

9  Eng.  379 ;  Couturier  v.  Hastie,  5  H.  L.  673;  Hazard  v.  New  England 
Ins.  Co.,  1  Sumn.  218;  Silvernail  v.  Cole,  12  Barb.  685;  Sherman  v. 
Barnard,  19  Barb.  291 ;  Metcalf  on  Cont.  30,  31 ;  1  Poth.  Ob.  by  Evans, 
113;  Benjamin  on  Sales,  §§  76,  77,  ch.  4;  2  Kent.  Com.  468.  It  is 
therefore  the  opinion  of  a  majority  of  the  court  that  the  judgment  in 
Pelkie's  favor  ought  not  to  be  disturbed. 

Judgment  is  affirmed  with  costs. 

9  Cyc.  399-401    (10-12);  W.  P.  612    (71). 


SHERWOOD  v.  WALKER. 
66  MICHIGAN,  568.— 1887. 

MORSE,  J.  Replevin  for  a  cow.  Suit  commenced  in  justice's  court. 
Judgment  for  plaintiff.  Appealed  to  Circuit  Court  of  Wayne  County, 
and  verdict  and  judgment  for  plaintiff  in  that  court.  The  defendants 
bring  error,  and  set  out  twenty-five  assignments  of  the  same. 

The  main  controversy  depends  upon  the  construction  of  a  contract 
for  the  sale  of  the  cow.  The  plaintiff  claims  that  the  title  passed,  and 
bases  his  action  upon  such  claim.  The  defendants  contend  that  the 
contract  was  executory,  and  by  its  terms  no  title  to  the  animal  was 
acquired  by  plaintiff. 

The  defendants  reside  at  Detroit,  but  are  in  business  at  Walkerville, 
Ontario,  and  have  a  farm  at  Greenfield,  in  Wayne  County,  upon  which 
were  some  blooded  cattle  supposed  to  be  barren  as  breeders.  The 
Walkers  are  importers  and  breeders  of  polled  Angus  cattle. 

The  plaintiff  is  a  banker  living  at  Plymouth,  in  Wayne  County. 
He  called  upon  the  defendants  at  Walkerville  for  the  purchase  of  some 
of  their  stock,  but  found  none  there  that  suited  him.  Meeting  one 
of  the  defendants  afterwards,  he  was  informed  that  they  had  a  few 
head  upon  this  Greenfield  farm.  He  was  asked  to  go  out  and  look 
at  them,  with  the  statement  at  the  time  that  they  were  probably  bar- 
ren, and  would  not  breed. 

May  5,  1886,  plaintiff  went  out  to  Greenfield  and  saw  the  cattle. 
A  few  days  thereafter,  he  called  upon  one  of  the  defendants  with  the 
view  of  purchasing  a  cow,  known  as  "Rose  2d  of  Aberlone."  After 
considerable  talk,  it  was  agreed  that  defendants  would  telephone  Sher- 
wood at  his  home  in  Plymouth  in  reference  to  the  price.  The  second 
morning  after  this  talk  he  was  called  up  by  telephone,  and  the  terms 
of  the  sale  were  finally  agreed  upon.  He  was  to  pay  five  and  one-half 
cents  per  pound,  live  weight,  fifty  pounds  shrinkage.  He  was  asked 
how  he  intended  to  take  the  cow  home,  and  replied  that  he  might  ship 
her  from  King's  cattle-yard.  He  requested  defendants  to  confirm  the 
sale  in  writing,  which  they  did  by  sending  him  the  following  letter : 


286  FORMATION    OF    CONTRACT. 

"WALKEBVILLE,  May  15,  1886. 

"T.  C.  SHERWOOD,  President,  etc. 

"Dear  Sir, — We  confirm  sale  to  you  of  the  cow,  Rose  2d  of  Aberlone,  lot 
56  of  our  catalogue,  at  five  and  a  half  cents  per  pound,  less  fifty  pounds 
shrink.  We  enclose  herewith  order  on  Mr.  Graham  for  the  cow.  You  might 
leave  check  with  him,  or  mail  to  us  here,  as  you  prefer. 

"Yours   truly, 

"HIBAM  WALKEB  &  SONS." 

The  order  upon  Graham  enclosed  in  the  letter  read  as  follows : 

"WALKEBVTIXE,  May  15,  1886. 

"GEOBGE  GBAHAM, — You  will  please  deliver  at  King's  cattle-yard  to  Mr. 
T.  C.  Sherwood,  Plymouth,  the  cow  Rose  2d  of  Aberlone,  lot  56  of  our  cata- 
logue. Send  halter  with  cow,  and  have  her  weighed. 

"Yours   truly, 

"HIBAM  WALKEB  &  SONS." 

On  the  twenty-first  of  the  same  month  the  plaintiff  went  to  defend- 
ants' farm  at  Greenfield,  and  presented  the  order  and  letter  to  Gra- 
ham, who  informed  him  that  the  defendants  had  instructed  him  not  to 
deliver  the  cow.  Soon  after,  the  plaintiff  tendered  to  Hiram  Walker, 
one  of  the  defendants,  $80,  and  demanded  the  cow.  Walker  refused 
to  take  the  money  or  deliver  the  cow.  The  plaintiff  then  instituted 
this  suit. 

After  he  had  secured  possession  of  the  cow  under  the  writ  of 
(replevin,  the  plaintiff  caused  her  to  be  weighed  by  the  constable  who 
served  the  writ,  at  a  place  other  than  King's  cattle-yard.  She  weighed 
1420  pounds. 

When  the  plaintiff,  upon  the  trial  in  the  Circuit  Court,  had  sub- 
mitted his  proofs  showing  the  above  transaction,  defendants  moved  to 
strike  out  and  exclude  the  testimony  from  the  case,  for  the  reason  that 
it  was  irrelevant,  and  did  not  tend  to  show  that  the  title  to  the  cow 
passed,  and  that  it  showed  that  the  contract  of  sale  was  merely  execu- 
tory. The  court  refused  the  motion,  and  an  exception  was  taken. 

The  defendants  then  introduced  evidence  tending  to  show  that  at 
the  time  of  the  alleged  sale  it  was  believed  by  both  the  plaintiff  and 
themselves  that  the  cow  was  barren  and  would  not  breed;  that 
she  cost  $850,  and  if  not  barren  would  be  worth  from  $750  to  $1000 ; 
that  after  the  date  of  the  letter,  and  the  order  to  Graham,  the  de- 
fendants were  informed  by  said  Graham  that  in  his  judgment  the  cow 
was  with  calf,  and  therefore  they  instructed  him  not  to  deliver  her  to 
plaintiff,  and  on  the  twentieth  of  May,  1886,  telegraphed  to  the  plain- 
tiff what  Graham  thought  about  the  cow  being  with  calf,  and  that 
consequently  they  could  not  sell  her.  The  cow  had  a  calf  in  the  month 
of  October  following. 

On  the  nineteenth  of  May  the  plaintiff  wrote  Graham  as  follows : 


REALITY    OF    CONSENT:    MISTAKE.  287 

"PLYMOUTH,  May  19,  1886. 
"MB.  GEORGE  GBAHAM,  Greenfield. 

"Dear  Sir, — I  have  bought  Rose  or  Lucy  from  Mr.  Walker,  and  will  be 
there  for  her  Friday  morning,  nine  or  ten  o'clock.  Do  not  water  her  in  the 
morning. 

"Yours,  etc., 

"T.  C.  SHERWOOD." 

Plaintiff  explained  the  mention  of  the  two  cows  in  this  letter  by 
testifying  that,  when  he  wrote  this  letter,  the  order  and  letter  of  de- 
fendants were  at  his  house,  and,  writing  in  a  hurry,  and  being  uncer- 
tain as  to  the  name  of  the  cow,  and  not  wishing  his  cow  watered,  he 
thought  it  would  do  no  harm  to  name  them  both,  as  his  bill  of  sale 
would  show  which  one  he  had  purchased.  Plaintiff  also  testified  that 
he  asked  defendants  to  give  him  a  price  on  the  balance  of  their  herd 
at  Greenfield,  as  a  friend  thought  of  buying  some,  and  received  a 
letter  dated  May  17,  1886,  in  which  they  named  the  price  of  five  cattle, 
including  Lucy  at  $90,  and  Eose  2d  at  $80.  When  he  received  the 
letter  he  called  defendants  up  by  telephone,  and  asked  them  why  they 
put  Kose  3d  in  the  list,  as  he  had  already  purchased  her.  They  re- 
plied that  they  knew  he  had,  but  thought  it  would  make  no  difference 
if  plaintiff  and  his  friend  concluded  to  take  the  whole  herd. 

The  foregoing  is  the  substance  of  all  the  testimony  in  the  case. 

The  circuit  judge  instructed  the  jury  that  if  they  believed  the 
defendants,  when  they  sent  the  order  and  letter  to  plaintiff,  meant  to 
pass  the  title  to  the  cow,  and  that  the  cow  was  intended  to  be  delivered 
to  plaintiff,  it  did  not  matter  whether  the  cow  was  weighed  at  any 
particular  place,  or  by  any  particular  person;  and  if  the  cow  was 
weighed  afterwards,  as  Sherwood  testified,  such  weighing  would  be  a 
sufficient  compliance  with  the  order;  if  they  believed  that  defendants 
intended  to  pass  the  title  by  the  writing,  it  did  not  matter  whether  the 
cow  was  weighed  before  or  after  suit  brought,  and  the  plaintiff  would 
be  entitled  to  recover. 

The  defendants  submitted  a  number  of  requests,  which  were  refused. 
The  substance  of  them  was  that  the  cow  was  never  delivered  to  plain- 
tiff, and  the  title  to  her  did  not  pass  by  the  letter  and  order;  and  that 
under  the  contract,  as  evidenced  by  these  writings,  the  title  did  not  pass 
until  the  cow  was  weighed  and  her  price  thereby  determined ;  and  that, 
if  the  defendants  only  agreed  to  sell  a  cow  that  would  not  breed,  then 
the  barrenness  of  the  cow  was  a  condition  precedent  to  passing  title, 
and  plaintiff  cannot  recover.  The  court  also  charged  the  jury  that 
it  was  immaterial  whether  the  cow  was  with  calf  or  not.  It  will 
therefore  be  seen  that  the  defendants  claim  that,  as  a  matter  of  law, 
the  title  to  this  cow  did  not  pass,  and  that  the  circuit  judge  erred  in 
submitting  the  case  to  the  jury,  to  be  determined  by  them,  upon  the 
intent  of  the  parties  as  to  whether  or  not  the  title  passed  with  the 
sending  of  the  letter  and  order  by  the  defendants  to  the  plaintiff.  .  .  . 


288  FORMATION   OF   CONTRACT. 

The  following  cases  in  this  court  support  the  instruction  of  the 
court  below  as  to  the  intent  of  the  parties  governing  and  controlling 
the  question  of  a  completed  sale,  and  the  passing  of  title :  Lingham 
v.  Eggleston,  27  Mich.  324 ;  Wilkinson  v.  Holiday,  33  Id.  386 ;  Grant  v. 
Merchants'  and  Manufacturers'  Bank,  35  Id.  527;  Carpenter  v.  Gra- 
ham, 42  Id.  194;  Brewer  v.  Michigan  Salt  Ass'n,  47  Id.  534;  Whit- 
comb  v.  Whitney,  24  Id.  486 ;  Byles  v.  Colier,  54  Id.  1 ;  Scotten  v. 
Sutter,  37  Id.  526,  532;  Ducey  Lumber  Co.  v.  Lane,  58  Id.  520,  525; 
Jenkinson  v.  Monroe  Bros.  &  Co.,  61  Id.  454. 

It  appears  from  the  record  that  both  parties  supposed  this  cow  was 
barren  and  would  not  breed,  and  she  was  sold  by  the  pound  for  an  in- 
significant sum  as  compared  with  her  real  value  if  a  breeder.  She  was 
evidently  sold  and  purchased  on  the  relation  of  her  value  for  beef, 
unless  the  plaintiff  had  learned  of  her  true  condition,  and  concealed 
such  knowledge  from  the  defendants.  Before  the  plaintiff  secured 
possession  of  the  animal,  the  defendants  learned  that  she  was  with  calf, 
and  therefore  of  great  value,  and  undertook  to  rescind  the  sale  by 
refusing  to  deliver  her.  The  question  arises  whether  they  had  a  right 
to  do  so. 

The  circuit  judge  ruled  that  this  fact  did  not  avoid  the  sale,  and  it 
made  no  difference  whether  she  was  barren  or  not.  I  am  of  the 
opinion  that  the  court  erred  in  this  holding.  I  know  that  this  is  a 
close  question,  and  the  dividing  line  between  the  adjudicated  cases  is 
not  easily  discerned.  But  it  must  be  considered  as  well  settled  that  a 
party  who  has  given  an  apparent  consent  to  a  contract  of  sale  may  re- 
fuse to  execute  it,  or  he  may  avoid  it  after  it  has  been  completed,  if 
the  assent  was  founded,  or  the  contract  made,  upon  the  mistake  of  a 
material  fact, — such  as  the  subject  matter  of  the  sale,  the  price,  or 
some  collateral  fact  materially  inducing  the  agreement;  and  this  can 
be  done  when  the  mistake  is  mutual.  1  Benj.  Sales,  §§  605,  606; 
Leake,  Cont.  339 ;  Story,  Sales  (4th  ed.),  §§  148,  377.  See  also  Cutts 
v.  Guild,  57  N".  Y.  229;  Harvey  v.  Harris,  112  Mass.  32;  Gardner  v. 
Lane,  9  Allen,  492 ;  S.  C.,  12  Allen,  44 ;  Huthmacher  v.  Harris'  Am'rs, 
38  Penn.  St.  491 ;  Byers  v.  Chapin,  28  Ohio  St.  300 ;  Gibson  v.  Pelkie, 
37  Mich.  380,  and  cases  cited;  Allen  v.  Hammond,  11  Pet.  63,  71. 

If  there  is  a  difference  or  misapprehension  as  to  the  substance  of  the 
thing  bargained  for,  if  the  thing  actually  delivered  or  received  is 
different  in  substance  from  the  thing  bargained  for  and  intended  to  be 
sold,  then  there  is  no  contract;  but  if  it  be  only  a  difference  in  some 
quality  or  accident,  even  though  the  mistake  may  have  been  the  actuat- 
ing motive  to  the  purchaser  or  seller,  or  both  of  them,  yet  the  contract 
remains  binding. 

"The  difficulty  in  every  case  is  to  determine  whether  the  mistake  or  mis- 
apprehension is  as  to  the  substance  of  the  whole  contract,  going,  as  it  were, 
to  the  root  of  the  matter,  or  only  to  some  point,  even  though  a  material  point, 


REALITY   OF    CONSENT:    MISTAKE.  289 

an  error  as  to  which  does  not  affect  the  substance  of  the  whole  consideration." 
Kennedy  v.  Panama  &c.  Mail  Co.,  L.  R.  2  Q.  B.  580,  588. 

It  has  been  held,  in  accordance  with  the  principles  above  stated,  that 
where  a  horse  is  bought  under  the  belief  that  he  is  sound,  and  both 
vendor  and  vendee  honestly  believe  him  to  be  sound,  the  purchaser 
must  stand  by  his  bargain,  and  pay  the  full  price,  unless  there  was  a 
warranty. 

It  seems  to  me,  however,  in  the  case  made  by  this  record,  that  the 
mistake  or  misapprehension  of  the  parties  went  to  the  whole  substance 
of  the  agreement.  If  the  cow  was  a  breeder,  she  was  worth  at  least 
$750 ;  if  barren,  she  was  worth  not  over  $80.  The  parties  would  not 
have  made  the  contract  of  sale  except  upon  the  understanding  and 
belief  that  she  was  incapable  of  breeding,  and  of  no  use  as  a  cow.  It 
is  true  she  is  now  the  identical  animal  that  they  thought  her  to  be 
when  the  contract  was  made;  there  is  no  mistake  as  to  the  identity 
of  the  creature.  Yet  the  mistake  was  not  of  the  mere  quality  of  the 
animal,  but  went  to  the  very  nature  of  the  thing.  A  barren  cow  is 
substantially  a  different  creature  than  a  breeding  one.  There  is  as 
much  difference  between  them  for  all  purposes  of  use  as  there  is  be- 
tween an  ox  and  a  cow  that  is  capable  of  breeding  and  giving  milk.  If 
the  mutual  mistake  had  simply  related  to  the  fact  whether  she  was 
with  calf  or  not  for  one  season,  then  it  might  have  been  a  good  sale; 
but  the  mistake  affected  the  character  of  the  animal  for  all  time,  and 
for  her  present  and  ultimate  use.  She  was  not  in  fact  the  animal,  or 
the  kind  of  animal,  the  defendants  intended  to  sell  or  the  plaintiff  to 
buy.  She  was  not  a  barren  cow,  and,  if  this  fact  had  been  known,  there 
would  have  been  no  contract.  The  mistake  affected  the  substance  of 
the  whole  consideration,  and  it  must  be  considered  that  there  was  no 
contract  to  sell,  or  sale  of  the  cow  as  she  actually  was.  The  thing  sold 
and  bought  had  in  fact  no  existence.  She  was  sold  as  a  beef  creature 
would  be  sold ;  she  is  in  fact  a  breeding  cow,  and  a  valuable  one. 

The  court  should  have  instructed  the  jury  that  if  they  found  that 
the  cow  was  sold,  or  contracted  to  be  sold,  upon  the  understanding  of 
both  parties  that  she  was  barren,  and  useless  for  the  purpose  of  breed- 
ing, and  that  in  fact  she  was  not  barren,  but  capable  of  breeding,  then 
the  defendant  had  a  right  to  rescind,  and  to  refuse  to  deliver,  and  the 
verdict  should  be  in  their  favor. 

The  judgment  of  the  court  below  must  be  reversed,  and  a  new  trial 
granted,  with  costs  of  this  court  to  defendants. 

Campbell,  C.  J.,  and  Champlin,  J.,  concurred.  Sherwood,  J.,  dis- 
sented. 

9  Cyc.  397    (4);   399-401    (10-12);    W.  P.  606    (65);   612    (71). 


2!)0  FORMATION    OF    CONTRACT. 

HECHT  v.  BATCHELLEK. 
147  MASSACHUSETTS,  335.— 1888. 

Contract  for  money  had  and  received.  Judgment  for  plaintiff. 
Defendants  appeal. 

MORTON,  C.  J.  The  defendants,  being  the  owners  of  a  promissory 
note  which  they  had  taken  in  the  ordinary  course  of  business,  sold  it 
through  brokers  to  the  plaintiffs.  It  was  afterwards  ascertained  that, 
two  hours  before  this  sale,  the  makers  of  the  note  had  made  a  "volun- 
tary assignment  of  all  their  assets  for  the  benefit  of  their  creditors,  to 
be  administered  under  the  insolvent  laws  of  Ohio,"  of  which  State  they 
were  residents.  Neither  of  the  parties  to  this  suit,  nor  the  brokers 
employed  by  the  defendants,  knew  of  the  assignment  at  the  time  of  the 
sale,  but  they  all  supposed  that  the  makers  were  doing  business  as 
theretofore.  The  plaintiffs  contend  that  they  are  entitled  to  recover 
upon  either  of  two  grounds :  first,  that  there  was  a  mutual  mistake  of 
the  parties  as  to  the  thing  sold,  and  therefore  no  contract  was  com- 
pleted between  them ;  and,  secondly,  that  there  was  a  warranty  express 
or  implied,  by  the  defendants,  that  the  makers  of  the  note  were  then 
carrying  on  business,  and  had  not  failed  or  made  an  assignment. 

It  is  a  general  rule,  that,  where  parties  assume  to  contract,  and 
there  is  a  mistake  as  to  the  existence  or  identity  of  the  subject  matter, 
there  is  no  contract,  because  of  the  want  of  the  mutual  assent  necessary 
to  create  one ;  so  that,  in  the  case  of  a  contract  for  the  sale  of  personal 
property,  if  there  is  such  mistake,  and  the  thing  delivered  is  not  the 
thing  sold,  the  purchaser  may  refuse  to  receive  it,  or,  if  he  receives  it, 
may  upon  discovery  of  the  mistake  return  it,  and  recover  back  the 
price  he  has  paid.  But  to  produce  this  result  the  mistake  must  be 
one  which  affects  the  existence  or  identity  of  the  thing  sold.  Any  mis- 
take as  to  its  value  or  quality,  or  other  collateral  attributes,  is  not 
sufficient  if  the  thing  delivered  is  existent,  and  is  the  identical  thing 
in  kind  which  was  sold.  Gardner  v.  Lane,  9  Allen,  492 ;  Gardner  v. 
Lane,  12  Allen,  39;  Spurr  v.  Benedict,  99  Mass.  463;  Bridgewater 
Iron  Co.  v.  Enterprise  Ins.  Co.,  134  Mass.  433 ;  Benjamin  on  Sales,  § 
54. 

In  the  case  at  bar,  the  subject  matter  of  the  contract  was  the  note  of 
J.  and  S.  B.  Sachs.  The  note  delivered  was  the  same  note  which  the 
parties  bought  and  sold.  They  may  both  have  understood  that  the 
makers  were  solvent,  whereas  they  were  insolvent ;  but  such  a  mistake 
or  misapprehension  affects  the  value  of  the  note  and  not  its  identity. 
Day  v.  Kinney,  131  Mass.  37.  In  Day  v.  Kinney,  the  makers  of  the 
note  sold  were  in  fact  insolvent,  but  they  had  not  stopped  payment  or 
been  adjudged  insolvent,  and  the  decision  is  confined  to  the  facts  of  the 
case.  But  we  think  the  same  principles  apply  in  this  case.  The 


REALITY    OF    CONSENT:    MISTAKE.  291 

makers  of  the  note  had  made  an  assignment  for  the  benefit  of  their 
creditors,  but  this  did  not  extinguish  the  note,  or  destroy  its  identity. 
It  remained  an  existing  note,  capable  of  being  enforced,  with  every 
essential  attribute  going  to  its  nature  as  a  note  which  it  had  before. 
Its  quality  and  value  were  impaired,  but  not  its  identity.  The  parties 
bought  and  sold  what  they  intended,  and  their  mistake  was  not  as  to 
the  subject  matter  of  the  sale,  but  as  to  its  quality.  We  are  therefore 
of  opinion  that  the  sale  was  valid,  and  that  the  plaintiffs  cannot  re- 
cover the  amount  they  paid,  as  upon  a  failure  of  consideration. 

We  think  the  principles  we  have  stated  are  decisive  of  the  case  be- 
fore us.  The  defendants  sold  the  note  in  good  faith.  So  far  as  the 
evidence  shows,  neither  party,  at  the  time  of  the  sale,  spoke  of,  or  in- 
quired about,  or  knew  anything  about,  the  failure  of  the  makers. 
They  stood  upon  an  equal  footing,  and  they  had  equal  means  of  know- 
ing the  standing  of  the  makers.  It  was  understood  that  the  defendants 
were  selling  the  note  without  recourse  to  them.  They  did  not  ex- 
pressly warrant  the  value  of  the  note,  and  we  are  of  the  opinion  that 
from  the  circumstances  no  warranty  could  fairly  be  inferred  of  the 
solvency  of  the  makers,  or  that  they  continued  to  do  business. 

We  are  therefore  of  opinion,  .  .  .  upon  the  facts  of  the  case,  the 
court  was  not  justified  in  finding  for  the  plaintiffs. 

Exceptions  sustained. 

9  Cyc.  395  (86-89)  ;  W.  P.  606  (65)  ;  654  (5). 


WOOD  v.  BOYtfTON. 

64  WISCONSIN,  265.— 1885. 

TAYLOR,  J.  This  action  was  brought  in  the  Circuit  Court  for  Mil- 
waukee County  to  recover  the  possession  of  an  uncut  diamond  of  the 
alleged  value  of  $1000.  The  case  was  tried  in  the  Circuit  Court  and, 
after  hearing  all  the  evidence  in  the  case,  the  learned  circuit  judge 
directed  the  jury  to  find  a  verdict  for  the  defendants.  The  plaintiff 
excepted  to  such  instruction,  and,  after  a  verdict  was  rendered  for  the 
defendants,  moved  for  a  new  trial  upon  the  minutes  of  the  judge.  The 
motion  was  denied,  and  the  plaintiff  duly  excepted,  and,  after  judg- 
ment was  entered  in  favor  of  the  defendants,  appealed  to  this  court. 

The  defendants  are  partners  in  the  jewelry  business.  On  the  trial  it 
appeared  that  on  and  before  the  28th  of  December,  1883,  the  plaintiff 
was  the  owner  of  and  in  the  possession  of  a  small  stone  of  the  nature 
and  value  of  which  she  was  ignorant ;  that  on  that  day  she  sold  it  to 
one  of  the  defendants  for  the  sum  of  one  dollar.  Afterwards  it  was 
ascertained  that  the  stone  was  a  rough  diamond,  and  of  the  value  of 
about  $700.  After  learning  this  fact  the  plaintiff  tendered  the  de- 


292  FORMATION    OF    CONTRACT. 

fendants  the  one  dollar,  and  ten  cents  as  interest,  and  demanded  a  re- 
turn of  the  stone  to  her.  The  defendants  refused  to  deliver  it,  and 
therefore  she  commenced  this  action. 

The  plaintiff  testified  to  the  circumstances  attending  the  sale  of  the 
stone  to  Mr.  Samuel  B.  Boynton,  as  follows : 

"The  first  time  Boynton  saw  that  stone  he  was  talking  about  buying  the 
topaz,  or  whatever  it  is,  in  September  or  October.  I  went  into  his  store  to 
get  a  little  pin  mended,  and  I  had  it  in  a  small  box, — the  pin,  a  small  ear- 
ring, .  .  .  this  stone,  and  a  broken  sleeve-button  were  in  the  box.  Mr. 
Boynton  turned  to  give  me  a  check  for  my  pin.  I  thought  I  would  ask  him 
what  the  stone  was,  and  I  took  it  out  of  the  box  and  asked  him  to  please 
tell  me  what  that  was.  He  took  it  in  his  hand  and  seemed  some  time  looking 
at  it.  1  told  him  I  had  been  told  it  was  a  topaz,  and  he  said  it  might  be.  He 
says,  'I  would  buy  this;  would  you  sell  it?'  I  told  him  I  did  not  know  but 
what  I  would.  What  would  it  be  worth?  And  he  said  he  did  not  know;  he 
would  give  me  a  dollar  and  keep  it  as  a  specimen,  and  I  told  him  I  would  not 
sell  it;  and  it  was  certainly  pretty  to  look  at.  He  asked  me  where  I  found 
it,  and  I  told  him  in  Eagle.  He  asked  about  how  far  out,  and  I  said  right 
in  the  village,  and  I  went  out.  Afterwards,  and  about  the  28th  of  Decem- 
ber, I  needed  money  pretty  badly,  and  thought  every  dollar  would  help,  and 
I  took  it  back  to  Mr.  Boynton  and  told  him  I  had  brought  back  the  topaz,  and 
he  says,  'Well,  yes;  what  did  I  offer  you  for  it?'  and  I  says,  'One  dollar';  and 
he  stepped  to  the  change  drawer  and  gave  me  the  dollar,  and  I  went  out." 

In  another  part  of  her  testimony  she  says : 

"Before  I  sold  the  stone  I  had  no  knowledge  whatever  that  it  was  a  diamond. 
I  told  him  that  I  had  been  advised  that  it  was  probably  a  topaz,  and  he  said 
probably  it  was.  The  stone  was  about  the  size  of  a  canary  bird's  egg,  nearly 
the  shape  of  an  egg,  worn  pointed  at  one  end;  it  was  nearly  straw  color,  a 
little  darker." 

She  also  testified  that  before  this  action  was  commenced  she  tendered 
the  defendants  $1.10,  and  demanded  the  return  of  the  stone,  which 
they  refused.  This  is  substantially  all  the  evidence  of  what  took  place 
at  and  before  the  sale  to  the  defendants,  as  testified  to  by  the  plaintiff 
herself.  She  produced  no  other  witness  on  that  point. 

The  evidence  on  the  part  of  the  defendant  is  not  very  different  from 
the  version  given  by  the  plaintiff,  and  certainly  is  not  more  favorable 
to  the  plaintiff.  Mr.  Samuel  B.  Boynton,  the  defendant  to  whom  the 
stone  was  sold,  testified  that  at  the  time  he  bought  this  stone,  he  had 
never  seen  an  uncut  diamond;  had  seen  cut  diamonds,  but  they  are 
quite  different  from  the  uncut  ones;  "he  had  no  idea  this  was  a  dia- 
mond, it  never  entered  his  brain  at  the  time."  Considerable  evidence 
•was  given  as  to  what  took  place  after  the  sale  and  purchase,  but  the 
evidence  has  very  little,  if  any,  bearing  upon  the  main  point  in  the 
case. 

This  evidence  clearly  shows  that  the  plaintiff  sold  the  stone  in  ques- 
tion to  the  defendants,  and  delivered  it  to  them  in  December,  1883, 
for  a  consideration  of  one  dollar.  The  title  to  the  stone  passed  by  the 


REALITY   OF   CONSENT :    MISTAKE.  293 

sale  and  delivery  to  the  defendants.  How  has  that  title  been  divested 
and  again  vested  in  the  plaintiff?  The  contention  of  the  learned 
counsel  for  the  appellant  is  that  the  title  became  vested  in  the  plain- 
tiff by  the  tender  to  the  Boyntons  of  the  purchase  money,  with  interest, 
and  a  demand  of  a  return  of  the  stone  to  her.  Unless  such  tender  and 
demand  revested  the  title  in  the  appellant,  she  cannot  maintain  her 
action. 

The  only  question  in  the  case  is  whether  there  was  anything  in  the 
sale  which  entitled  the  vendor  (the  appellant)  to  rescind  the  sale  and 
so  revest  the  title  in  her.  The  only  reasons  we  know  of  for  rescinding 
a  sale  and  revesting  the  title  in  the  vendor  so  that  he  may  maintain 
an  action  at  law  for  the  recovery  of  the  possession  against  his  vendee 
are,  ( 1 )  that  the  vendee  was  guilty  of  some  fraud  in  procuring  a  sale 
to  be  made  to  him;  (2)  that  there  was  a  mistake  made  by  the  vendor 
in  delivering  an  article  which  was  not  the  article  sold,  a  mistake  in 
fact  as  to  the  identity  of  the  thing  sold  with  the  thing  delivered  upon 
the  sale.  This  last  is  not  in  reality  a  rescission  of  the  sale  made,  as 
the  thing  delivered  was  not  the  thing  sold,  and  no  title  ever  passed 
to  the  vendee  by  such  delivery. 

In  this  case,  upon  the  plaintiff's  own  evidence,  there  can  be  no  just 
ground  for  alleging  that  she  was  induced  to  make  the  sale  she  did 
by  any  fraud  or  unfair  dealings  on  the  part  of  Mr.  Boynton.  Both 
were  entirely  ignorant  at  the  time  of  the  character  of  the  stone  and  of 
its  intrinsic  value.  Mr.  Boynton  was  not  an  expert  in  uncut  diamonds, 
and  had  made  no  examination  of  the  stone,  except  to  take  it  in  his  hand 
and  look  at  it  before  he  made  the  offer  of  one  dollar,  which  was  refused 
at  the  time,  and  afterwards  accepted  without  any  comment  or  further 
examination  made  by  Mr.  Boynton.  The  appellant  had  the  stone  in 
her  possession  for  a  long  time,  and  it  appears  from  her  own  statement 
that  she  had  made  some  inquiry  as  to  its  nature  and  qualities.  If  she 
chose  to  sell  it  without  further  investigation  as  to  its  intrinsic  value 
to  a  person  who  was  guilty  of  no  fraud  or  unfairness  which  induced 
her  to  sell  it  for  a  small  sum,  she  cannot  repudiate  the  sale  because  it 
is  afterwards  ascertained  that  she  made  a  bad  bargain.  Kennedy  v. 
Panama  &c.  Mail  Co.,  L.  R.  Q.  B.  580. 

There  is  no  pretense  of  any  mistake  as  to  the  identity  of  the  thing 
sold.  It  was  produced  by  the  plaintiff  and  exhibited  to  the  vendee  be- 
fore the  sale  was  made,  and  the  thing  sold  was  delivered  to  the  vendee 
when  the  purchase  price  was  paid.  Kennedy  v.  Panama  &c.  Mail  Co., 
L.  R.  2  Q.  B.  587 ;  Street  v.  Blay,  2  Barn.  &  Adol.  456 ;  Gompertz  v. 
Bartlett,  2  El.  &  Bl.  849 ;  Gurney'v.  Womersley,  4  El.  &  Bl.  133 ;  Ship's 
Case,  2  De  G.,  J.  &  S.  544.  Suppose  the  appellant  had  produced  the 
stone,  and  said  she  had  been  told  that  it  was  a  diamond,  and  she 
believed  it  was,  but  had  no  knowledge  herself  as  to  its  character  or 
ralue,  and  Mr.  Boynton  had  given  her  $500  for  it,  could  he  have 


294  FORMATION    OF   CONTRACT. 

rescinded  the  sale  if  it  had  turned  out  to  be  a  topaz  or  any  other  stone 
of  very  small  value?  Could  Mrs.  Boynton  have  rescinded  the  sale  on 
the  ground  of  mistake?  Clearly  not,  nor  could  he  rescind  it  on  the 
ground  that  there  had  been  a  breach  of  warranty,  because  there  was  no 
warranty,  nor  could  he  rescind  it  on  the  ground  of  fraud,  unless  he 
could  show  that  she  falsely  declared  that  she  had  been  told  it  was  a 
diamond,  or,  if  she  had  been  so  told,  still  she  knew  it  was  not  a 
diamond.  See  Street  v.  Blay,  supra. 

It  is  urged,  with  a  good  deal  of  earnestness,  on  the  part  of  the  coun- 
sel for  the  appellant,  that,  because  it  has  turned  out  that  the 
stone  was  immensely  more  valuable  than  the  parties  at  the  time  of  the 
sale  supposed  it  was,  such  fact  alone  is  a  ground  for  the  rescission  of 
the  sale,  and  that  fact  was  evidence  of  fraud  on  the  part  of  the  vendee. 
Whether  inadequacy  of  price  is  to  be  received  as  evidence  of  fraud, 
even  in  a  suit  in  equity  to  avoid  a  sale,  depends  upon  the  facts  known 
to  the  parties  at  the  time  the  sale  is  made. 

When  this  sale  was  made  the  value  of  the  thing  sold  was  open  to  the 
investigation  of  both  parties ;  neither  knew  its  intrinsic  value,  and,  so 
far  as  the  evidence  in  this  case  shows,  both  supposed  that  the  price 
paid  was  adequate.  How  can  fraud  be  predicated  upon  such  a  sale, 
even  though  after  investigation  showed  that  the  intrinsic  value  of  the 
thing  sold  was  hundreds  of  times  greater  than  the  price  paid?  It 
certainly  shows  no  such  fraud  as  would  authorize  the  vendor  to  rescind 
the  contract  and  bring  an  action  at  law  to  recover  the  possession  of  the 
thing  sold.  Whether  that  fact  would  have  any  influence  in  an  action 
in  equity  to  avoid  the  sale,  we  need  not  consider.  See  Stettheimer  v. 
Killip,  75  N.  Y.  287 ;  Etting  v.  Bank  of  U.  S.,  11  Wheat.  59. 

We  can  find  nothing  in  the  evidence  from  which  it  could  be  justly 
inferred  that  Mr.  Boynton,  at  the  time  he  offered  the  plaintiff  one 
dollar  for  the  stone,  had  any  knowledge  of  the  real  value  of  the  stone, 
or  that  he  entertained  even  a  belief  that  the  stone  was  a  diamond.  It 
cannot,  therefore,  be  said  that  there  was  a  suppression  of  knowledge 
on  the  part  of  the  defendant  as  to  the  value  of  the  stone  which  a  court 
of  equity  might  seize  upon  to  avoid  the  sale.  Following  cases  show 
that,  in  the  absence  of  fraud  or  warranty,  the  value  of  the  property  sold, 
as  compared  with  the  price  paid,  is  no  ground  for  a  rescission  of  a  sale. 
Wheat  v.  Cross,  31  Md.  99;  Lambert  v.  Heath,  15  Mees.  &  W.  487; 
Bryant  v.  Pember,  45  Vt.  487 ;  Kuelkamp  v.  Kidding,  31  Wis.  503,  511. 

However  unfortunate  the  plaintiff  may  have  been  in  selling  this 
valuable  stone  for  a  mere  nominal  sum,  she  has  failed  entirely  to  make 
out  a  case  either  of  fraud  or  mistake  in  the  sale  such  as  will  entitle  her 
to  a  rescission  of  such  sale  so  as  to  recover  the  property  sold  in  an 
action  at  law. 

By  the  court.     The  judgment  of  the  Circuit  Court  is  affirmed. 

9  Cyc.  395   (86-89)  ;  W.  P.  606   (65)  ;  19  H.  L.  R.  290. 


REALITY   OF    CONSENT:    MISTAKE.  295 


SEARS  v.  GRAND  LODGE  OF  THE  ANCIENT  ORDER 
OF  UNITED  WORKMEN. 

163  NEW  YORK,  374.— 1900. 

Appeal  from  a  judgment  of  the  Appellate  Division,  reversing  a  judg- 
ment in  favor  of  plaintiff,  and  granting  a  new  trial. 

BARTLETT,  J.     This  appeal  presents  rather  a  novel  question. 

On  the  31st  of  July,  1886,  one  Charles  R.  Baumgrass,  residing  in 
the  city  of  Syracuse,  became  a  member  of  a  subordinate  lodge  of  de- 
fendant and  received  a  certificate  of  membership,  which  provided  in 
the  event  of  his  death  the  defendant  would  pay  to  his  wife,  Mary  A. 
Bftumgrass,  the  sum  of  $2000.  On  September  28,  1886,  Baumgrass 
disappeared  and  was  not  seen  or  heard  from  thereafter  until  April  15, 

1896,  a  period  of  nearly  ten  years.     In  the  meantime   important 
transactions  and  negotiations  had  taken  place  affecting  the  rights  of 
the  parties.     Mrs.  Baumgrass,  the  beneficiary,  was  advised  to  rest 
upon  her  rights  until  seven  years  had  elapsed,  when  she  might  proceed 
under  the  legal  presumption  that  her  husband  was  dead.     She  waited 
about  nine  years  and  then  brought  an  action  against  the  defendant 
on  the  23d  of  September,  1895,  to  recover  $2000  under  the  certificate 
of  insurance.     On  the  26th  day  of  March,  1896,  and  before  the  action 
was  tried,  she  entered  into  an  agreement  of  compromise  with  the  de- 
fendant, under  which  her  suit  against  it  was  discontinued  without 
costs.     The  agreement  recited  the  facts  and  provided  for  the  settle- 
ment and  discontinuance  of  the  action;  that  the  defendant  should 
pay  to  the  beneficiary  "the  sum  of  $666  in  cash  promptly" ;  that  said 
$666  "is  not  to  be  returned  in  any  event" ;  that  $1334  should  be  placed 
by  defendant  in  the  hands  of  a  trustee  to  be  held  by  him  until  July  1, 

1897,  subject  to  the  condition  that  if  before  that  time  the  defendant 
should  produce  reasonable  proof  that  the  insured  was  alive,  the  money 
so  deposited  was  to  be  returned  to  it,  but  failing  in  such  proof,  it 
was  to  be  paid  to  the  beneficiary  and,  in  the  language  of  the  agreement, 

•  "she  shall  take  full  title  to  the  same."  Twenty  days  after  the  execu- 
tion of  this  agreement,  and  before  defendant  had  made  the  absolute 
payment  of  $666  as  agreed,  the  insured  was  proved  to  be  alive.  There- 
upon the  beneficiary  demanded  payment  of  the  $666,  which  was  re- 
fused, and  she  assigned  her  claim  under  the  agreement  of  compromise 
to  the  plaintiff.  The  facts  are  undisputed ;  the  Special  Term  rendered 
judgment  for  plaintiff,  which  was  reversed  by  the  Appellate  Division 
with  a  divided  court. 

The  defendant  rests  its  defense  on  the  legal  proposition  that  the 
agreement  on  which  the  plaintiff  seeks  to  recover  was  made  while  both 
parties  thereto  were  laboring  under  a  material  mistake  of  fact,  to  wit, 
the  supposed  death  of  the  insured,  and  is,  therefore,  unenforceable. 


296  FORMATION   OF    CONTRACT." 

The  counsel  for  the  defendant  has  cited  us  to  many  authorities  to 
the  general  effect  that  where  parties  to  a  contract  have  entered  into  it 
under  the  impression  that  a  certain  state  of  facts  existed,  which  proved 
to  be  error,  equity  will  afford  relief.  This  is  a  sound  proposition 
of  law,  but  it  has  no  application  to  the  facts  in  this  case. 

The  material  facts  may  be  briefly  stated.  The  insured  disap- 
peared absolutely,  leaving  his  wife  as  beneficiary  under  his  certifi- 
cate of  insurance  issued  by  the  defendant;  she  waited  nine  years  and 
then  sued  to  recover  the  total  insurance  of  $2000.  In  this  situation 
the  defendant  seeks  a  compromise.  It  is  not  unreasonable  to  assume 
that  the  defendant  regarded  the  chances  of  success  in  the  litigation  as 
decidedly  in  favor  of  the  plaintiff;  the  legal  presumption  arising  at 
the  end  of  seven  years,  that  the  insured  was  dead,  had  existed  for  two 
years.  What  then  was  there  to  compromise  in  the  action  then  pend- 
ing? Clearly  but  one  tiling  was  dealt  with  or  could  be  in  the  agree- 
ment of  settlement,  to  wit,  the  possibility  that  the  insured  should  prove 
to  be  alive.  That  this  was  the  basis  of  compromise  upon  which  the 
agreement  rested  is  perfectly  apparent  on  the  face  of  the  instrument. 
The  defendant  said  to  the  beneficiary,  give  us  sixteen  months  more 
time  to  prove  the  insured  is  alive  and  discontinue  your  suit  at  once. 
If  you  do  this,  we  will  make  you  a  cash  payment  of  $666,  which  is 
not  to  be  paid  back  in  any  event,  and,  at  the  expiration  of  the  sixteen 
months,  if  we  fail  to  prove  the  insured  is  alive,  we  will  pay  you  $1334, 
which  is  to  be  held  for  both  of  us  by  a  trustee  meanwhile,  and,  if  we  do 
prove  it,  the  money  is  to  be  returned  to  us.  It  is  urged  that  there  is 
no  consideration  for  this  agreement.  The  discontinuance  of  action, 
the  extension  of  time  in  which  defendant  was  to  pay  the  insurance, 
and  the  compromise  of  a  doubtful  claim,  were  a  sufficient  consideration. 

It  is  also  urged  that  the  trial  judge  found  that  when  the  agreement 
was  entered  into,  both  parties  believed  the  insured  was  dead.  It  was 
also  found  that  notwithstanding  such  belief  the  contract  recognized, 
contemplated,  and  provided  for  the  possibility  of  the  insured  being 
alive.  It  is  to  be  kept  in  mind  that  the  present  action  is  limited 
to  the  cash  payment  that  was  to  have  been  made  under  the  agreement, 
and  in  regard  to  which  the  defendant  was  in  default  at  the  time  it 
was  discovered  that  the  insured  was  alive.  This  payment  should  have 
been  made  when  the  contract  was  signed,  and  it  was  then  distinctly 
agreed  that  it  should  not  be  paid  back  "in  any  event/'  which  meant 
it  should  not  be  repaid  even  if  it  were  subsequently  proved  that  the 
insured  was  alive. 

In  view  of  all  the  circumstances,  it  cannot  be  said  that  the  parties 
entered  into  the  agreement  laboring  under  a  mutual  mistake  of  fact. 
Mr.  Pomeroy  in  his  work  on  Equity  Jurisprudence  (§855,  2d  ed.) 
states  the  correct  rule  governing  this  case.  "Where  parties  have  en- 
tered into  a  contract  or  arrangement  based  upon  uncertain  or  con- 


REALITY   OF   CONSENT:    MISTAKE.  297 

tingent  events  purposely  as  a  compromise  of  a  doubtful  claim  arising 
from  them,  and  where  parties  have  knowingly  entered  into  a  specu- 
lative contract  or  transaction,  one  in  which  they  intentionally  specu- 
lated as  to  the  result,  and  there  is  in  either  case  an  absence  of  bad 
faith,  violation  of  confidence,  misrepresentation,  concealment,  and 
other  inequitable  conduct  mentioned  in  a  former  paragraph,  if  the 
facts  upon  which  such  agreement  or  transaction  was  founded  or  the 
event  of  the  agreement  itself  turned  out  very  differently  from  what 
was  expected  or  anticipated,  this  error,  miscalculation,  or  disappoint- 
ment, although  relating  to  a  matter  of  fact  and  not  of  law,  is  not 
such  a  mistake  within  the  meaning  of  the  equitable  doctrine  as  en- 
titles the  disappointed  party  to  any  relief  either  by  way  of  canceling 
the  contract  and  rescinding  the  transaction,  or  of  defense  to  a  suit 
brought  for  its  enforcement.  In  such  classes  of  agreements  and 
transactions  the  parties  are  supposed  to  calculate  the  chances  and  they 
certainly  assume  the  risks."  Again,  in  section  849,  Mr.  Pomeroy, 
after  dealing  with  relief  where  a  party  is  mistaken  as  to  his  legal 
rights,  interests,  or  relations,  closes  with  these  words:  "It  should  be 
carefully  observed  that  this  rule  has  no  application  to  compromises, 
where  doubts  have  arisen  as  to  the  rights  of  the  parties  and  they  have 
intentionally  entered  into  an  arrangement  for  the  purpose  of  com- 
promising and  settling  those  doubts.  Such  compromises,  whether  in- 
volving mistakes  of  law  or  fact,  are  governed  by  special  considera- 
tions/' A  number  of  instructive  authorities  are  cited  by  the  learned 
author  under  both  of  these  sections. 

It  may  be  observed  in  this  connection  that  the  trial  court  found 
that  there  was  no  fraud  on  the  part  of  the  beneficiary,  and,  substan- 
tially, that  she  had  acted  throughout  in  good  faith.  The  agreement 
was  in  furtherance  of  a  lawful  compromise,  and  enforceable  without 
regard  to  the  validity  of  the  beneficiary's  claim  under  the  original 
certificate  of  insurance.  Compromises  of  disputed  claims  fairly  en- 
tered into  are  final,  and  will  be  sustained  by  the  courts  without  regard 
to  the  validity  of  the  claims.  Wehrum  v.  Kuhn,  61  N.  Y.  623 ;  White 
v.  Hoyt,  73  N.  Y.  505 ;  Dunham  v.  Griswold,  100  N".  Y.  224 ;  Crans  v. 
Hunter,  28  1ST.  Y.  389;  Mowatt  v.  Wright,  1  Wend.  355.  The  de- 
fendant, in  executing  the  agreement  of  compromise,  assumed  the  risk 
and  calculated  the  chances  of  being  placed  in  the  present  situation, 
and  there  would  seem  to  be  no  reason  in  law  or  public  policy  why 
plaintiff  should  not  recover.  It  would  be  a  harsh  rule,  indeed,  that 
would  preclude  insurer  and  beneficiary  nine  years  after  the  insured 
had  disappeared  from  entering  into  an  enforceable  agreement  of  com- 
promise under  the  state  of  facts  here  disclosed. 

The  judgment  of  the  Appellate  Division  should  be  reversed  and 
the  judgment  of  the  Trial  Term  affirmed,  with  costs  to  the  plaintiff 
in  all  the  courts. 


298  FORMATION   OF    CONTRACT. 

PARKER,  C.  J.,  MARTIN,  VANN,  CULLEN,  and  WERNER,  JJ.,  con- 
cur; GRAY,  J.,  dissents. 

Judgment  reversed,  etc.1 
9  Cyc.  398  (6);  401   (16);  345   (25);  W.  P.  214   (23);  614  (74). 


c.  Mistake  of  one  party,  known  to  the  other. 

MUMMENHOFF  et  al.  v.  KANDALL. 

19  INDIANA  APPELLATE  COURT,  44.— 1898. 

HENLEY,  J.  On  the  1st  day  of  October,  1894,  the  appellee,  resid- 
ing at  Oxford,  Mich.,  sent  through  the  mail  the  following  letter: 
"Oxford,  Mich.,  Oct.  1st,  1894.  Mummenhoff  Co.,  Indianapolis, 
Ind. — Gentlemen :  Can  we  not  get  to  doing  some  business  ?  I  quote 
you  the  following  low  price  on  potatoes,  either  in  straight  cars  or  in 
mixed,  part  of  each  kind  of  vegetables.  Would  quote  you  potatoes  at 
35  cts.,  ruta-bagas,  25  cts.,  62  No.  carrots,  35  cts.,  55  No.  onions, 
either  red  or  yellow.  The  carrots  are  both  long  and  yellow.  The 
price  on  delivered  track  Indianapolis.  My  certified  weights  guaran- 
tied within  2  per  cent.  Yours  truly,  C.  L.  Eandall,  per  N.  B."  This 
letter  was  dictated  by  appellee  to  a  stenographer,  who  wrote  the  same 
out  on  a  typewriter,  and  by  the  mistake  and  inadvertence  of  the 
stenographer  in  typewriting  the  same  from  her  stenographic  notes 
she  wrote  in  said  letter  the  price  of  potatoes  at  35  cts.  per  bushel, 
instead  of  the  price  of  55  cts.,  as  was  dictated  to  her  by  appellee. 

i  In  Riegel  v.  American  Life  Ins.  Co.,  153  Pa.  St.  134,  a  creditor  had  a 
life  insurance  policy  on  the  life  of  his  debtor  for  $6000,  the  annual  premium 
being  $153.90.  For  thirteen  years  the  whereabouts  of  the  debtor  were 
unknown  and  as  the  payment  of  the  premiums  became  burdensome,  the 
creditor  took  a  paid-up  policy  for  $2500  in  lieu  of  the  $6000  policy.  The 
creditor  supposed  the  debtor  to  be  then  living;  the  Insurance  Company 
issued  a  policy  for  the  amount  to  which  the  creditor  was  entitled,  assum- 
ing the  insured  debtor  to  be  still  living.  In  fact,  unknown  to  either  party, 
the  insured  had  died  about  ten  days  before  the  old  policy  was  canceled  and 
the  new  one  issued.  The  creditor  brought  an  action  to  reinstate  the  old 
policy  and  the  court  held  (two  judges  dissenting)  that  there  was  a  mutual 
mistake  of  a  material  fact,  that  both  parties  proceeded  upon  the  assump- 
tion that  the  insured  was  still  living  and  that  the  element  of  doubt  as  to 
whether  he  was  living  or  dead  did  not  enter  into  the  transaction. 

An  elaborate  discussion  of  such  mistake  of  fact  as  will  warrant  the  re- 
scission of  a  contract  is  found  in  Kowalke  v.  Milwaukee  Ry.,  103  Wis.  472, 
where  the  mistake  alleged  was  as  to  the  fact  of  pregnancy  of  a  woman  at 
the  time  of  a  release  of  a  claim  for  damages  for  injury  to  her;  and  the 
question  was  whether  the  release  was  executed  under  mutual  mistake 
of  fact,  or  whether  the  element  of  doubt  was  itself  a  part  of  the  subject 
matter  of  the  release  and  the  contract  itself  made  with  the  understanding 
that  each  party  took  his  chances  as  to  whether  or  not  the  fact  existed. 


REALITY   OF   CONSENT:    MISTAKE.  299 

This  letter  was  received  by  appellants  at  Indianapolis,  Ind.,  on  the 
2d  day  of  October,  1894,  and  appellants  at  once  sent  to  appellee  an 
order  by  mail  as  follows:  "Indianapolis,  Oct.  2nd,  1894.  Mr.  C.  L. 
Randall,  Oxford,  Mich. — Dear  Sir:  We  are  in  receipt  of  your  favor 
of  the  1st  inst.  Please  ship  us  2  or  3  cars  of  potatoes  at  your  earliest 
convenience,  at  price  quoted.  If  you  have  good  stock,  we  shall  give 
you  a  good  many  of  our  orders.  Resp'y,  Mummenhoff  &  Co." 

Appellee,  upon  the  receipt  of  the  said  order,  and  being  ignorant 
of  the  mistake  of  the  stenographer,  as  before  set  out,  accepted  appel- 
lants' order  as  being  an  order  for  the  number  of  cars  of  potatoes 
mentioned  by  appellants,  and  as  being  at  the  price  of  55  cents  per 
bushel,  and  on  the  3d  day  of  October,  1894,  shipped  to  appellants 
one  car  of  potatoes  containing  405^2  bushels,  and  at  the  same  time 
transmitted  by  mail  to  appellants  at  Indianapolis,  Ind.,  a  bill  there- 
for, in  which  bill  the  appellants  were  charged  with  the  number  of 
bushels  of  potatoes  shipped  at  55  cents  per  bushel.  Two  days  after- 
wards— on  the  5th  day  of  October,  1894 — appellee  shipped  to  appel- 
lants still  another  car  of  potatoes  containing  417%  bushels,  and 
transmitted  by  mail  at  the  same  time  to  the  appellants  a  statement  of 
such  shipment,  in  which  the  appellants  were  charged  with  the  amount 
of  the  potatoes  therein  shipped  at  55  cents  per  bushel.  On  the  6th 
day  of  October,  1894,  appellants,  having  received  the  bills  covering 
the  two  shipments  of  October  3d  and  4th,  and  finding  that  the  po- 
tatoes were  therein  charged  to  them  at  55  cents,  telegraphed  to  appel- 
lee as  follows :  "Indianapolis,  Ind.,  Oct.  6,  1894.  To  C.  L.  Randall, 
Oxford,  Mich. :  You  offered  potatoes  thirty-five,  billed  at  fifty-five. 
Explain.  Mummenhoff  &  Co."  The  receipt  of  this  message  by  ap- 
pellee was  his  first  knowledge  of  the  mistake  of  his  stenographer  in 
the  letter  of  October  2d,  and,  neither  car  of  potatoes  having  yet  ar- 
rived at  Indianapolis,  their  destination,  appellee  immediately  tele- 
graphed appellants  as  follows:  "October  6th,  1894.  To  Mummen- 
hoff &  Co.,  Indianapolis,  Ind.:  My  quotation  was  fifty-five  cents 
delivered.  Potatoes  cost  forty-five  here.  Second  car  on  road.  If 
can't  use  as  billed,  will  give  directions.  C.  L.  Randall."  Notwith- 
standing appellee's  telegram,  appellants  received,  accepted,  and  used 
the  two  cars  of  potatoes,  and,  knowing  that  the  quotation  of  35  cents 
in  the  letter  of  October  2d  was  a  mistake,  refuse  to  settle  upon  any 
basis  other  than  35  cents  per  bushel. 

Appellee  began  this  action  against  appellants  in  the  lower  court, 
basing  his  first  paragraph  of  complaint  upon  the  facts  as  we  have 
detailed  them.  The  second  paragraph  of  complaint  demanded  the 
reasonable  value  of  the  potatoes  alleged  to  have  been  sold  and  deliv- 
ered to  appellants  at  their  special  instance  and  request.  Appellants 
demurred  to  the  first  paragraph  of  complaint.  The  paragraph  was 
held  sufficient.  An  answer  of  three  paragraphs  was  filed,  to  each  of 


300  FORMATION    OF    CONTRACT. 

which  appellee  demurred.  The  lower  court  sustained  the  demurrer 
to  the  second  paragraph  of  answer.  There  was  a  trial,  and  a  finding 
for  appellee,  and,  over  appellants'  motion  for  a  new  trial,  judgment 
was  rendered  in  favor  of  appellee.  Appellants'  assignment  of  errors 
brings  before  this  court  for  review  the  rulings  of  the  lower  court  upon 
the  demurrer  to  the  first  paragraph  of  complaint,  the  demurrer  to  the 
second  paragraph  of  answer,  and  the  overruling  of  the  motion  for  a 
new  trial. 

The  demurrer  to  the  first  paragraph  of  appellee's  complaint  was 
properly  overruled.  Under  the  allegations  of  this  paragraph  of  com- 
plaint the  minds  of  the  contracting  parties  never  met  upon  a  proposi- 
tion to  sell  potatoes  at  35  cents  per  bushel,  because  it  is  alleged  that 
the  price  was  a  mistake,  and  that  it  was  so  understood  by  appellants, 
to  whom  it  was  made.  "As  mutual  assent  is  necessary  to  the  forma- 
tion of  a  contract  (i.  e.,  of  sale),  it  follows  that  an  error  or  mistake 
of  facts  in  that  which  goes  to  the  essence  of  the  agreement,  and  there- 
fore excludes  such  assent,  prevents  the  formation  of  the  contract, 
since  each  party  is  really  agreeing  to  something  different,  notwith- 
standing the  apparent  mutual  assent."  21  Am.  &  Eng.  Enc.  Law, 
459.  We  think  it  is  plain  that  there  was  no  contract  by  appellee  to 
sell  the  potatoes  at  35  cents  per  bushel,  and  the  complaint  alleges  that 
appellants  knew,  when  they  received  the  offer,  that  it  was  a  mistake; 
they  knew  that  appellee  had  not,  in  fact,  offered  the  potatoes  at  that 
price ;  and  appellants,  in  their  letter  ordering  the  potatoes  to  be  shipped 
"at  price  quoted,"  failed  to  mention  to  appellee  the  price  that  had 
been  quoted;  consequently  it  cannot  be  said  that  appellee,  in  acting 
upon  appellants'  order,  in  any  way  adopted  the  price  so  mistakenly 
quoted.  But,  under  the  allegations  of  the  complaint,  appellants  after- 
wards became  liable  to  appellee  for  the  potatoes  at  55  cents  per  bushel, 
because  appellants  received  the  potatoes  as  their  property  after  being 
notified  of  the  mistake  in  the  quotation,  and  after  notice  of  the  price 
at  which  they  must  receive  them,  or  not  receive  at  all.  If  appellants 
had  received  the  potatoes,  and  disposed  of  them  in  ignorance  of  the 
mistake  made  in  the  quotation,  or,  knowing  of  the  mistaken  quota- 
tion, had  not  been  informed  of  the  price  expected  by  appellee,  an 
entirely  different  case  would  be  presented  from  the  one  presented  by 
the  first  paragraph  of  the  complaint. 

The  second  paragraph  of  answer  was  clearly  insufficient,  and  for 
that  reason  alone  the  objection  that  the  demurrer  was  not  in  proper 
form  cannot  avail  the  appellants.  Blue  v.  Bank,  145  Ind.  518,  43 
N.  E.  655 ;  Field  v.  Brown,  146  Ind.  293,  45  N.  E.  464.  .  .  . 

Judgment  affirmed.1 

9  Cyc.  396   (97)  ;  W.  P.  606   (64). 

i  In  Shelton  v.  Ellis,  70  Ga.  297,  plaintiff  was  employed  to  compile  a  rate 
sheet  for  the  W.  &  A.  Ky.,  showing  cost  of  tickets  between  different  points 


REALITY    OF    CONSENT:    MISTAKE.  301 

DAVIS  v.  KEISINGER. 
120  N.  Y.  APPELLATE  DIVISION,  766.— 1907. 

HOUGHTON,  J.  The  action  is  to  recover  damages  for  failure  to 
deliver  1,000  bags  of  rice  sold  by  description  and  sample.  On  May 
13,  1903,  the  defendant  solicited  the  plaintiff  to  buy,  and  on  that  day 
he  purchased,  250  bags  of  "Bassein  rice  like  sample  AA"  to  arrive,  at 
.0255  per  pound;  and,  having  sold  this  invoice  at  an  advance,  three 
days  later  he  purchased  another  lot  of  250  bags  at  the  same  price, 
which  lot  he  also  sold.  On  the  19th  day  of  May  he  purchased  500  bags 
more  at  .0260.  The  sample  upon  which  the  trades  were  made  was 
not  Bassein  rice,  but  Java  rice,  which  is  a  superior  grade,  and  always 
commands  a  higher  price  in  the  market.  A  mistake  had  been  made 
by  some  one  in  preparing  the  sample,  and  when  the  first  lot  was  pur- 
chased neither  the  plaintiff  nor  the  defendant  was  aware  of  it,  for 
neither  was  familiar  with  the  two  kinds  of  rice.  From  the  evidence 
it  may  also,  perhaps,  be  inferred  that  when  the  second  lot  was  pur- 
chased the  plaintiff  did  not  know  of  the  mistake,  although  he  appre- 
ciated he  was  getting  a  very  good  bargain.  As  to  the  first  lot,  and 
possibly  as  to  the  second  lot,  plaintiff  and  defendant  dealt  on  an  equal 
footing,  neither  knowing  the  sample  was  not  Bassein  rice,  and  defend- 
ant must  be  held  to  his  bargain  to  deliver  the  rice  which  the  sample 
called  for.  When  the  last  purchase  of  500  bags  was  made,  however, 
it  is  manifest  from  the  evidence  that  the  plaintiff  had  learned  of  the 
defendant's  mistake,  and  knew  or  had  reason  to  believe  that  the  sample 
was  Java  rice,  and  not  Bassein  rice,  which  the  defendant  mistakenly 
supposed  it  to  be.  When  this  last  contract  was  made,  therefore,  the 
plaintiff  knew  that  defendant  had  made  a  mistake  respecting  the  sam- 
ple, and  was  offering  a  high-grade  and  high-priced  rice  for  sale  at 
the  price  of  a  low  or  medium  grade  rice,  which  he  supposed,  from  the 
description  of  "Bassein,"  he  was  selling. 

The  plaintiff  cannot  recover  any  damages  under  a  contract  entered 
into  under  such  circumstances;  for,  having  knowledge  of  the  mistake 
under  which  defendant  was  laboring,  it  would  be  a  fraud  on  his  part 
to  take  advantage  of  it.  The  plaintiff,  as  early  as  when  he  resold  the 

By  mistake  he  printed  the  fare  from  Atlanta,  Georgia,  to  Rogers,  Arkan- 
sas, as  $21.25,  when  it  should  have  been  $36.70.  Defendant  discovered  the 
mistake,  and  immediately  purchased  of  the  ticket  agent  of  the  W.  &  A.  Ry. 
a  large  number  of  the  tickets  at  the  price  printed  in  the  rate  sheet. 
Plaintiff,  being  responsible  to  the  railway  for  the  error,  offered  to  return 
defendant's  money  and  demanded  the  tickets,  which  offer  and  demand  were 
refused  by  defendant.  Plaintiff  alleged  in  his  bill  that  defendant  knew  that 
a  mistake  had  been  made  in  the  rate  sheet  and  fraudulently  took  advan- 
tage of  it.  A  temporary  injunction  was  granted  to  restrain  defendant  from 
disposing  of  *h<*  tickets,  and  a  receiver  was  appointed  to  hold  them. 


302  FORMATION    OF    CONTRACT. 

first  lot  of  250  bags,  was  told  by  an  expert  that  the  sample  looked  like 
Java  rice ;  and  he  says  several  men  in  the  trade  talked  of  the  fact  that 
Java  rice  was  being  sold  for  Bassein  rice  between  his  first  and  last 
purchases.  From  the  facts  appearing,  the  extent  of  plaintiff's  recov- 
ery should  be  his  damages  on  his  first  and  second  purchases,  and 
nothing  for  his  last  purchase  of  500  bags.  .  .  . 

The  judgment  and  order  should  be  reversed,  and  a  new  trial 
granted,  with  costs  to  the  appellant  to  abide  the  event. 

MCLAUGHLIN,  J.  (dissenting).  I  dissent.  The  sale  was  by  sam- 
ple, and  the  rice  from  which  the  sample  was  taken  was  in  existence. 
The  plaintiff  is  entitled  to  the  benefit  of  his  contract.  He  acted  hon- 
orably with,  and  did  not  practice  a  fraud  upon,  the  defendant,  and 
has  recovered  no  more  than  he  is  entitled  to.  He  offered  the  best 
proof  as  to  damages  which  was  available. 

The  judgment  is  right,  and  should  be  affirmed. 


Misrepresentation. 

(t.)     Misrepresentation  distinguished  from  fraud. 

NOTE. — For  eases  under  this  topic,  see  the  cases  on  "Effects  of  Misrepre- 
sentation," post,  p.  305,  and  on  "Knowledge  of  Falsity,"  post,  p.  338. 


(tt.)     Representations  distinguished  from  terms. 

DAVISON  v.  VON  LINGER. 

113  UNITED  STATES,  40.— 1884. 

Libel  in  personam,  in  admiralty,  against  the  owners  of  the  steamer 
Whickham,  to  recover  damages  for  breach  of  charter-party.  Cross- 
libel  in  personam  against  the  charterers  for  damages  for  breach  of 
charter-party. 

The  charter-party  was  executed  at  Philadelphia  on  August  1,  1879, 
and  provided  that  the  steamship  Whickham  "now  sailed  or  about  to 
sail  from  Benizaf  with  cargo  for  Philadelphia,  .  .  .  with  liberty  to 
take  outward  cargo  to  Philadelphia  for  owner's  benefit,  shall,  with  all 
convenient  speed,  sail  and  proceed  to  Philadelphia  or  Baltimore,  at 
charterers'  option,  after  discharge  of  inward  cargo  at  Philadelphia, 
or  as  near  thereunto  as  she  may  safely  get,  and  there  load  afloat  from 
said  charterers,  or  their  agents,  a  full  and  complete  cargo  of  grain 
and  (or)  other  lawful  merchandise."  The  owners  had  submitted  a 
charter-party  in  which  the  vessel  was  described  as  "sailed  from,  or 
loading  at,  Benizaf,"  but  this  the  charterers  declined  to  accept,  and 
the  charter-party  was  executed  with  the  description  "now  sailed  or 


REALITY    OF    CONSENT:    MISREPRESENTATION.  303 

about  to  sail  from  Benizaf."  In  fact  the  vessel  was  then  loading  at 
Benizaf,  and  did  not  sail  until  August  7th.  On  the  9th  the  charter- 
ers learned  that  she  had  that  day  passed  Gibraltar,  and  being  satisfied 
that  she  would  not  arrive  in  time  to  load  in  August,  procured  another 
vessel,  which  they  loaded  at  an  increased  rate  of  freight,  as  favorablo 
as  possible.  The  Whickham  discharged  her  cargo  at  Philadelphia 
on  September  7th  and  was  tendered  to  the  charterers  at  Baltimore 
on  the  llth.  The  charterers  declined  to  accept  her  on  the  ground 
that  she  had  neither  sailed  nor  was  about  to  sail  from  Benizaf  on 
August  1st.  Another  charter  was  then  obtained  at  a  loss,  on  as  favor- 
able terms  as  possible,  and  for  this  loss  the  owners  filed,  the  cross-libel. 

It  further  appeared  that  all  parties  understood  that  the  charterers 
wanted  a  vessel  which  could  load  in  August;  that  they  had  asked  a 
guaranty  that  the  Whickham  would  arrive  in  time,  but  this  was  re- 
fused; that  the  basis  of  the  belief  that  the  Whickham  would  arrive 
rested  on  telegraphic  information  from  Gibraltar,  a  day's  sail  from 
Benizaf. 

Decree  for  cross-lfbellants  in  District  Court,  which  was  reversed  in 
the  Circuit  Court  and  a  decree  entered  for  the  libellants. 

MR.  JUSTICE  BLATCHFORD.  .  .  .  The  decision  of  the  Circuit  Court 
proceeded  on  the  ground  that  the  language  of  the  charter-party  must 
be  interpreted,  if  possible,  as  the  parties  in  Baltimore  understood  it 
when  they  were  contracting.  In  view  of  the  facts,  that  all  the  con- 
tracting parties  understood  that  the  vessel  was  wanted  to  load  in 
August,  that,  as  soon  as  the  charterers  learned  that  she  did  not  leave 
Gibraltar  until  the  9th,  they  took  steps  to  get  another  vessel,  and  that 
they  declined  to  sign  ,a  charter-party  which  described  the  vessel  as 
"sailed  from,  or  loading  at,  Benizaf,"  the  court  held  that  the  language 
of  the  charter-party  meant  that  the  vessel  had  either  sailed,  or  was 
about  ready  to  sail,  with  cargo ;  and  that  the  vessel  was  not  in  the  con- 
dition she  was  represented,  being  not  more  than  three-elevenths  loaded. 

The  argument  for  the  appellants  is,  that  the  words  of  the  charter- 
party  "about  to  sail  with  cargo"  imply  that  the  vessel  has  some  cargo 
on  board  but  is  detained  from  sailing  by  not  having  all  on  board,  and 
that  she  will  sail,  when,  with  dispatch,  all  her  cargo,  which  is  loading 
with  dispatch,  shall  be  on  board;  and  that  this  vessel  fulfilled  those 
conditions.  As  to  the  attendant  circumstances  at  Baltimore,  it  is 
urged  that  the  charterers  asked  for  a  guaranty  that  the  vessel  would 
arrive  in  time  for  their  purposes,  and  it  was  refused,  and  that  the 
printed  clause  as  to  an  option  in  the  charterers  to  cancel  was  stricken 
out,  and  that  then  the  charterers  accepted  the  general  words  used. 

The  words  of  the  charter-party  are,  "now  sailed,  or  about  to  sail, 
from  Benizaf,  with  cargo  for  Philadelphia."  The  word  "loading"  is 
not  found  in  the  contract.  The  sentence  in  question  implies  that  the 
vessel  is  loaded,  because  the  words  "with  cargo"  apply  not  only  to  the 


304  FORMATION    OF   CONTRACT.      , 

words  "about  to  sail,"  but  to  the  words  "sailed,"  and  as,  if  the  vessel 
had  "sailed  with  cargo,"  she  must  have  had  her  cargo  on  board,  so,  if 
it  is  agreed  she  is  "about  to  sail  with  cargo,"  the  meaning  is,  that 
she  has  her  cargo  on  board,  and  is  ready  to  sail.  This  construction 
is  in  harmony  with  all  that  occurred  between  the  parties  at  the  time, 
and  with  the  conduct  of  the  charterers  afterwards.  The  charterers 
wanted  a  guaranty  that,  even  if  the  vessel  had  already  sailed,  or  when- 
ever she  should  sail,  she  would  arrive  in  time  for  them  to  load  her 
with  grain  in  August.  This  was  refused,  and  the  charterers  took  the 
risk  of  her  arriving  in  time,  if  she  had  sailed,  or  if,  having  her  cargo 
then  on  board,  she  should,  as  the  charter-party  says,  "with  all  con- 
venient speed,  sail  and  proceed  to  Philadelphia  or  Baltimore."  More- 
over, the  charterers  refused  to  sign  a  charter-party  with  the  words 
"sailed  from,  or  loading  at,  Benizaf,"  and  both  parties  agreed  on  the 
words  in  the  charter-party,  which  were  the  words  of  authority  used  by 
the  agents  in  Philadelpia  of  the  owners  of  the  vessel.  The  erasing 
of  the  printed  words,  as  to  the  option  of  cancelling,  was  in  harmony 
with  the  refusal  of  the  owners  to  guarantee  the  arrival  by  a  certain  day. 
So,  also,  when  the  charterers  learned,  on  the  9th  of  August,  that  the 
vessel  did  not  leave  Gibraltar  till  that  day,  they  proceeded  to  look  for 
another  vessel.  It  was  then  apparent  that  the  vessel  had  not  left 
Benizaf  by  the  1st  of  August,  or  with  such  reasonable  dispatch  there- 
after, that  she  could  have  had  her  cargo  on  board,  ready  to  sail  on  the 
1st  of  August. 

That  the  stipulation  in  the  charter-party,  that  the  vessel  is  "now 
sailed,  or  about  to  sail,  from  Benizaf,  with  cargo,  for  Philadelphia," 
is  a  warranty,  or  a  condition  precedent,  is,  we  think,  quite  "clear.  It  is 
a  substantive  part  of  the  contract,  and  not  a  mere  representation,  and 
is  not  an  independant  agreement,  serving  only  as  a  foundation  for  an 
action  for  compensation  in  damages.  A  breach  of  it  by  one  party  jus- 
tifies a  repudiation  of  the  contract  by  the  other  party,  if  it  has  not  been 
partially  executed  in  his  favor.  The  case  falls  within  the  class  of 
which  Glaholm  v.  Hays  (2  Man.  &  Gr.  257),  Ollive  v.  Booker  (1  Exch. 
416),  Oliver  v.  Fielden  (4  Exch.  135),  Gorrissen  v.  Perrin  (2  C.  B. 
K".  S.  681),  Croockewit  v.  Fletcher  (1  H.  &  N.  893),  Seeger  v.  Duthie 
(8  C.  B.  N.  S.  45),  Behn  v.  Burness  (3  B.  &  S.  751),  Corkling  v. 
Massey  (L.  R.  8  C.  P.  395),  and  Lowber  v.  Bangs  (2  Wall.  728)  are 
examples;  and  not  within  the  class  illustrated  by  Tarrabochia  v. 
Hickie,  1  H.  &  N.  183 ;  Dimech  v.  Corlett,  12  Moore  P.  C.  199 ;  and 
Clipsham  v.  Vertue,  5  Q.  B.  265.  It  is  apparent,  from  the  averments 
in  the  pleadings  of  the  charterers,  of  facts  which  are  established  by 
the  findings,  that  time  and  the  situation  of  the  vessel  were  material 
and  essential  parts  of  the  contract.  Construing  the  contract  by  the 
aid  of,  and  in  the  light  of,  the  circumstances  existing  at  the  time  it  was 
made,  averred  in  the  pleadings  and  found  as  facts,  we  have  no  diffi- 


REALITY   OF    CONSENT:    MISREPRESENTATION.  305 

culty  in  holding  the  stipulation  in  question  to  be  a  warranty.  See 
Abbott  on  Shipping,  llth  ed.  by  Shee,  pp.  227,  228.  But  the  instru- 
ment must  be  construed  with  reference  to  the  intention  of  the  parties 
when  it  was  made,  irrespective  of  any  events  afterwards  occurring; 
and  we  place  our  decision  on  the  ground  that  the  stipulation  was 
originally  intended  to  be,  and  by  its  term  imports,  a  condition  prece- 
dent. The  position  of  the  vessel  at  Benizaf,  on  the  1st  of  August — 
the  fact  that,  if  she  had  not  then  sailed,  she  was  laden  with  cargo,  so 
that  she  could  sail — these  were  the  only  data  on  which  the  charterers 
could  make  any  calculation  as  to  whether  she  could  arrive  so  as  to 
discharge  and  reload  in  August.  They  rejected  her  as  loading;  but 
if  she  was  in  such  a  situation,  with  cargo  in  her,  that  she  could  be 
said  to  be  "about  to  sail,"  because  she  was  ready  to  sail,  they  took  the 
risk  as  to  the  length  of  her  voyage. 

The  decree  of  the  Circuit  Court  is  affirmed. 

9  Cyc.  410    (59);   W.  P.   655    (10). 


(Hi.)  Effects  of  misrepresentation. 

a.  In  contracts  generally. 
WILCOX  v.  IOWA  WESLEYAN  OTIVEKSITY. 

32    IOWA,    367.-1871. 

Action  to  foreclose  a  mortgage  executed  by  defendant  college  to 
secure  a  promissory  note.  Defense,  accord  and  satisfaction  of  note 
and  mortgage,  in  consideration  of  certain  lands  agreed  by  defendant 
to  be  given  and  by  plaintiff  to  be  taken  as  payment.  Plaintiff  sets 
up  that  he  was  induced  to  enter  such  agreement  by  the  false  repre- 
sentations of  defendant  as  to  the  location,  character,  and  value  of  the 
land.  Such  representations  are  found  to  be  in  fact  false,  but  also 
that  the  agent  of  the  defendant  made  them  in  good  faith,  believing 
each  piece  of  land  to  be  as  described. 

A  decree  was  entered  by  the  trial  court  cancelling  the  note  and 
mortgage  and  releasing  defendant  from  all  liability  thereon.  Plain- 
tiff appeals. 

MILLER,  J.  ...  Is  the  plaintiff  entitled  to  be  relieved  from  his 
agreement  compounding  his  claim  against  defendant,  and,  if  so,  to 
what  extent? 

The  appellee  cites  Holmes  v.  Clark  (10  Iowa,  423),  which  holds, 
that  in  order  to  sustain  an  action  on  the  ground  of  false  and  fraudulent 
representations  in  the  sale  of  land,  it  must  be  shown  that  the  repre- 
sentations were  false  and  fraudulent  within  the  knowledge  of  the 
party  making  them;  and  he  argues  that  appellant  is,  in  view  of  the 


306  FORMATION   OF   CONTRACT. 

law,  without  remedy  in  this  case.  The  rule  laid  down  in  that  case  is 
well  established  and  universally  followed  in  all  actions,  at  law  for 
damages  sustained  by  false  and  fraudulent  representations  in  a  sale 
(see  cases  cited  by  appellant  in  that  case)  ;  but  equity  will  grant  relief 
on  the  ground  of  fraud,  although  the  party  representing  a  material  fact 
made  the  assertion  without  knowing  whether  it  was  true  or  not.  The 
consequences  to  the  person  who  acted  on  the  faith  of  the  representa- 
tions are  the  same  whether  he  who  made  them  knew  them  to  be  false 
or  was  ignorant  whether  they  were  true  or  not.  And  if  the  representa- 
tions were  made  to  influence  the  conduct  of  another  party  in  a  matter 
of  business,  and  they  did  influence  him  to  his  prejudice,  equity  will 
interfere  and  grant  him  relief.  Williard's  Eq.  Jur.  150;  Ainslie  v. 
Medlycott,  9  Ves.  21;  Harding  v.  Eandall,  15  Me.  332;  Smith  v. 
Richards,  13  Pet.  38;  Turnbull  v.  Gadsden,  2  Strobh.  (S.  C.)  Eq.  14; 
McFerran  v.  Taylor,  3  Cranch,  281. 

And  even  if  by  mistake,  and  innocently,  a  party  misrepresents  a 
material  fact,  upon  which  another  party  is  induced  to  act,  it  is  as  con- 
clusive a  ground  of  relief  in  equity  as  a  wilful  and  false  assertion. 
Taylor  v.  Ashton,  11  Mees.  &  Wels.  400;  Foster  v.  Charles,  6  Bing. 
396. 

Now  it  is  entirely  clear,  from  the  evidence,  that  the  plaintiff  was 
thus  induced  to  act  in  this  case.  The  lots  were  represented  to  be  of 
particular  situations  and  values,  when  they  were  in  fact  otherwise ;  and 
while  the  agent  informed  plaintiff  that  he  had  never  seen  the  lots 
himself,  and  did  not  make  the  representations  from  his  own  knowl- 
edge, yet  he  did  what  was,  substantially,  the  same  thing,  by  stating 
what  the  donors  said  in  respect  to  their  situations  and  values,  and  that 
he  (the  agent)  knew  one  of  the  donors,  whom  he  represented  to  be  a 
smart  business  man  and  a  leading  member  of  the  church,  whose  state- 
ments could  be  relied  upon.  Through  the  representations  and  per- 
suasions of  the  agent,  the  plaintiff  generously  donated  or  agreed  to 
donate  forty  per  centum  of  his  claim  to  the  university,  and  receive  in 
payment  of  the  balance  real  property  at  cash  prices.  This  he  was,  in 
equity  and  conscience,  entitled  to  receive.  He  selected  the  two  lots 
before  mentioned  upon  the  representations  of  the  agent,  relying  en- 
tirely, as  he  had  a  right  to  do  under  the  circumstances,  thereon  respect- 
ing the  situation  and  value  of  the  same.  The  lots  were  not  as  repre- 
sented. They  were  represented  by  the  agent  to  be  worth,  in  the 
aggregate,  the  sum  of  $1000,  whereas  they  were  worth  less  than  one- 
fifth  that  sum.  Under  these  circumstances  the  plaintiff  is  clearly 
entitled  to  equitable  relief  from  so  unconscionable  a  bargain.  Nor  do 
we  think,  under  all  the  circumstances  of  the  case,  that  he  has  lost  his 
right  to  relief  by  any  delay  or  laches  on  his  part.  And  as,  by  his 
agreement,  he  was  to  receive  land  at  cash  prices,  to  the  extent  of  sixty 
per  centum  of  his  claim,  which  the  university  has  failed  to  pay  or  con- 


REALITY    OF   CONSENT:    MISREPRESENTATION.  307 

vey  to  him,  he  will  be  entitled  to  recover  the  money  instead  of  these 
lots,  according  to  his  contract  entered  into  June  6,  1861,  viz.:  $1000 
with  six  per  centum  interest  from  that  date,  upon  reconveying  the 
lots  to  the  university  or  to  whom  it  shall  direct. 

The  judgment  of  the  District  Court  is  reversed,  and  the  cause  will 
be  remanded  for  further  proceedings  not  inconsistent  with  this  opinion, 
or  the  appellant  may,  if  he  so  elect,  have  final  judgment  in  this  court. 

Reversed.1 

9  Cyc.  408-409  (49-50);  38  L.  R.  A.  (N.  s.)  301,  303,  306;  Williston, 
Liability  for  honest  misrepresentation,  24  H.  L.  R.  415. 


SCHOOL  DIRECTOES  v.  BOOMHOUR. 

83  ILLINOIS,  17.— 1876. 

Action  for  damages  for  breach  of  contract.  Verdict  for  plain- 
tiff, from  which  defendants  appeal. 

SCOTT,  J.  The  finding  and  judgment  of  the  court  are  plainly  and 
manifestly  against  the  weight  of  evidence,  and  so  palpable  is  the  error, 
the  judgment,  for  that  cause,  must  be  reversed.  When  plaintiff 
applied  to  defendants  to  teach  their  district  school,  they  distinctly  in- 
formed him  it  was  conditionally  engaged  to  Miss  Swartz,  and  if  she 
succeeded  in  getting  a  certificate  of  qualification  that  week  at  the 
teachers'  institute,  then  in  session  at  Lena,  she  was  to  have  the  school ; 
but  he  assured  them  she  could  not  get  a  certificate,  for  the  reason,  as 
he  "understood,  there  would  be  no  examination  for  teachers  that 
week."  Other  testimony  is  xiiuch  stronger,  but  this  is  plaintiff's  own 
statement,  and  in  that  he  was  clearly  mistaken.  One  object  in  hold- 
ing the  institute,  as  stated  by  the  county  superintendent  of  schools, 
was,  that  an  examination  of  teachers  might  be  had,  and,  he  states, 
public  announcement  was  made  that  such  examination  would  take 
place.  Plaintiff  was  present  at  that  meeting  of  the  institute,  but 
whether  he  heard  the  announcement  or  not,  the  superintendent  does  not 
know.  That  such  examination  would  be  held  was  a  matter  of  public 

1  In  Martin  v.  Hill,  41  Minn.  337  the  court  said:  "That  one  who,  making 
a  purchase,  does  not  get  by  it  substantially  what,  from  the  false  representations 
of  the  vendor  as  to  material  facts,  he  had  a  right  to  believe,  and  does  believe  he 
is  purchasing,  may  have  a  rescission  of  the  contract  of  purchase,  if  he  is  guilty 
of  no  laches,  is  beyond  question.  It  would  be  the  grossest  injustice  to 
hold  a  party  to  a  purchase,  where,  solely  through  the  fault  of  the  other 
party,  he  gets  only  what  he  did  not  intend  to  buy.  And  to  this  right  of 
rescission  it  is  not  essential  that  the  false  representations  were  made  with 
actual  intent  to  defraud.  The  right  is  not  based  on  actual  fraud,  but  on 
a  material  mistake  of  facts  caused  by  the  fault  of  the  other  party." 


308  FORMATION   OF   CONTRACT. 

notoriety,  and  as  it  was  of  special  interest  to  those  assembled,  it  must 
have  been  the  subject  of  conversation. 

The  fact  is  uncontroverted,  Miss  Swartz  was  at  that  session  of  the 
institute,  was  examined,  and  received  the  usual  certificate  of  qualifica- 
tion. On  presenting  it  to  defendants,  they  gave  her  the  school,  ac- 
cording to  their  original  agreement  with  her,  and  refused  to  allow 
plaintiff  to  teach,  and  so  notified  him  at  once  by  letter.  In  this 
they  did  right.  Plaintiff's  employment  was  induced  either  by  a  mis- 
representation or  a  misapprehension  of  facts,  and  he  could  not  de- 
mand the  performance  of  his  alleged  contract.  Defendants  were  mis- 
led by  the  erroneous  information  communicated  by  plaintiff,  and  he 
will  not  be  permitted  to  make  his  wrongful  conduct  a  ground  of  an 
action  in  his  favor.  Whether  his  representations  of  facts  were  wil- 
fully or  innocently  untrue,  is  a  question  about  which  we  need  express 
no  opinion.  The  effect  is  the  same,  whether  he  knew  they  were  un- 
true or  not. 

Legally,  Miss  Swartz  was  entitled  to  the  benefit  of  her  contract 
with  defendants,  and  they  never  would  have  negotiated  with  plaintiff 
concerning  the  school  had  it  not  been  for  his  representation  she  could 
not  obtain  the  requisite  certificate.  On  these  principal  facts  there  is 
absolutely  no  conflict  in  the  testimony.  It  is  all  one  way.  There  is 
not  a  shadow  of  justice  in  the  claim  put  forth  by  plaintiff,  and  in  no 
view  that  can  be  taken,  can  he  be  permitted  to  recover. 

The  judgment  of  the  court  below  will  be  reversed. 
i  Judgment  reversed. 

9  Cyc.  408-409  (47-50);  411  (62-63);  W.  P.  678  (47);  25  H.  L.  R. 
383. 


WOODRUFF  &  CO.    v.  SAUL. 
70  GEORGIA,  271.— 1883. 

Action  on  an  account.  Defense,  composition  and  release.  Judg- 
ment for  defendant. 

Plaintiffs  appeal. 

Plaintiffs  sued  defendant  on  an  account,  and  in  reply  to  the  defense 
of  composition  and  release,  set  up  that  the  agreement  was  procured 
by  the  false  representations  of  the  defendant. 

CRAWFORD,  J.  .  .  .  The  error  complained  of  in  the  charge  given,  is 
that  the  debtor  must  know  his  representations  to  be  false,  to  make  the 
settlement  void.  It  is  thoroughly  well  settled  by  the  common  law 
that  the  misrepresentation  of  a  material  fact,  made  by  one  of  the  par- 
ties to  a  contract,  though  made  by  mistake  and  innocently,  if  acted 


REALITY    OF   CONSENT:    MISREPRESENTATION.  309 

on  by  the  opposite  party,  constitutes  legal  fraud.     Story's  Eq.,  191 
et  seq.;  Kerr  on  Fraud  and  Mistake,  53  et  seq.;  6  Ga.  458. 

Judgment  reversed.1 

9  Cyc.  408-409  (47-50)  ;  411   (62-63)  ;  W.  P.  378   (10) 


&.  In  contracts  uberrimae  fidei. 
WALDEN  v.  LOUISIANA  INSUKANCE  CO 

12  LOUISIANA,  134.— 1838. 

MARTIN,  J.  The  plaintiff  is  appellant  from  a  judgment,  which 
rejected  his  claim  for  the  value  of  a  house,  insured  by  the  defendants, 
and  which  was  destroyed  by  fire. 

The  facts  of  the  case  are  these:  A  ropewalk,  which  was  so  con- 
tiguous to  the  house,  that  the  destruction  of  the  former  by  fire,  must 
necessarily  have  involved  the  latter  in  the  like  calamity;  it  was  ru- 
mored, that  an  attempt  had  been  made  to  set  fire  to  the  ropewalk, 

i  Remedies  for  misrepresentation. — In  the  United  States  equitable  relief  is 
generally  granted  in  the  case  of  contracts  induced  by  innocent  false  repre- 
sentation: Johnston  v.  Bent,  93  Ala.  160;  Lockridge  v.  Foster,  5  111.  669; 
(but  see  Tone  v.  Wilson,  81  111.  529;  Prentice  v.  Crane,  234  111.  302; 
Gillispie  v.  Fulton  Co.,  236  111.  188;  Stockhalm  v.  Adams,  96  111.  App.  152;) 
Brooks  v.  Riding,  46  Ind.  15;  Garden  v.  Mann,  36  Ind.  App.  694;  Wilcox 
v.  Iowa  Wesleyan  University,  32  la.  367;  Hunter  v.  League  Safety  Cure  Co., 
96  la.  573;  Watson  v.  Stucker,  5  Dana  (Ky.)  581;  Pratt  v.  Philbrook,  33 
Me.  17;  Cochran  v.  Pascault,  54  Md.  1;  Keene  v.  Demelman,  172  Mass.  17; 
Converse  v.  Blumrich,  14  Mich.  109;  Beebe  v.  Young,  14  Mich.  136;  Mar- 
tin v.  Hill,  41  Minn.  337;  Isaacs  v.  Skrainka,  95  Mo.  517;  Florida  v.  Morrison, 
44  Mo.  App.  529;  Crowley  v.  Smyth,  46  N.  J.  L.  380;  Crowe  v.  Lewin,  95  N. 
Y.  423 ;  Tryon  v.  Lyon,  133  App.  Div.  798 ;  Garrett  Co.  v.  Halsey,  38  Misc.  ^N. 
Y.)  438;  Lynch's  Appeal,  97  Pa.  St.  349;  Lewis  v.  McLemore,  10  Yerg.  (Tenn.) 
206;  Singleton  v.  Houston,  79  S.  W.  (Tex.)  98;  Adams  v.  Reed,  11  Utah  480; 
Twitchell  v.  Bridge,  42  Vt.  68;  McMullin's  Adm'r  v.  Sanders,  79  Va.  356; 
Smith  v.  Richards,  13  Pet.  26;  Doggett  v.  Emerson,  3  Story  (U.  S.)  700; 
Simon  v.  Goodyear  Metallic  Rubber  Shoe  Co.,  105  Fed.  573. 

But  relief  at  law  is  generally  denied:  Johnston  v.  Bent,  93  Ala.  160; 
Gregory  v.  Schoenell,  55  Ind.  101;  Shook  v.  Singer  Manufacturing  Co.,  61 
Ind.  520;  Scroggin  v.  Wood,  87  la.  497;  King  v.  Mills,  10  Allen  (Mass.), 
548;  Pike  v.  Fay,  101  Mass.  134. 

However  relief  at  law  was  granted  in  Woodruff  v.  Saul,  70  Ga.  271;  School 
Directors  v.  Boomhour,  83  111.  17;  Wickham  v.  Grant,  28  Kan.  517;  Gunby 
v.  Sluter,  44  Md.  237;  McNeill  v.  Bank,  100  Miss.  271;  Lynch  v.  Mercantile 
Trust  Co.,  18  Fed.  486.  See  25  H.  L.  R.  383. 

In  Taylor  v.  Leith,  26  Oh.  St.  428,  it  was  held  that  no  action  in  tort  for 
deceit  would  lie  for  innocent  false  representation;  but  in  Mulvey  v.  King, 
39  Oh.  St.  491,  a  counterclaim  for  damages  based  on  innocent  false  repre- 
sentation was  allowed  to  be  interposed  to  an  action  for  the  price. 


310  FORMATION   OF   CONTRACT. 

which  induced  the  plaintiff  to  insure  the  house.  The  defendants 
resisted  his  claim,  on  the  ground,  that  he  had  not  communicated  the 
circumstances,  which  had  excited  his  alarm  and  determined  him  to 
insure. 

It  appears  to  us,  the  District  Court  did  not  err.  The  underwriter 
had  an  undoubted  right  to  be  informed  of  every  circumstance,  which, 
creating  or  increasing  the  risk  against  which  insurance  is  sought,  may 
induce  him  to  decline  the  insurance,  or  demand  a  higher  premium. 
It  appears,  from  the  plaintiff's  own  confession,  that  the  attempt  which 
had  been  made  to  set  on  fire  a  building,  which  could  not  have  been 
consumed  without  materially  endangering  his  house,  created  in  him  an 
alarm,  which  prompted  him  to  guard  against  the  danger. 

It  is  true,  he  evidently  acted  in  good  faith ;  for  when  he  called  on  the 
defendants  for  indemnification,  he  candidly  informed  them  of  the 
circumstance  which  had  alarmed  him.  His  ignorance  of  his  duty 
cannot  protect  him  against  his  omission  to  give  information  of  a 
material  fact,  which  the  defendants  had  a  right  to  know,  in  order  to 
establish  the  proper  rate  of  insurance. 

It  is  therefore  ordered,  adjudged,  and  decreed  that  the  judgment 
of  the  District  Court  be  affirmed,  with  costs. 

9  Cyc.  409   (52). 


PHGENIX  LIFE  INS.  CO.  v.  RADDIN. 
120  UNITED  STATES,  183.— 1887. 

Action  at  law  to  recover  upon  a  life  insurance  policy  issued  by 
defendant  upon  the  life  of  plaintiff's  son. 

Judgment  for  plaintiff.     Defendant  appeals. 

The  policy  contained  a  provision  that,  "if  any  of  the  declarations 
or  statements  made  in  the  application  for  this  policy,  upon 
the  faith  of  which  this  policy  is  issued,  shall  be  found  in  any  respect 
untrue,  this  policy  shall  be  null  and  void."  Question  28  and  the  an- 
swer were  as  follows: 

"28.  Has  any  application  been 
made  to  this  or  any  other  company 
for  assurance  on  the  life  of  the 

party?     If    so,     with    what    result?  «,«,IAA™      -o     •*.  \i 

irr,   *.  $10,000,     Equitable     Life     Assur- 

What   amounts   are   now   assured   on  "           '    „  M 

,,,.,,,,                         ,    .         .     .  ance  Society. 

the   life   of   the    party,    and   in   what 

companies?  If  already  assured  in 
this  company,  state  the  No.  of  the 
policy." 

Defendant  offered  to  prove  that  the  assured,  within  three  weeks 
before  the  application  for  the  policy  in  suit,  had  made  applications  to 


REALITY    OF   CONSENT:    MISREPRESENTATION.  311 

two  other  companies  for  insurance  on  the  life  of  the  insured,  each  of 
which  had  been  declined.  The  court  excluded  the  evidence  and  ruled, 
"that  if  the  answer  to  one  of  the  interrogatories  of  question  28  was 
true,  there  would  be  no  breach  of  warranty;  that  the  failure  to  an- 
swer the  other  interrogatories  of  question  28  was  no  breach  of  the 
contract;  and  that  if  the  company  took  the  defective  application,  it 
would  be  a  waiver  on  their  part  of  the  answers  to  the  other  interroga- 
tories of  that  question/' 

MR.  JUSTICE  GRAY.  .  .  .  The  jury  having  returned  a  verdict  for 
the  plaintiff  in  the  full  amount  of  the  policy,  the  defendant's  excep- 
tions to  the  refusal  to  rule  as  requested  and  to  the  rulings  aforesaid 
present  the  principal  question  in  the  case. 

The  rules  of  law  which  govern  the  decision  of  this  question  are 
well  settled,  and  the  only  difficulty  is  in  applying  those  rules  to  the 
facts  before  us. 

Answers  to  questions  propounded  by  the  insurers  in  an  application 
for  insurance,  unless  they  are  clearly  shown  by  the  form  of  the  con- 
tract to  have  been  intended  by  both  parties  to  be  warranties,  to  be 
strictly  and  literally  complied  with,  are  to  be  construed  as  representa- 
tions, as  to  which  substantial  truth  in  everything  material  to  the  risk 
is  all  that  is  required  of  the  applicant.  Moulor  v.  American  Ins.  Co., 
Ill  U.  S.  335;  Campbell  v.  New  England  Ins.  Co.,  98  Mass.  381; 
Thomson  v.  Weems,  9  App.  Cas.  671. 

The  misrepresentation  or  concealment  by  the  assured  of  any  material 
fact  entitles  the  insurers  to  avoid  the  policy.  But  the  parties  may 
by  their  contract  make  material  a  fact  that  would  otherwise  be  im- 
material, or  make  immaterial  a  fact  that  would  otherwise  be  material. 
Whether  there  is  other  insurance  on  the  same  subject,  and  whether  such 
insurance  has  been  applied  for  and  refused,  are  material  facts,  at 
least  when  statements  regarding  them  are  required  by  the  insurers  as 
part  of  the  basis  of  the  contract.  Carpenter  v.  Providence  Washington 
Ins.  Co.,  16  Pet.  495 ;  Jeffries  v.  Life  Ins.  Co.,  22  Wall.  47 ;  Anderson 
v.  Fitzgerald,  4  H.  L.  Cas.  484;  Macdonald  v.  Law  Union  Ins.  Co., 
L.  R.  9  Q.  B.  328 ;  Edington  v.  Mtna,  Life  Ins.  Co.,  77  N.  Y.  564,  and 
100  N.  Y.  536. 

Where  an  answer  of  the  applicant  to  a  direct  question  of  the  insurers 
purports  to  be  a  complete  answer  to  the  question,  any  substantial  mis- 
statement  or  omission  in  the  answer  avoids  a  policy  issued  on  the 
faith  of  the  application.  Cazenove  v.  British  Equitable  Assurance 
Co.,  29  Law  Journal  (N.  S.),  C.  P.  160,  affirming  S.  C.  6  C.  B.  N.  S. 
437.  But  where  upon  the  face  of  the  application  a  question  appears 
to  be  not  answered  at  all,  or  to  be  imperfectly  answered,,  and  the  in- 
surers issue  a  policy  without  further  inquiry,  they  waive  the  want  or 
imperfection  in  the  answer,  and  render  the  omission  to  answer  more 
fully  immaterial.  Connecticut  Ins.  Co.  v.  Luchs,  108  U.  S.  498 ;  Hall 


312  FORMATION   OF    CONTRACT. 

v.  People's  Ins.  Co.,  6  Gray,  185;  Lorillard  Ins.  Co.  v.  McCulloch,  21 
Ohio  St.  176;  American  Ins.  Co.  v.  Mahone,  56  Mississippi,  180; 
Carson  v.  Jersey  City  Ins.  Co.,  14  Vroom,  300,  and  15  Vroom,  210; 
Lebanon  Ins.  Co.  v.  Kepler,  106  Penn.  St.  28. 

The  distinction  between  an  answer  apparently  complete,  but  in  fact 
incomplete  and  therefore  untrue,  and  an  answer  manifestly  incomplete, 
and  as  such  accepted  by  the  insurers,  may  be  illustrated  by  two  cases 
of  fire  insurance,  which  are  governed  by  the  same  rules  in  this  respect  as 
cases  of  life  insurance.  If  one  applying  for  insurance  upon  a  build- 
ing against  fire  is  asked  whether  the  property  is  incumbered,  and  for 
what  amount,  and  in  his  answer  discloses  one  mortgage,  when  in  fact 
there  are  two,  the  policy  issued  thereon  is  avoided.  Towne  v.  Fitch- 
burg  Ins.  Co.,  7  Allen,  51.  But  if  to  the  same  question  he  merely  an- 
swers that  the  property  is  incumbered,  without  stating  the  amount  of 
incumbrances,  the  issue  of  the  policy  without  further  inquiry  is  a 
waiver  of  the  omission  to  state  the  amount.  Nichols  v.  Fayette  Ins. 
Co.,  1  Allen,  63. 

In  the  contract  before  us,  the  answers  in  the  application  are  no- 
where called  warranties,  or  made  part  of  the  contract.  In  the  policy 
those  answers  and  the  concluding  paragraph  of  the  application  are  re- 
ferred to  only  as  "the  declarations  or  statements  upon  the  faith  of 
which  this  policy  is  issued";  and  in  the  concluding  paragraph  of  the 
application  the  answers  are  declared  to  be  "fair  and  true  answers  to 
the  foregoing  questions/7  and  to  "form  the  basis  of  the  contract  for 
insurance/'  They  must  therefore  be  considered,  not  as  warranties 
which  are  part  of  the  contract,  but  as  representations  collateral  to  the 
contract,  and  on  which  it  is  based. 

The  28th  printed  question  in  the  application  consists  of  four  suc- 
cessive interrogatories,  as  follows:  "Has  any  application  been  made 
to  this  or  any  other  company  for  assurance  on  the  life  of  the  party  ?  If 
so,  with  what  result?  What  amounts  are  now  assured  on  the  life  of 
the  party,  and  in  what  companies?  If  already  assured  in  this  com- 
pany, state  the  number  of  policy."  The  only  answer  written  opposite 
this  question  is,  "$10,000,  Equitable  Life  Assurance  Society." 

The  question  being  printed  in  very  small  type,  the  answer  is  written 
in  a  single  line  midway  of  the  opposite  space,  evidently  in  order  to 
prevent  the  ends  of  the  letters  from  extending  above  or  below  that 
space ;  and  its  position  with  regard  to  that  space,  and  to  the  several  in- 
terrogatories combined  in  the  question,  does  not  appear  to  us  to  have 
any  bearing  upon  the  construction  and  effect  of  the  answer. 

But  the  four  interrogatories  grouped  together  in  one  question,  and 
all  relating  to  the  subject  of  other  insurance,  would  naturally  be  un- 
derstood as  all  tending  to  one  object,  the  ascertaining  of  the  amount  of 
euch  insurance.  The  answer  in  its  form  is  responsive,  not  to  the  first 
and  second  interrogatories,  but  to  the  third  interrogatory  only,  and 


REALITY    OF   CONSENT:    MISREPRESENTATION.  313 

fully  and  truly  answers  that  interrogatory  by  stating  the  existing 
amount  of  prior  insurance  and  in  what  company,  and  thus  renders  the 
fourth  interrogatory  irrelevant.  If  the  insurers,  after  being  thus 
truly  and  fully  informed  of  the  amount  and  the  place  of  prior  in- 
surance, considered  it  material  to  know  whether  any  unsuccessful  ap- 
plications had  been  made  for  additional  insurance,  they  should  either 
have  repeated  the  first  two  interrogatories,  or  have  put  further  ques- 
tions. The  legal  effect  of  issuing  a  policy  upon  the  answer  as  it  stood 
was  to  waive  their  right  of  requiring  further  answers  as  to  the  par- 
ticulars mentioned  in  the  28th  question,  to  determine  that  it  was  im- 
material, for  the  purposes  of  their  contract,  whether  any  unsuccessful 
applications  had  been  made,  and  to  estop  them  to  set  up  the  omission 
to  disclose  such  applications  as  a  ground  for  avoiding  the  policy.  The 
insurers,  having  thus  conclusively  elected  to  treat  that  omission  as 
immaterial,  could  not  afterwards  make  it  material  by  proving  that  it 
was  intentional. 

The  case  of  London  Assurance  v.  Hansel  (11  Ch.  D.  363),  on 
which  the  insurers  relied  at  the  argument,  did  not  arise  on  a 
question  including  several  interrogatories  as  to  whether  another  ap- 
plication had  been  made,  and  with  what  result,  and  the  amount  of 
existing  insurance,  and  in  what  company.  But  the  application  or 
proposal  contained  two  separate  questions ;  the  first,  whether  a  proposal 
had  been  made  at  any  other  office,  and,  if  so,  where ;  the  second,  whether 
it  was  accepted  at  the  ordinary  premuium,  or  at  an  increased  premium, 
or  declined;  and  contained  no  third  question  or  interrogatory  as  to 
the  amount  of  existing  insurance,  and  in  what  company.  The  single 
answer  to  both  questions  was,  "Insured  now  in  two  offices  for  £16,000 
at  ordinary  rates.  Policies  effected  last  year."  There  being  no  spe- 
cific interrogatory  as  to  the  amount  of  existing  insurance,  that  an- 
swer could  apply  only  to  the  question  whether  a  proposal  had  been 
made,  or  to  the  question  whether  it  had  been  accepted,  and  at  what 
rates,  or  declined ;  and  as  applied  to  either  of  those  questions  it  was  in 
fact,  but  not  upon  its  face,  incomplete  and  therefore  untrue.  As  ap- 
plied to  the  first  question,  it  disclosed  only  some  and  not  all  of  the 
proposals  which  had  in  fact  been  made;  and  as  applied  to  the  second 
question,  it  disclosed  only  the  proposals  which  had  been  accepted,  and 
not  those  which  had  been  declined,  though  the  question  distinctly  em- 
braced both.  That  case  is  thus  clearly  distinguished  in  its  facts  from 
the  case  at  bar.  So  much  of  the  remarks  of  Sir  George  Jessel,  M.  R., 
in  delivering  judgment,  as  implies  that  an  insurance  company  is  not 
bound  to  look  with  the  greatest  attention  at  the  answers  of  an  appli- 
cant to  the  great  number  of  questions  framed  by  the  company  or  its 
agents,  and  that  the  intentional  omission  of  the  insured  to  answer  a 
question  put  to  him  is  a  concealment  which  will  avoid  a  policy  issued 


314  FORMATION    OF    CONTRACT. 

without  further  inquiry,  can  hardly  be  reconciled  with  the  uniform 
current  of  American  decisions. 

For  these  reasons,  our  conclusion  upon  this  branch  of  the  case  is 
that  there  was  no  error,  of  which  the  company  had  a  right  to  complain, 
either  in  refusals  to  rule,  or  in  the  rulings  made. 

The  only  objection  remaining  to  be  considered  is  that  of  variance 
between  the  declaration  and  the  evidence,  which  is  thus  stated  in  the 
bill  of  exceptions:  "After  the  plaintiff  had  rested,  the  defendant 
asked  the  court  to  rule  that  there  was  a  variance  between  the  declara- 
tion and  the  proof,  inasmuch  as  the  declaration  stated  the  considera- 
tion of  the  contract  to  be  the  payment  of  the  sum  of  $152.10  and  of  an 
annual  premium  of  $304.20,  while  the  policy  showed  the  consideration 
to  be  the  representations  made  in  the  application  as  well  as  payment  of 
the  aforesaid  sums  of  money,  and  that  an  amendment  to  the  declaration 
was  necessary ;  but  this  the  court  declined  to  rule,  to  which  the  defend- 
ant excepted." 

But  the  "consideration,"  in  the  legal  sense  of  the  word,  of  a  con- 
tract is  the  quid  pro  quo,  that  which  the  party  to  whom  a  promise  is 
made  does  or  agrees  to  do  in  exchange  for  the  promise.  In  a  con- 
tract of  insurance,  the  promise  of  the  insurer  is  to  pay  a  certain 
amount  of  money  upon  certain  conditions;  and  the  consideration  on 
the  part  of  the  assured  is  his  payment  of  the  whole  premium  at  the 
inception  of  the  contract,  or  his  payment  of  part  then  and  his  agree- 
ment to  pay  the  rest  at  certain  periods  while  it  continues  in  force. 
In  the  present  case,  at  least,  the  application  is  collateral  to  the  contract, 
and  contains  no  promise  or  agreement  of  the  assured.  The  statements 
in  the  application  are  only  representations  upon  which  the  promise 
of  the  insurer  is  based,  and  conditions  limiting  the  obligation  which  he 
assumes.  If  they  are  false,  there  is  a  misrepresentation,  or  a  breach 
of  condition,  which  prevents  the  obligation  of  the  insurer  from  ever  at- 
taching, or  brings  it  to  an  end ;  but  there  is  no  breach  of  any  contract 
or  promise  on  the  part  of  the  assured,  for  he  has  made  none.  In  short, 
the  statements  in  this  application  limit  the  liability  of  the  insurer,  but 
they  create  no  liability  on  the  part  of  the  assured.  The  expression  at 
the  beginning  of  the  policy,  that  the  insurance  is  made  "in  considera- 
tion of  the  representations  made  in  the  application  for  this  policy,"  and 
of  certain  sums  paid  and  to  be  paid  for  premiums,  does  not  make  those 
representations  part  of  the  consideration,  in  the  technical  sense,  or 
render  it  necessary  or  proper  to  plead  them  as  such. 

Judgment  affirmed. 

9  Cyc.  409    (52). 


REALITY    OF   CONSENT:    MISREPRESENTATION.  315 

c.  Estoppel. 
STEVENS  v.  LUDLTJM. 

46  MINNESOTA,  160.— 1891. 

Action  brought  in  the  municipal  court  of  Minneapolis,  the  complaint 
alleging  that  defendant  was  engaged  in  business  under  the  name  of 
the  "New  York  Pie  Company,"  and  that  on  December  20,  1889,  plain- 
tiff drew  a  bill  of  exchange  for  $100  upon  the  defendant  under  that 
name,  which  was  on  the  same  day  accepted  by  him,  the  acceptance  being 
signed  "New  York  Pie  Company,  E.  J.  White,  Mgr."  The  answer 
was  a  general  denial.  At  the  trial  (before  the  court,  without  a  jury) 
there  was  evidence  tending  to  prove,  and  the  court  found,  among  other 
things,  that  the  bill  was  drawn  for  the  price  of  goods  sold  and  de- 
livered by  plaintiff ;  that  the  goods  were  ordered  by  White  in  the  name 
of  the  pie  company,  and,  before  delivering  them,  the  plaintiff  made 
inquiry  at  Bradstreet's  and  at  Dun's  commercial  agencies  (to  which 
he  was  a  subscriber),  and  was  informed  that  the  defendant  was  the 
proprietor  of  the  business  carried  on  in  that  name,  and  he  relied  on 
this  information  in  making  the  sale;  and  that  the  information  so 
given  by  the  agencies  had  been  received  by  them  from  defendant. 
Judgment  was  ordered  for  plaintiff,  and  the  defendant  appeals  from 
an  order  refusing  a  new  trial. 

GILFILLAN,  C.  J.  The  facts  found  by  the  court  below  are  suffi- 
cient to  create  an  equitable  estoppel  against  defendant  as  to  the  owner- 
ship of  the  concern  doing  business  as  the  "New  York  Pie  Company/' 
To  raise  such  an  estoppel,  it  is  not  necessary  that  the  representations 
should  have  been  made  with  actual  fraudulent  intent.  If  he  knows  or 
ought  to  know  the  truth,  and  they  are  intentionally  made  under  such 
circumstances  as  show  that  the  party  making  them  intended,  or  might 
reasonably  have  anticipated,  that  the  party  to  whom  they  are  made, 
or  to  whom  they  are  to  be  communicated,  will  rely  and  act  on  them 
as  true,  and  the  latter  has  so  relied  and  acted  on  them,  so  that  to  per- 
mit the  former  to  deny  their  truth  will  operate  as  a  fraud,  the  former 
is,  in  order  to  prevent  the  fraud,  estopped  to  deny  their  truth.  Cole- 
man  v.  Pearce,  26  Minn.  123  (1  N.  W.  Rep.  846)  ;  Beebe  v.  Wilkinson, 
30  Minn.  548  (16  N.  W.  Rep.  450).  Nor  need  the  representations 
be  made  directly  to  the  party  acting  on  them.  It  is  enough  if  they 
were  made  to  another,  and  intended  or  expected  to  be  communicated 
as  the  representations  of  the  party  making  them  to  the  party  acting 
on  them,  for  him  to  rely  and  act  on.  "The  representation  may  be  in- 
tended for  a  particular  individual  alone,  or  for  several,  or  for  the 
public,  or  for  any  one  of  a  particular  class,  or  it  may  be  made  to  A, 
to  be  communicated  to  B.  Any  one  so  intended  by  the  party  making 


316  FORMATION    OF    CONTRACT. 

the  representation  will  be  entitled  to  relief  or  redress  against  him,  by 
acting  on  the  representation  to  his  damage."  Bigelow,  Fraud,  445. 
If  one  act  on  a  representation  not  made  to  nor  intended  for  him,  he 
will  do  so  at  his  own  risk.  An  instance  of  a  right  to  act  on  a  repre- 
sentation not  made  directly  to  the  person  acting  on  it,  but  intended  for 
him  if  he  had  occasion  to  act  on  it,  is  furnished  by  Pence  v.  Arbuckle, 
22  Minn.  417.  The  representations  a  business  man  makes  to  a  bank 
or  commercial  agency,  especially  to  the  latter,  relating  to  his  busi- 
ness or  to  his  pecuniary  responsibility,  are  among  those  expected  to  be 
communicated  to  others  for  them  to  act  on.  The  business  of  a  com- 
mercial agency  is  to  get  such  information  as  it  can  relative  to  the  busi- 
ness and  pecuniary  ability  of  business  men  and  business  concerns,  and 
communicate  it  to  such  of  its  patrons  as  may  have  occasion  to  apply 
for  it.  Any  one  making  representations  to  such  an  agency,  relating 
to  his  business  or  to  the  business  of  any  concern  with  which  he  is  con- 
nected, must  know,  must  be  held  to  intend,  that  whatever  he  so  repre- 
sents will  be  communicated  by  the  agency  to  any  patron  who  may  have 
occasion  to  inquire.  His  representations  are  intended  as  much  for  the 
patrons  of  the  agency,  and  for  them  to  act  on,  as  for  the  agency  itself. 
When  the  representations  so  made  are  communicated,  as  those  of  the 
person  making  them,  to  a  patron  of  the  agency,  and  he  relies  and  acts 
on  them,  he  is  in  position  to  claim  an  estoppel. 

The  findings  of  fact  in  the  case  are  fully  sustained  by  the  evidence. 

Order  affirmed. 

16  Cyc.  749   (46);  20  Cyc.  70    (54). 


Fraud. 

(i.)  Essential  features. 

a.  Fraud  is  a  false  representation. 

LAIDLAW  v.  ORGAN. 
2  WHEATON    (U.  S.),  178.— 1817. 

Petition  or  libel  for  the  possession  of  one  hundred  and  eleven  hogs- 
heads of  tobacco,  and  for  the  sequestration  of  the  same  pending  the 
final  decision  of  the  court.  Answer  by  defendants  disclaiming  any 
interest  in  the  tobacco,  and  bill  of  interpleader  by  Boorman  and  John- 
son, who  claimed  the  ownership  of  the  same.  Writ  of  sequestration 
was  granted,  and  on  the  trial  a  verdict  was  directed  for  the  plaintiff, 
and  final  judgment  entered  for  the  possession  of  the  tobacco,  and  for 
costs.  Writ  of  error  by  defendants. 

The  bill  of  exceptions  was  in  part  as  follows: 

"And  it  appearing  in  evidence  in  the  said  cause,  that  on  the  night  of 
the  18th  of  February,  1815,  Messrs.  Livingston,  White,  and  Shepherd  brought 


REALITY    OF   CONSENT:    FRAUD.  317 

from  the  British  fleet  the  news  that  a  treaty  of  peace  had  been  signed  at 
Ghent,  by  the  American  and  British  commissioners,  contained  in  a  letter 
from  Lord  Bathurst  to  the  Lord  Mayor  of  London,  published  in  the  British 
newspapers,  and  that  Mr.  White  caused  the  same  to  be  made  public,  in  a 
handbill,  on  Sunday  morning,  8  o'clock,  the  19th  of  February,  1815,  and  that 
the  brother  of  Mr.  Shepherd,  one  of  these  gentlemen,  and  who  was  interested 
in  one-third  of  the  profits  of  the  purchase  set  forth  in  said  plaintiff's  petition, 
had  on  Sunday  morning,  the  19th  of  February,  1815,  communicated  said  news 
to  the  plaintiff;  that  the  said  plaintiff,  on  receiving  said  news,  called  on 
Francis  Girault  (with  whom  he  had  been  bargaining  for  the  tobacco  men- 
tioned in  the  petition,  the  evening  previous),  said  Francis  Girault  being 
one  of  the  said  house  of  trade  of  Peter  Laidlaw  &  Co.,  soon  after  sunrise 
on  the  morning  of  Sunday,  the  19th  of  February,  1815,  before  he  had  heard 
said  news.  Said  Girault  asked  if  there  was  any  news  which  was  calculated 
to  enhance  the  price  or  value  of  the  article  about  to  be  purchased;  and  that 
the  said  purchase  was  then  and  there  made,  and  the  bill  of  parcels  annexed 
to  the  plaintiff's  petition,  delivered  to  the  plaintiff,  between  8  and  9  o'clock 
in  the  morning  of  that  day;  and  that,  in  consequence  of  said  news,  the  value 
of  said  article  had  arisen  from  30  to  50  per  cent.  There  being  no  evidence  that 
the  plaintiff  had  asserted  or  suggested  anything  to  the  said  Girault,  calculated 
to  impose  upon  him  with  respect  to  said  news,  and  to  induce  him  to  think 
or  believe  that  it  did  not  exist;  and  it  appearing  that  the  said  Girault,  when 
applied  to,  on  the  next  day,  Monday,  the  20th  of  February,  1815,  on  behalf  of 
the  plaintiff,  for  an  invoice  of  said  tobacco,  did  not  then  object  to  the  said 
sale,  but  promised  to  deliver  the  invoice  to  the  said  plaintiff,  in  the  course  of 
the  forenoon  of  that  day;  the  court  charged  the  jury  to  find  for  the  plaintiff. 
Wherefore,  that  justice,  by  due  course  of  law,  may  be  done  in  this  case,  the 
counsel  of  said  defendants,  for  them,  and  on  their  behalf,  prays  the  court  that 
this  bill  of  exceptions  be  filed,  allowed,  and  certified  as  the  law  directs. 

"(Signed)  DOMINICK  A.  HALL,  District  Judge. 

"NEW  OBLEANS,  this  3d  day  of  May,  1815." 

MARSHALL,  C.  J.  The  question  in  this  case  is,  whether  the  intelli- 
gence of  extrinsic  circumstances,  which  might  influence  the  price  of 
the  commodity,  and  which  was  exclusively  within  the  knowledge  of  the 
vendee,  ought  to  have  been  communicated  by  him  to  the  vendor? 
The  court  is  of  opinion,  that  he  was  not  bound  to  communicate  it.  It 
would  be  difficult  to  circumscribe  the  contrary  doctrine  within  proper 
limits,  where  the  means  of  intelligence  are  equally  accessible  to  both 
parties.  But  at  the  same  time,  each  party  must  take  care  not  to  say 
or  do  anything  tending  to  impose  upon  the  other. 

The  court  thinks  that  the  absolute  instruction  of  the  judge  was 
erroneous,  and  that  the  question,  whether  any  imposition  was  practiced 
by  the  vendee  upon  the  vendor,  ought  to  have  been  submitted  to  the 
jury.  For  these  reasons,  the  judgment  must  be  reversed,  and  the  cause 
remanded  to  the  District  Court  of  Louisiana,  with  directions  to  award 
a  venire  facias  de  novo. 

Judgment  reversed,  and  venire  de  novo  awarded.1 

9  Cyc.  412  (75)  ;  415  (82)  ;  416  (85)  ;  20  Cyc.  15-16  (41-44)  ;  W.  P.  683 
(55)  ;  20  H.  L.  R.  413. 

i  "That  case   (Laidlaw  v.  Organ)    seems  to  us  to  go  as  far  as  moral  princi- 


318  FORMATION    OF    CONTRACT. 

THE  CLANDEBOYE.1 

70  FEDERAL  REP.    (C.  C.  A.),  631.— 1895. 

This  was  a  libel  by  Leo  Lomm,  master  of  the  steamtug  Dauntless, 
against  the  steamship  Clandeboye,  W.  H.  Strickland,  master,  claimant, 
to  recover  compensation  for  salvage  service.  The  Circuit  Court  ren- 
dered a  decree  awarding  salvage  in  the  sum  of  $10,000,  from  which  the 
claimant  has  appealed. 

SEYMOUR,  District  Judge.  The  material  facts  of  the  case  are  as  fol- 
lows: The  Clandeboye,  a  large  and  valuable  British  steamer,  had  be- 

ples  will  justify,  even  in  cases  of  that  description,  depending  on  public  in- 
telligence, and  further  than  the  same  court  seemed  willing  to  go  in  the  case 
of  Etting  v.  Bank  of  United  States,  11  Wheat.  59."— Mellin,  C.  J.,  in  Lapish 
v.  Wells,  6  Me.  175,  189.  It  should  be  noticed  that  Etting  v.  Bank  of  United 
States  was  a  case  of  fraud  on  a  surety.  See  also  the  criticism  in  Paddock 
v.  Strobridge,  29  Vt.  470,  and  the  explanation  in  Stewart  v.  Wyoming  Ranch* 
Co.,  128  U.  S.  383. 

In  Croyle  v.  Moses,  90  Pa.  St.  250,  an  action  of  deceit,  the  court  says: 
"The  question  presented  by  the  points  was  substantially,  if  at  the  time  of 
the  sale  the  horse  was  known  to  the  defendant  to  be  'a  cribber  or  wind- 
sucker,'  and  this  fact  was  artfully  concealed  by  him  to  the  injury  of  the 
plaintiff,  whether  it  was  such  a  concealment  of  a  latent  defect  as  would  avoid 
the  contract.  The  points  submitted  did  not  rest  on  the  mere  facts  that  the 
horse  was  hitched  short  and  the  reasons  assigned  therefor,  but  also  on  the 
additional  facts  that  the  defendant  knew  him  to  be  a  crib-biter,  and  resorted 
to  this  artifice  to  conceal  it,  and  gave  an  untruthful  reason  to  mislead  and 
deceive  the  plaintiff.  The  complaint  is  not  for  a  refusal  or  omission  to 
answer,  but  for  an  evasive  and  artful  answer.  ...  If  the  jury  should 
believe,  as  the  plaintiff  testified,  that  he  said  to  the  defendant,  'If  there  is 
anything  wrong  with  the  horse,  I  do  not  want  him  at  any  price,'  and  that 
the  defendant,  with  knowledge  he  was  a  crib-biter,  answered  the  plaintiff 
artfully  and  evasively,  with  intent  to  deceive  him,  and  did  thereby  deceive 
him  to  his  injury,  it  was  such  a  fraud  on  the  plaintiff  as  would  justify  him 
in  rescinding  the  contract."  Cf.  Dean  v.  Morey,  33  la.  120. 

In  Stewart  v.  Wyoming  Ranche  Co.,  128  U.  S.  383,  the  court  says:  "In 
an  action  of  deceit,  it  is  true  that  silence  as  to  a  material  fact  is  not  neces- 
sarily, as  matter  of  law,  equivalent  to  a  false  representation.  But  mere 
silence  is  quite  different  from  concealment;  aliud  est  tacere,  aliud  celare; 
a  suppression  of  the  truth  may  amount  to  a  suggestion  of  falsehood;  and  if, 
with  intent  to  deceive,  either  party  to  a  contract  of  sale  conceals  or  sup- 
presses a  material  fact,  which  he  is  in  good  faith  bound  to  disclose,  this  is 
evidence  of  and  equivalent  to  a  false  representation,  because  the  conceal- 
ment or  suppression  is  in  effect  a  representation  that  what  is  disclosed  is  the 
whole  truth.  The  gist  of  the  action  is  fraudulently  producing  a  false  impres- 
sion upon  the  mind  of  the  other  party;  and  if  this  result  is  accomplished,  it 
is  unimportant  whether  the  means  of  accomplishing  it  are  words  or  acts 
of  the  defendant,  or  his  concealment  or  suppression  of  material  facts  not 
equally  within  the  knowledge  or  reach  of  the  plaintiff." 

i  Although  this  case  arises  in  admiralty,  the  principles  upon  which  it  is 
decided  are  drawn  from  the  common  law  and  equity. — EDS. 


REALITY  OF  CONSENT:  FRAUD.  319 

come  disabled  by  breakage  of  machinery,  and  had  arrived  off  the  Little 
Bahama  Islands.  Her  mate  had  been  sent  by  a  ship's  boat  for  assis- 
tance, and  had  on  the  15th  of  May,  1894,  arrived  at  Savannah.  In  pur- 
suance of  telegraphic  instructions  cabled  to  him  by  the  owners,  he  had 
engaged  the  services  of  the  Morse  of  New  York,  then,  however,  lying  at 
the  port  of  Philadelphia,  which  had  agreed  to  proceed  forthwith  to  the 
Little  Bahamas,  and  tow  the  Clandeboye  to  Vera  Cruz,  her  port  of  des- 
tination, for  the  sum  of  $5,000.  Leo  Lomm,  the  libellant,  part  owner 
and  master  of  the  tug  Dauntless,  lying  at  the  time  at  its  home  port  of 
Brunswick,  Ga.,  having  learned  from  the  Savannah  papers  of  the  ar- 
rival at  that  port  of  the  mate  of  the  Clandeboye,  and  of  the  condition 
and  location  of  that  vessel,  on  the  17th  of  May  telegraphed,  through 
his  agents,  to  Savannah,  and  received  a  reply  stating  that  the  tug 
Morse  of  New  York  had  been  chartered  to  go  to  the  assistance  of  the 
Clandeboye.  The  distance  from  New  York — and  that  from  Philadel- 
phia is  about  the  same — to  Stranger's  Cay,  where  the  Clandeboye  was 
lying,  is  more  than  1000  miles.  From  Brunswick  the  distance  is  about 
one-third  as  great.  Captain  Lomm's  boat  was  lying  idle.  He  con- 
cluded that  he  could  beat  the  Morse  in  a  race  to  the  Clandeboye,  and 
that,  the  master  of  the  latter  not  knowing  of  the  employment  of  the 
Morse,  he  could  obtain  a  profitable  job  of  salvage.  The  telegram  an- 
nouncing the  employment  of  the  Morse  by  the  Clandeboye's  owners 
reached  Brunswick  at  a  little  after  3  P.M.  of  the  17th.  Shortly  after 
dark  of  the  same  day  the  Dauntless  started  for  the  Bahamas.  She 
arrived  at  Stranger's  Cay  before  noon  on  the  19th.  Her  master  had 
the  interview,  and  made  with  the  master  of  the  Clandeboye  the  con- 
tract, which  is  a  matter  in  litigation,  immediately  thereafter,  and  in 
a  couple  of  hours  the  vessels  left  for  Newport  News,  one  in  tow  of  the 
other.  Between  three  and  four  days  afterwards  the  Morse  reached  the 
the  spot  where  the  Clandeboye  had  been  lying  at  anchor,  to  find  that  she 
had  gone.  The  conversation  between  the  masters  of  the  steamer  and 
of  the  tug  at  Stranger's  Cay  contains  the  contract  entered  into  between 
them  and  the  words  that  led  up  to  it.  ...  The  material  facts  in  the 
testimony  are  that  Captain  Lomm  told  Captain  Strickland  of  the 
arrival  of  his  mate  in  Savannah,  but  did  not  tell  him  of  the  employ- 
ment of  the  Morse  for  his  relief. 

The  result  of  the  enterprise  of  Captain  Lomm  will  be  disastrous  to 
the  owners  of  the  Clandeboye  if  the  decree  of  the  District  Court  is 
allowed  to  stand.  Captain  Lomm  declined  to  take  the  Clandeboye  to 
Vera  Cruz,  the  port  to  which  her  cargo  was  consigned,  and  did  tow  her 
to  Newport  News,  where  she  was  repaired.  Fifteen  hundred  tons  of  her 
cargo  had  to  be  unloaded  and  then  reloaded  before  she  proceeded  to 
Vera  Cruz.  Her  owners  were  compelled  to  pay  to  the  owners  of  the 
Morse  the  sum  of  $1900  for  the  services  of  that  tug,  and  salvage  com- 
pensation amounting  to  $10,000 — double  what  the  Morse  had  agreed  to 


320  FORMATION    OF    CONTRACT. 

charge  for  towing  the  Clandeboye  to  Yera  Cruz — has  been  awarded 
to  the  Dauntless.  But  the  master  of  the  steamship,  in  charge  of  his 
vessel,  and  not  in  communication  with  his  owners,  was  fully  em- 
powered to  contract  with  the  owners  of  the  Dauntless.  The  contract 
made  was  binding,  unless  invalidated  by  the  conduct  of  Captain  Lomm 
in  concealing  the  fact  that  the  owners  of  the  Clandeboye  had  engaged 
the  services  of  the  Morse.  As  is  said  by  the  judge  in  the  court  below : 

"Whether  or  not  the  right  of  Captain  Lomm  to  a  salvage  reward  was 
forfeited  by  his  silence  on  the  subject  of  the  employment  of  the  Morse,  in 
his  conferences  at  the  Little  Bahama  banks  with  Captain  Strickland,  is  the 
question  on  which  the  case  depends.  There  is  no  doubt  that  Captain  Lomm 
ought  to  have  given  this  information  to  Captain  Strickland.  The  question 
is,  whether  his  obligation  to  do  so  was  so  stringent  as  to  constitute  the 
omission  a  fraudulent  piece  of  deception." 

While  the  right  to  salvage  does  not  necessarily  always  arise  out  of  an 
actual  contract,  it  does  so  in  the  case  at  bar.  Services  spontaneously 
rendered  to  vessels  wrecked,  or,  under  the  conditions  of  an  earlier 
period,  set  upon  by  pirates,  or  attacked  by  enemies,  or  captured  and 
rescued,  are  recompensed  with  salvage  money,  whether  the  services 
were  or  were  not  requested.  The  present  case,  however,  is  one  of  a 
different  character.  The  Clandeboye,  at  anchor  off  the  Bahamas, 
though  disabled,  and  in  a  position  of  contingent  peril,  was  not  wrecked. 
She  had  remained  eleven  days  without  injury  where  she  then  was,  and 
was  under  the  plenary  control  of  her  master,  who  was  at  full  liberty  to 
accept  or  refuse  the  services  of  the  Dauntless. 

The  arrangement  entered  into  between  the  two  masters  constituted 
a  contract,  and  is  subject  to  the  principles  which  regulate  the  validity 
of  contracts.  If  valid,  the  courts  of  admiralty  are  bound  to  enforce 
it ;  if  not,  to  set  it  aside,  in  accordance  with  the  general  rules  affecting 
all  contracts.  The  law  of  contracts  requires  of  the  parties  to  them 
mutual  good  faith.  Is  there  any  principle  of  mercantile  law  by  which 
that  obligation  to  good  faith  which  required  Captain  Lomm  to  inform 
Captain  Strickland  of  the  hiring  of  the  Morse  is  relaxed,  and  is  not  of 
so  stringent  a  force  as  to  make  the  omission  fraudulent  ?  If  there  is, 
it  must  be  sought  in  the  analogies  of  the  rule  of  caveat  emptor.  The 
doctrine  of  caveat  emptor  belongs,  strictly  speaking,  to  the  law  of  sales, 
but  its  principles  apply  to  other  contracts.  Nor  is  it  a  doctrine  pecu- 
liar to  the  common  law.  It  is  in  force  in  all  mercantile  communities, 
and  has  always  been  administered  under  the  civil  law.  Pothier  says, 
speaking  of  the  contract  of  sale:  "Good  faith  prohibits,  not  only 
falsehood,  but  all  suppression  of  everything  which  he  with  whom  we 
contract  has  an  interest  in  knowing,  touching  the  thing  which  makes 
the  object  of  the  contract;"  but  he  adds,  speaking  of  contracts  where 
one  party  has  not  revealed  all  his  information  to  the  other :  "The  in- 
terest of  commerce"  does  not  permit  "parties  to  be  readily  admitted  to 


EEAL1TV    OF    CONSENT:    1'HAUD. 

demand  a  dissolution  of  bargains  which  have  been  concluded;  they 
must  impute  it  to  themselves  in  not  being  better  informed."  Poth. 
Cont.  Sale,  pt.  2,  c.  2,  §§  234,  239.  In  the  case  of  Laidlaw  v.  Organ, 
Chief  Justice  Marshall  says :  "The  question  in  this  case  is  whether  the 
intelligence  of  extrinsic  circumstances  which  might  influence  the  price 
of  the  commodity,  and  which  was  exclusively  within  the  knowledge  of 
the  vendee,  ought  to  have  been  communicated  by  him  to  the  vendor. 
The  court  is  of  the  opinion  that  he  was  not  bound  to  communicate  it. 
It  would  be  difficult  to  circumscribe  the  contrary  doctrine  within  proper 
limits,  where  the  means  of  intelligence  are  equally  accessible  to  both 
parties."  Laidlaw  v.  Organ,  2  Wheat.  178.  "Under  the  general  doc- 
trine of  caveat  emptor,  the  vendor  is  not  ordinarily  bound  to  disclose 
every  defect  of  which  he  may  be  cognizant,  although  his  silence  may 
operate  virtually  to  deceive  the  vendee."  Story,  Cont.  §  516.  The 
general  rule,  both  of  law  and  equity,  in  respect  to  concealments,  is 
that  mere  silence  with  regard  to  a  material  fact  which  there  is  no  obli- 
gation to  divulge  will  not  avoid  a  contract.  Thus  if  A,  knowing  that 
there  is  a  mine  in  the  land  of  B,  of  which  B  is  ignorant,  should  con- 
tract to  purchase  the  land  without  divulging  the  fact,  it  would  be  a 
valid  contract,  although  the  land  were  sold  at  a  price  which  it  would  be 
worth  without  the  mine,  because  A  is  under  no  legal  obligation,  by 
the  nature  of  the  contract,  to  give  any  information  thereof.  Fox  v. 
Macreth,  2  Brown,  Ch.  400,  1  White  &  T.  Lead.  Cas.  Eq.  *172. 
"Without  some  such  general  rule  the  facilities  of  sale  would  be  greatly 
impeded,  and  there  would  be  no  security  to  the  vendor"  or  to  the 
vendee.  Story,  Cont.  §  517. 

It  will  be  noticed  that  the  general  rule  of  law  is  a  requirement  of 
good  faith  in  mutual  dealings,  and  that  the  doctrine  of  caveat  emptor 
is  an  exception  to  such  requirement,  founded  upon  special  reasons, 
viz.  the  necessities  of  commerce,  and  the  impossibility  of  so  limiting 
any  other  doctrine  as  to  do  justice.  As  Chief  Justice  Marshall  says, 
"it  would  be  difficult  to  circumscribe  the  contrary  doctrine  within 
proper  limits."  The  necessities  of  commerce  require  that  enterprise 
should  be  encouraged  by  allowing  diligence  at  least  its  due  reward, 
and  not  interfering  with  any  proper  and  reasonably  fair  competition 
for  intelligence.  Any  other  course  would  set  the  active  and  the  sloth- 
ful upon  an  equality.  "Vigilantibus  non  dormientibus  jura  sub- 
veniunt." 

Even  more  weighty  is  the  second  reason  given  in  support  of  the 
doctrine.  The  law  works  with  blunt  tools.  Fallible  memories,  prej- 
udiced statements,  intentional  falsehood,  the  bias  of  self-interest, 
ignorance,  and  stupidity,  are  all  concomitants  of  much  of  the  testi- 
mony from  which  she  has  to  make  up  her  judgments.  General  rules, 
applicable  to  the  majority  of  cases,  but  sometimes  having  an  oppres- 
sive bearing  upon  particular  ones,  make  up  the  principles  upon  which, 


322  FORMATION    OF    CONTRACT. 

of  necessity,  she  founds  her  decisions,  for  the  law  must  be  workable. 
It  must  be  comprehensible  to  men  who  live  under  its  rule,  and  must 
not  be  so  complex  as  to  over-burden  the  memory  with  minutiae.  Fur- 
ther, were  it  open,  in  all  cases  of  contracts,  for  a  dissatisfied  party 
to  cry  off,  by  saying  that  the  other  party  had  known  better  than  he 
the  value  of  the  subject-matter,  or  the  market  price,  or  some  other 
extrinsic  circumstance,  there  would  be  no  finality  in  human  dealings, 
and  the  only  limitation  to  the  litigation  that  would  ensue  would  be 
that  imposed  by  the  diminution  of  business  caused  by  such  want  of 
finality  and  certainty. 

But  caveat  emptor  is  but  the  exception,  and  not  the  rule.  Its  op- 
eration is  to  be  diligently  circumscribed  within  proper  limits.  The 
doctrine  is  not  applied  (1)  to  cases  of  active  fraud,  one  variety  of 
which  consists  in  misrepresentation  of  facts,  including  what  is  often 
equivalent,  partial  statements;  it  is  not  applied  (2)  to  cases  in  which 
trust  is  implied  by  reason  either  of  the  relations  to  one  another  of  the 
parties,  or  the  nature  of  the  contract;  nor  (3)  to  cases  in  which,  in 
the  absence  of  laches  in  the  party  injured,  the  persons  dealing  with 
one  another  do  not  deal  upon  mutually  equal  terms,  by  reason  of  there 
being  special  knowledge  in  the  possession  of  one  party  which  is  inac- 
cessible to  the  other. 

(1)  The  case   of   actual   or  implied   misrepresentation  needs   no 
illustration. 

(2)  That  of  trust  includes  all  the  known  fiduciary  relations, — such 
as  those  of  attorney  and  client,  guardian  and  ward,  agent  and  prin- 
cipal, and  generally  of  all  who  stand  in  the  relation  of  trustee  and 
cestui  que  trust.     It  also  includes  dealings  with  regard  to  all  matters 
which  from  their  nature  demand  mutual  confidence.     One  seeking  in- 
surance is  bound  to  state  all  facts  within  his  knowledge  which  would 
have  an  influence  on  the  terms  of  the  contract,  but  are  unknown  to 
the  insurer.     A  vendor  of  goods  is  bound  to  point  out  any  latent  de- 
fect in  them  known  to  himself.     A  person  selling  negotiable  paper 
warrants  that  he  has  no  knowledge  of  any  facts  which  prove  it  worth- 
less.    It  is  held  that  if  one  sells  to  another  a  check  of  a  third  party, 
knowing  that  other  checks  of  the  same  party  have  been  recently  dis- 
honored, without  communicating  the  fact  to  the  buyer,  it  is  a  fraudu- 
lent concealment.     Brown  v.  Montgomery,  20  N".  Y.  287. 

(3)  The  case  of  information  possessed  by  one  party  and  absolutely 
unobtainable  by  the  other,  though  of  rarer  occurrence,  is  one  in  which 
the  enforcement  of  the  rule  of  good  faith  is  fully  as  imperative  as  it 
is  in  the  two  classes  of  cases  first  mentioned.     It  is  perhaps  not  prop- 
erly an  exception  to  the  doctrine  of  caveat  emptor  but  rather  a  case 
outside  of  its  terms.     The  purchaser  cannot  look  out  for  what  he  can- 
not have  knowledge  of.     It  is  thus  stated  by  Chancellor  Kent  in  his 
Commentaries:     "If  there  be  an  intentional  concealment  or  suppres- 


REALITY  OF  CONSENT:  FRAUD.  323 

sion  of  material  facts  in  the  making  of  a  contract  in  cases  in  which 
both  parties  have  not  equal  access  to  the  means  of  information,  it  will 
be  deemed  unfair  dealing,  and  will  vitiate  and  avoid  the  contract." 
2  Kent,  Comm.  Lect.  39,  *482.  It  is  implied  in  Judge  Marshall's 
opinion  in  Laidlaw  v.  Organ,  already  cited,  in  the  sentence  ending 
with  the' words,  "where  the  means  of  intelligence  are  equally  accessible 
to  both  parties."  Supra.  Under  this  exception,  more  logically  than 
under  that  of  special  confidence,  where  it  is  generally  placed  in  the 
text  books,  comes  the  obligation  of  one  who  has  manufactured  goods 
to  reveal  to  a  purchaser  any  latent  defect  in  them  known  to  himself, 
and  the  similar  obligation  of  a  vendor  of  real  estate  to  inform  a 
vendee  of  all  incumbrances  placed  by  himself  upon  the  land.  Where 
one  party  to  a  contract  has  information  inaccessible  to  the  other, 
neither  of  the  reasons  assigned  for  the  principle  of  caveat  emptor  ap- 
plies. The  contract  is  not  one  which  should  be  sustained  to  encour- 
age mercantile  competition  and  diligence ;  for,  where  knowledge  cannot 
be  obtained,  competition  is  impossible  and  diligence  useless,  there  can 
be  no  vigilance  to  be  rewarded  or  sloth  to  be  discouraged.  Nor  would 
much  danger  of  unsettling  the  finality  of  business  transactions  or  of 
opening  bargains  to  the  uncertainties  of  conflicting  testimony  about 
the  equality  of  knowledge  of  the  parties  be  likely  to  arise  by  reason 
of  the  invalidating  of  contracts  for  this  cause. 

The  case  at  bar  is  the  first  of  the  kind  that  has  come  before  a  court 
of  admiralty,  but  it  is  as  striking  a  one  as  could  be  imagined  or  in- 
vented. It  is  one  in  which  one  party  to  the  bargain  has  knowledge 
of  a  fact  which,  if  known  to  the  other,  would  have  prevented  the 
making  of  the  contract.  The  ignorance  of  the  fact  on  the  part  of 
the  second  party  is  one  which  cannot  be  made  a  subject  of  controversy, 
and  this  ignorance  was  known  to  the  party  suing  upon  the  contract. 
To  give  him  the  benefit  of  it,  to  the  injury  of  the  claimants,  would  be, 
in  our  opinion,  a  startling  violation  of  the  fundamental  principle  of 
all  law,  that  equity  is  equality.  We  think  that  the  agreement  between 
the  masters  of  the  two  vessels,  made  in  the  case  at  bar,  is  infected 
with  all  three  of  the  vices  just  stated,  and  is,  therefore,  not  within 
the  doctrine  of  caveat  emptor.  It  must,  therefore,  be  declared  void 
under  the  principle  that  requires  good  faith  in  mutual  dealings. 

1.  Without  placing  as  much  stress  upon  the  point  as  upon  the 
other  two,  we  yet  think  it  may  be  fairly  held  that  in  telling  a  part, 
but  not  the  whole,  of  the  truth  to  Captain  Strickland,  Captain  Lomm 
was  guilty  of  that  suppressio  veri  which  the  law  calls  fraud.     By  this 
concealment  he  induced  the  former  to  make  a  contract  which  was 
contrary  to  the  wishes  and  intent  of  his  owners,  who  had  already 
made  with  another  a  more  favorable  bargain, — a  contract  that  he 
would  not  have  made  had  the  facts  been  fully  disclosed. 

2.  The  relation  of  salvor  and  saved,  while  not  one  of  the  fiduciary 


324  FORMATION   OF    CONTRACT. 

relations  generally  referred  to  in  the  law  books,  and  accurately  de- 
nned, as  well  as  classified,  is  yet  a  fiduciary  one.  This  will  be  readily 
apparent  when  we  remember  that  in  a  large  number  of  cases  of 
salvage,  particularly  the  earlier  ones,  the  salvor  has  actually  been  in 
possession  of  the  property  saved,  holding  it  for  the  lien  which  mari- 
time law  gives,  and  liable  as  trustee  to  the  owner  after  the  receipt  of 
salvage.  Besides  this  reason,  another  is  to  be  found  in  the  special 
confidence  resulting  from  the  very  nature  of  the  services  rendered. 
We  think  special  confidence  as  much  belongs  to  the  relation  between 
salvor  and  saved  as  to  that  between  insurer  and  insured. 

3.  Were  the  other  reasons  of  declaring  the  contract  void  absent, 
we  should  unhesitatingly  do  so  on  the  third  ground,  viz.  because  the 
parties  were  not  dealing  on  terms  of  equality.  There  was  on  the 
part  of  Captain  Lomm  an  intentional  suppression  of  a  material  fact, 
in  relation  to  which  he  was  informed,  while  Captain  Strickland  had 
not  access  to  any  means  of  obtaining  information  of  it.  Looking  at 
the  position  of  the  two  parties  to  the  bargain  from  another  point 
of  view,  there  appears  to  have  been  a  striking  inequality  between  them. 
The  master  of  the  Clandeboye  had,  when  the  Dauntless  arrived  at 
Stranger's  Cay,  been  for  nearly  four  weeks  in  a  disabled  vessel.  He 
had  lain  helpless  at  his  anchorage  for  eleven  days.  His  only  assistant, 
who  was  a  navigator  (the  mate  of  the  vessel),  was  absent,  and  he 
was  alone  in  authority  over  the  Clandeboye.  He  was  suffering  from 
the  pressure  of  anxiety,  responsibility,  and  delay.  The  master  of  the 
Dauntless,  aware  of  all  the  circumstances,  intent  solely  upon  gain, 
fresh  from  home,  with  a  mind  disengaged  and  at  ease,  had  an  unfair 
advantage  over  him.  In  the  short  period  during  which  he  considered 
and  agreed  to  accept  the  services  proffered  to  him,  Captain  Strickland 
can  hardly  be  supposed  to  have  had  the  time  or  grasp  of  the  facts 
that  would  have  enabled  him  to  have  drawn  all  the  inferences  from 
the  fact  of  his  mate's  opportunities  in  Savannah  that  have  been 
imagined  by  counsel.  During  that  hurried  interview  between  the 
masters  of  the  two  vessels,  it  doubtless  confusedly  occurred  to  the  mas- 
ter of  the  Clandeboye  that  his  mate  was  trying  to  do  something  for 
him,  and  that  tugs  would  be  at  hand  in  a  short  time,  prepared  to  tow 
him  somewhere.  Probably  he  thought  of  the  nearest  ports.  His 
conversation  shows  that  thoughts  of  this  kind  were  in  his  mind. 
He  was  anxious  to  get  away,  and  with  the  words  "first  come,  first 
served/'  he  made  terms  with  Captain  Lomm,  whose  tug  had  arrived 
first.  But  it  would  be  unjust  to  suppose  that,  he  expected  or  had  in 
his  mind  any  thought  of  the  possible  existence  of  what  was  actually 
the  fact,  viz.  a  contract  under  which  a  powerful  tug  had  been  em- 
ployed by  his  owners  to  tow  him  to  the  place  to  which  he  desired  to 
be  taken  (Yera  Cruz),  and  was  already  on  the  way  to  Stranger's  Cay, 
near  the  Little  Bahamas,  where  lie  was  lvin<j.  We  see  no  reason  to 


REALITY  OF  CONSENT:  FRAUD.  325 

doubt  his  statement  that,  if  he  had  known  of  the  employment  of  the 
Morse,  he  would  not  have  employed  the  Dauntless.  The  parties  were 
not  dealing  on  equal  terms,  and  their  contract  cannot  be  enforced. 

While,  however,  the  contract  must  be  set  aside,  it  does  not  neces- 
sarily follow  that  the  libellant  is  entitled  to  no  compensation.  The 
question  remains,  of  what,  if  anything,  the  Dauntless  is  entitled  to 
for  any  net  benefit  actually  received  by  the  Clandeboye  from  her  serv- 
ices. It  would  be  inequitable  to  allow  the  latter  to  refuse  to  pay  for 
anything  of  use  actually  received  by  her.  Nor  do  we  wish  to  extend 
to  a  new  case  the  exaction  of  penalties  in  civil  actions.  In  the  actual 
condition  and  position  of  the  Clandeboye  when  taken  in  tow  by  the 
Dauntless  she  needed  two  things, — repairs,  and  the  opportunity  of 
taking  her  cargo  to  Vera  Cruz.  If  Captain  Lomm  had  not  interfered, 
she  would  have  been  towed  to  Vera  Cruz  by  the  Morse  at  an  expense, 
including  cost  of  taking  her  mate  and  three  seamen  from  Tybee,  of 
$5200.  Upon  arriving  at  Vera  Cruz,  she  could  have  discharged  her- 
self of  her  cargo,  but  could  not  have  been  repaired,  owing  to  the  fact 
that  there  are  no  facilities  there  for  docking  vessels.  It  would  there- 
fore have  been  necessary  to  have  taken  her  to  some  port  possessed  of 
such  facilities.  New  Orleans,  Pensacola,  and  Newport  News  have 
been  suggested.  The  former  places  are  nearer  Vera  Cruz  than  New- 
port News,  but  the  latter  is  understood  to  have  very  superior  facilities 
of  the  kind  needed.  The  Dauntless  rendered  a  real  service  to  the 
Clandeboye  in  towing  her  to  Newport  News,  where  she  could  be 
docked.  After  being  repaired,  it  became  possible  for  her  to  proceed 
to  Vera  Cruz  under  her  own  steam,  but  it  seems  probable  from  the 
testimony  that,  had  she  been  towed  to  Vera  Cruz  in  the  first  instance, 
she  would  have  been  compelled  to  take  a  tug  in  her  journey  to  a  dry 
dock.  This  expense  she  has  been  saved.  In  addition  to  this,  she  was 
saved  by  the  Dauntless  from  the  perils  of  a  four  days'  longer  stay  at 
her  anchorage.  On  the  other  hand,  at  Newport  News  she  was  put 
to  the  expense  of  unloading  and  reloading  1500  tons  of  her  cargo, 
which  is  stated  by  Captain  Strickland  to  have  been  $1200.  The  cap- 
tain also  states  that  the  time  occupied  was  sixteen  days,  and  estimates 
demurrage  at  £45  per  day.  From  this  demurrage  there  ought  to  be 
deducted  the  four  days'  time  saved  her  by  the  Dauntless  in  taking  her 
from  Stranger's  Cay  before  the  arrival  of  the  Morse.  I  suppose,  too, 
that  the  demurrage  is  estimated  at  charter-party  rates,  and  is  exces- 
sive. I  should  be  disposed  to  allow  $1700  for  it.  The  amount  lost 
to  the  owners  of  the  Clandeboye  by  their  obligations  to  the  owners 
of  the  Morse  was  $1900.  The  total  on  this  side,  as  I  estimate  it, 
would  be  $4800,  besides  costs  of  steaming  from  Newport  News  to 
Vera  Cruz.  Against  this  is  the  saving  of  the  $5200,  which  was  to 
have  been  paid  for  the  services  of  the  Morse,  the  cost  of  taking  the 
Clandeboye  from  Vera  Cruz  to  a  port  with  docking  facilities,  which 


326  FORMATION   OF   CONTRACT. 

would  have  been  necessary  had  she  been  towed  to  Yera  Cruz  before 
being  repaired,  and  the  benefit  to  her  of  her  earlier  rescue  from  the 
perils  of  her  position  on  the  coast  of  the  Little  Bahamas.  On  the 
whole,  the  court  allows  $1000  as  the  net  gain  to  the  owners  of 
the  Clandeboye  for  the  services  of  the  Dauntless. 

Decree  modified,  and  rendered  in  favor  of  the  libellant  in  the  sum 
of  $1000. 

GOFF,  Circuit  Judge.  I  agree  with  the  court  that  the  agreement 
made  by  the  masters  of  the  Clandeboye  and  the  Dauntless  must,  under 
the  circumstances  shown  to  have  existed  at  the  time  it  was  entered 
into,  be  declared  void,  and  that  it  cannot  be  enforced  in  a  court  of 
admiralty.  I  do  not  concur  in  that  part -of  the  opinion  that  allows 
the  libellant  compensation  for  the  services  rendered  by  the  Dauntless, 
undertaken,  as  they  were,  in  bad  faith,  with  a  fraudulent  purpose, 
and  the  intention  of  suppressing  the  truth,  thereby  taking  advantage 
of  a  vessel,  if  not  in  danger,  at  least  in  distress,  and  causing  its  own- 
ers an  additional  and  unnecessary  expense.  In  a  case  of  this  char- 
acter a  court  of  admiralty  is  a  court  of  equity,  and  a  party  who  asks 
its  aid  must  come  before  it  with  clean  hands,  and  with  such  facts  as 
will,  ex  cequo  et  bono,  show  a  case  proper  for  its  interposition.  If  the 
salvors  have  been  guilty  of  misconduct  or  of  negligence,  or  have  been 
in  collusion  with  the  master,  or  have  attempted  to  take  advantage 
of  the  unfortunate,  they  have  thereby  forfeited  all  claim  for  compen- 
sation even  for  services  actually  rendered.  The  Boston,  1  Sumn. 
328,  Fed.  Cas.  No.  1673;  The  Byron,  5  Adm.  Eec.  248;  Fed.  Cas. 
No.  2275;  The  Lady  Worsley,  2  Spinks,  253;  The  Bello  Corrunes,  6 
Wheat.  152;  Marvin,  Wreck  &  Salv.  §  222;  Jones,  Salv.  124;  Cohen, 
Adm.  Law,  171. 

The  undisputed  facts  of  this  case  show  it  to  be  at  least  most  pe- 
culiar, the  books  containing  nothing  similar  to  it,  and  in  my  judg- 
ment the  courts  should  not  aid  in  duplicating  it  by  tolerating  such 
litigation.  I  think  that  the  decree  of  the  District  Court  should  be 
reversed,  and  the  cause  remanded,  with  directions  that  the  libel  be 
dismissed,  and  that  the  claimant  recover  all  costs.1 

9  Cyc.  415    (82). 

i  Materiality  of  representation. — In  Gordon  v.  Street  [1899]  2  Q.  B.  (C.  A.) 
641,  the  plaintiff,  a  money-lender,  advertised  under  a  fictitious  name,  and  the 
defendant  borrowed  money  and  gave  a  promissory  note  to  secure  the  sum 
borrowed  and  interest.  In  an  action  on  the  promissory  note  the  jury  found 
that  the  plaintiff  intentionally  concealed  his  identity  to  induce  the  defendant 
to  borrow  money  of  him  as  if  from  another,  and  that  the  defendant  was  so 
induced;  that  the  plaintiff  did  so  fraudulently;  that  the  defendant  entered 
into  the  contract  believing  that  he  was  doing  so  with  a  person  of  the  ficti- 
tious name  given  by  the  plaintiff;  and  that  the  defendant  repudiated  the 
contract  within  a  reasonable  time  after  he  discovered  that  the  plaintiff  was 
the  person  with  whom  he  had  contracted.  It  was  argued  for  the  plaintiff 


REALITY  OF  CONSENT:  FRAUD.  327 

GRIGSBY  v.  STAPLETON. 
94  MISSOURI,  423.— 1887. 

BLACK,  J.  This  was  a  suit  in  two  counts.  The  first  declares  for 
the  contract  price  of  one  hundred  head  of  cattle  sold  by  the  plaintiff 
to  the  defendant.  The  second  seeks  to  recover  the  value  of  the  same 
cattle.  The  contract  price,  as  well  as  the  value,  is  alleged  to  have 
been  $3431.25.  The  answer  is  (1)  a  general  denial;  (2)  a  fraudu- 
lent representation  as  to  the  health  and  condition  of  the  cattle;  (3) 
fraudulent  concealment  of  the  fact  that  they  had  Spanish  or  Texas 
fever;  (4)  tender  of  their  value  in  their  diseased  condition. 

Plaintiff  purchased  one  hundred  and  five  head  of  cattle  at  the  stock 
yards  in  Kansas  City  on  Friday,  July  25,  1884,  at  $3.60  per  hundred- 
weight. He  shipped  them  to  Barnard  on  Saturday.  Mr.  Ray,  plain- 
tiff's agent,  attended  to  the  shipment  and  accompanied  the  cattle. 
Ray  says  it  was  reported  in  the  yards,  before  he  left  Kansas  City, 
that  the  cattle  were  sick  with  Texas  fever;  some  persons  said  they 
were  sick  and  some  said  they  were  not.  When  the  cattle  arrived  at 

that  these  findings  were  immaterial,  because  the  fraud  proved  was  not  material 
to  the  contract  sued  on;  for,  whether  the  defendant  contracted  with  plaintiff 
or  with  any  other  lender  of  money  to  take  a  loan  of  £100  and  pay  £50  for 
it,  it  was  the  same  thing  to  the  defendant,  for,  when  the  day  of  payment 
arrived,  the  defendant  by  law  would  have  to  pay  the  money  contracted  to  be 
paid  to  whomsoever  he  had  contracted  to  pay  it,  and  it  mattered  not  to  him 
who  that  person  was.  The  court  held,  "the  first  point  which  arises  is  not 
whether  the  fraud  was  material  to  the  contract  entered  into,  but  whether  the 
fraud  was  material  to  the  inducement  which  brought  about  the  contract;  and, 
if  so,  the  jury  having  found  the  fact  of  fraud,  I  cannot  doubt  that  the 
fraudulent  concealing  of  the  plaintiff's  name  was  that  which  induced  the 
defendant  to  enter  into  the  contract  upon  which  he  is  now  sued,  and  was 
therefore  material  to  the  inducement.  On  what  ground  is  it  to  be  said  that  a 
defendant  who  has  been  induced  by  fraud  into  signing  a  contract  cannot,  when 
sued  upon  it,  set  up  the  well-known  defense  that  he  was  induced  by  the  fraud 
of  the  plaintiff  to  enter  into  it?  If  the  fraud  be  material  to  the  inducement, 
it  appears  to  me  plain  that  he  can.  And,  further,  I  will  say  that  to  enter 
into  a  contract  for  a  loan  with  a  creditor  such  as  Isaac  Gordon  (I  will  give 
his  own  description  of  himself  in  a  moment)  so  that,  when  the  day  for 
payment  arrives,  the  borrower  can  have  no  possible  chance  of  a  day's  or  even 
an  hour's  grace  but  on  the  contrary  has  the  certainty  of  being  pestered  with 
writs  and  threats  of  writs  and  bailiffs  and  bankruptcy  notices  (see  plain- 
tiff's letter  of  December  19,  1898,  under  the  name  of  Addison,  about  which 
hereafter),  whereby  life  is  rendered  unbearable,  and  health  is  often  injured, 
is  by  no  means,  in  my  opinion,  the  same  thing  as  entering  into  a  contract  for 
a  loan  with  a  man  who,  when  the  day  of  payment  arrives,  does  none  of  these 
things,  but,  on  the  contrary,  deals  in  a  fair  and  non-oppressive  manner;  and 
to  contract  with  the  oppressive  class  is  very  much  to  the  detriment  of  the 
borrower.  I  am  by  no  means  prepared  to  say  that  the  fraud  in  this  case 
was  not  material  to  the  contract  itself." 


328  FORMATION    OF    CONTRACT. 

Barnard,  Ray  told  the  plaintiff  of  the  report,  and  that  the  cattle 
were  in  a  bad  condition;  that  one  died  in  the  yards  at  Kansas  City 
before  loading,  and  another  died  in  the  cars  on  the  way.  On  Sunday 
morning  the  plaintiff  started  with  them  to  his  home.  After  driving 
them  a  mile  or  so,  he  says  he  concluded  to  and  did  drive  them  back 
to  the  yards,  because  they  were  wild.  One  of  them  died  on  this 
drive,  and  two  more  died  in  the  pen  at  Barnard  before  the  sale  to 
defendant.  There  is  much  evidence  tending  to  show  that  plaintiff 
drove  the  cattle  back  because  he  was  afraid  to  take  them  to  his  neigh- 
borhood, and  that  he  knew  they  were  diseased,  and  dying  from  the 
fever.  He  made  no  disclosure  of  the  fact  that  the  cattle  were  sick  to 
defendant,  nor  that  they  were  reported  to  have  the  fever.  Defendant 
bargained  for  the  cattle  on  Sunday  afternoon  and  on  Monday  morning 
completed  the  contract  at  $3.75  per  hundred-weight,  and  at  once 
shipped  them  to  Chicago.  Thirty  died  on  the  way,  and  twenty  were 
condemned  by  the  health  officer.  It  is  shown  beyond  all  question 
that  they  all  had  the  Texas  fever. 

The  court,  by  the  first  instruction  given  at  the  request  of  the  plain- 
tiff, told  the  jury,  that  if 

"Plaintiff  made  no  representations  to  defendant  as  to  the  health  or  con- 
dition of  said  cattle  to  influence  defendant  to  believe  said  cattle  were  sound 
or  in  healthy  condition,  but,  on  the  contrary,  defendant  bought  said  cattle 
on  actual  view  of  the  same  and  relying  on  his  own  judgment  as  to  their 
health  and  condition,  then  the  jury  will  find  for  plaintiff.  And  if  the 
cattle  were  bought  by  the  defendant  in  the  manner  above  stated,  it  makes 
no  difference  whether  said  cattle,  or  any  of  them,  were  at  the  time  of  said  sale 
affected  with  Texas  fever  or  other  disease,  or  whether  plaintiff  did  or  did 
not  know  of  their  being  so  diseased,  as,  under  such  circumstances,  he  would 
buy  at  his  own  risk  and  peril." 

Caveat  emptor  is  the  general  rule  of  the  common  law.  If  defects 
in  the  property  sold  are  patent  and  might  be  discovered  by  the  exer- 
cise of  ordinary  attention,  and  the  buyer  has  an  opportunity  to  inspect 
the  property,  the  law  does  not  require  the  vendor  to  point  out  defects. 
But  there  are  cases  where  it  becomes  the  duty  of  the  seller  to  point 
out  and  disclose  latent  defects.  Parsons  says  the  rule  seems  to  be, 
that  a  concealment  or  misrepresentation  as  to  extrinsic  facts,  which 
affect  the  market  value  of  the  thing  sold,  is  not  fraudulent,  while  the 
same  concealment  of  defects  in  the  articles  themselves  would  be 
fraudulent.  2  Pars,  on  Cont.  (6th  ed.)  775.  When  an  article  is 
sold  for  a  particular  purpose,  the  suppression  of  a  fact  by  the  vendor, 
which  fact  makes  the  article  unfit  for  the  purpose  for  which  it  was 
sold,  is  a  deceit ;  and,  as  a  general  rule,  a  material  latent  defect  must 
be  disclosed  when  the  article  is  offered  for  sale,  or  the  sale  will  be 
avoided.  1  Whart.  on  Cont.  sec.  248.  The  sale  of  animals  which  the 
seller  knows,  but  the  purchaser  does  not,  have  a  contagious  disease, 


REALITY  OF  CONSENT:  FRAUD.  329 

should  be  regarded  as  a  fraud  when  the  fact  of  the  disease  is  not  dis- 
closed. Cooley  on  Torts,  481.  Kerrsays:  "Defects,  however,  which 
are  latent,  or  circumstances  materially  affecting  the  subject-matter 
of  a  sale,  of  which  the  purchaser  has  no  means,  or  at  least  has  no 
equal  means  of  knowledge,  must,  if  known  to  the  seller,  be  disclosed." 
Kerr  on  Fraud  and  Mis.  (Bump's  ed.)  101. 

In  Cardwell  v.  McClelland  (3  Sneed,  150)  the  action  was  for  fraud 
in  the  sale  of  an  unsound  horse.  The  court  had  instructed  that  if 
the  buyer  relies  upon  his  own  judgment  and  observations,  and  the 
seller  makes  no  representations  that  are  untrue,  or  says  nothing,  the 
buyer  takes  the  property  at  his  own  risk.  This  instruction  was  held 
to  be  erroneous,  the  court  saying:  "If  the  seller  knows  of  a  latent 
defect  in  the  property  that  could  not  be  discovered  by  a  man  of  ordi- 
nary observation,  he  is  bound  to  disclose  it."  In  Jeffrey  v.  Bigelow 
(13  Wend.  518)  the  defendants,  through  their  agent,  sold  a  flock  of 
sheep  to  the  plaintiff ;  soon  after  the  sale,  a  disease  known  as  the  scab 
made  its  appearance  among  the  sheep.  It  was  in  substance  said,  had 
the  defendants  made  the  sale  in  person,  and  known  the  sheep  were 
diseased,  it  would  have  been  their  duty  to  have  informed  the  pur- 
chaser; and  the  defendants  were  held  liable  for  the  deceit. 

In  the  case  of  Me  Adams  v.  Gates  (24  Mo.  223)  the  plaintiff  made 
an  exchange  or  swap  for  a  filly,  unsound  from  loss  of  her  teeth.  The 
court,  after  a  careful  review  of  the  authorities,  as  they  then  stood, 
announced  this  conclusion:  "If  the  defect  complained  of  in  the 
present  case  was  unknown  to  the  plaintiff,  and  of  such  a  character 
that  he  would  not  have  made  the  exchange  had  he  known  of  it,  and 
was  a  latent  defect  such  as  would  have  ordinarily  escaped  the  observa- 
tion of  men  engaged  in  buying  horses,  and  the  defendant,  knowing  this, 
allowed  the  plaintiff  to  exchange  without  communicating  the  defect, 
he  was  guilty  of  a  fraudulent  concealment  and  must  answer  for  it  ac- 
cordingly." This  case  was  followed  and  the  principle  reasserted  in 
Ban-on  v.  Alexander,  27  Mo.  530.  Hill  v.  Balls  (2  H.  &  N.  299) 
eeems  to  teach  a  different  doctrine,  but  the  cases  in  this  court,  sup- 
ported as  they  are,  must  be  taken  as  the  established  law  of  this  State. 

There  is  no  claim  in  this  case  that  the  defendant  knew  these  cattle 
were  diseased.  It  seems  to  be  conceded  on  all  hands  that  Texas  fever 
is  a  disease  not  easily  detected,  except  by  those  having  had  experience 
with  it.  The  cattle  were  sold  to  the  defendant  at  a  sound  price.  If, 
therefore,  plaintiff  knew  they  had  the  Texas  fever,  or  any  other  disease 
materially  affecting  their  value  upon  the  market,  and  did  not  disclose 
the  same  to  the  defendant,  he  was  guilty  of  a  fraudulent  concealment 
of  a  latent  defect.  It  is  not  necessary  to  this  defense  that  there 
should  be  any  warranty  or  representations  as  to  the  health  or  condition 
of  the  cattle.  Indeed,  so  far  as  this  case  is  concerned,  if  the  cattle 
had  been  pronounced  by  some  of  the  cattlemen  to  have  the  Texas  fever, 


330  FORMATION   OF   CONTRACT. 

and,  after  knowledge  of  that  report  came  to  plaintiff,  some  of  them 
to  his  knowledge  died  from  sickness,  then  he  should  have  disclosed 
these  facts  to  the  defendant.  They  were  circumstances  materially 
affecting  the  value  of  the  cattle  for  the  purposes  for  which  they  were 
bought,  or  for  any  other  purpose,  and  of  which  defendant,  on  all  the 
evidence,  had  no  equal  means  of  knowledge. 

To  withhold  these  circumstances  was  a  deceit,  in  the  absence  of 
proof  that  defendant  possessed  such  information.  It  follows  that  the 
first  instruction  is  radically  wrong,  and  that  the  second  given  at  the 
request  of  the  plaintiff  is  equally  vicious. 

The  judgment  is  reversed  and  the  cause  remanded.1 

35  Cyc.  69-70  (40-43)  ;  30  L.  R.  A.  (N.  s.)  748;  Williaton,  Sales,  p.  1056 
(34). 


b.  The  representation  must  be  a  representation  of  fact. 
FISH  v.  CLELAND. 
33  ILLINOIS,  237.— 1864. 

BECKWITH,  J.  The  appellees  filed  a  bill  in  chancery  to  set  aside 
a  sale  made  by  them  to  the  appellant  of  a  life  estate  in  a  town  lot  in 
Jacksonville,  on  the  ground  of  fraud.  The  specific  allegations  on 
which  relief  is  sought  are:  First.  That  the  parties  owning  the  re- 
mainder, held  a  meeting  at  Jacksonville,  at  which  the  appellant  repre- 
sented his  wife,  one  of  the  owners,  when  it  was  concluded  by  them  to 
file  a  bill  in  chancery  for  a  partition  of  the  property,  and  in  order  to 
facilitate  the  same  it  was  deemed  expedient  to  buy  the  life  estate  of 
Mrs.  Cleland  on  joint  account,  at  the  price  of  $2600  to  $2800,  or 
thereabouts;  that  for  this  purpose  the  appellant,  representing  one  of 
the  joint  owners,  went  to  Eock  Island,  where  Mrs.  Cleland  resided, 
and  there  purchased  her  life  estate,  fraudulently  suppressing  what 
had  transpired  between  the  joint  owners  of  the  remainder  at  Jackson- 
ville. Second.  That  the  appellant  on  that  occasion  fraudulently 
represented  to  Mrs.  Cleland  that  the  property  could  not  be  sold  unless 
all  the  persons  interested  therein  were  willing ;  and  that  Hatfield,  one 
of  the  joint  owners,  was  not  willing  to  have  it  sold,  when  he  well 
knew  that  Hatfield  wished  it  partitioned  and  sold.  By  means  of  the 
suppression  of  what  had  transpired  between  the  owners  of  the  remain- 
der, and  these  representations,  the  appellees  allege  that  they  were 

i  See  also  Maynard  v.  Maynard  (49  Vt.  297),  where  it  was  held  a  fraud 
to  conceal  the  impotency  of  an  animal  purchased  for  breeding  purposes ;  Brown 
v.  Montgomery  (20  N.  Y.  287),  where  it  was  held  a  fraud  for  the  vendors  to 
conceal  the  insolvency  of  the  makers  of  a  check  sold  to  the  vendee.  For  a 
case  showing  a  strict  application  of  the  maxim  caveat  emptor,  see  Beninger 
v.  Corwin,  24  N.  J.  L.  257. 


REALITY  OF  CONSENT:  FRAUD.  331 

induced  to  sell  the  life  estate  in  question  for  a  grossly  inadequate 
consideration. 

In  the  present  case  it  is  not  material  to  define  the  nature  and  extent 
of  the  appellant's  obligation  to  the  owners  of  the  remainder.  He  may 
have  been  under  obligation  to  act  for  them  and  not  for  himself,  but 
their  rights  cannot  be  asserted  by  the  appellees,  and  are  not  involved 
in  the  present  controversy.  It  is  mentioned  in  the  bill  that  the  appel- 
lant was  the  son-in-law  of  Mrs.  Cleland,  but  it  is  not  alleged  that  this 
relationship  occasioned  any  confidence  between  the  parties.  There 
might  have  been  such  a  confidence  growing  out  of  this  relation  as  to 
authorize  the  appellees  to  act  upon  the  presumption  that  there  could 
be  no  concealment  of  any  material  fact  from  them,  but  a  court  of 
equity  cannot  afford  relief  on  that  ground  in  the  absence  of  any  alle- 
gation that  the  parties  acted  on  such  presumption,  and  where  there  is 
no  evidence  from  which  that  fact  can  be  inferred.  Undue  conceal- 
ment which  amounts  to  a  fraud  from  which  a  court  of  equity  will 
relieve,  where  there  is  no  peculiar  relation  of  trust  or  confidence  be- 
tween the  parties,  is  the  non-disclosure  of  those  facts  and  circumstances 
which  one  party  is  under  some  legal  or  equitable  obligation  to  com- 
municate to  the  other,  and  which  the  latter  has  a  right,  not  merely 
in  foro  conscientice,  but  juris  et  de  jure,  to  know.  1  Story's  Eq.  §  207. 
The  appellant  was  not  required  by  this  well-established  rule  to  disclose 
that  the  joint  owners  of  the  remainder  contemplated  a  partition  and 
sale  of  the  property,  nor  their  estimate  of  the  value  of  the  life  estate, 
nor  the  object  of  his  visit  to  Eock  Island.  There  is  nothing  shown 
in  the  case  creating  a  legal  or  equitable  obligation  on  his  part  to  do  so. 
The  bill  does  not  allege  any  misrepresentation  of  the  value  of  the 
property  or  of  the  life  estate  therein,  and  we  therefore  dismiss  from 
our  consideration  all  the  evidence  in  that  regard.  The  allegata  must 
exist  before  the  court  can  consider  the  probata. 

The  representation  of  the  appellant  that  the  property  could  not  be 
sold  without  all  the  parties  interested  therein  consented,  if  under- 
stood to  mean  that  a  voluntary  sale  could  not  be  made  without  such 
consent,  was  true,  and  one  which  every  one  must  know  was  true;  but 
if  the  representation  was  understood  to  mean  that  a  sale  could  not  be 
had  by  an  order  of  court  without  the  consent  of  all  parties,  then  it 
was  a  representation  in  regard  to  the  law  of  the  land,  of  which  the 
one  party  is  presumed  to  know  as  much  as  the  other.  A  represen- 
tation of  what  the  law  will  or  will  not  permit  to  be  done,  is  one  upon 
which  the  party  to  whom  it  is  made  has  no  right  to  rely,  and  if  he 
does  so,  it  is  his  own  folly,  and  he  cannot  ask  the  law  to  relieve  him 
from  the  consequences.  The  truth  or  falsehood  of  such  a  representa- 
tion can  be  tested  by  ordinary  vigilance  and  attention.  It  is  an  opin- 
ion in  regard  to  the  law,  and  is  always  understood  as  such.  5  Hill, 
303.  We  have  not  deemed  it  material  to  ascertain  the  truth  or  false- 


332  FORMATION   OF   CONTRACT. 

hood  of  the  alleged  representation  that  Hatfield  was  not  willing  the 
property  should  be  sold.  If  untrue,  it  was  only  a  misrepresentation 
in  regard  to  the  sellers'  chance  of  sale,  or  the  probability  of  their 
getting  a  better  price  for  the  property  than  the  price  offered  by  the 
appellant.  Misrepresentations  of  this  nature  are  not  alone  sufficient 
ground  for  setting  aside  a  contract.  1  Sug.  Vend.  7;  12  East,  637. 
Our  duty  is  to  administer  the  law,  and  having  discharged  it,  we  leave 
the  parties  before  the  tribunal  of  an  enlightened  public  and  to  their 
own  consciences.  Our  duty  does  not  require  us  to  become  advocates 
for  or  against  them  before  those  tribunals.  The  decree  of  the  court 
below  will  be  reversed,  and  the  bill  dismissed. 

Decree  reversed.1 

[Again  before  the  court  and  reported  in  43  Illinois,  282,  on  the 
question  of  relation  of  trust  and  confidence.] 

9  Cyc.  420    (98,  1)  ;  20  Cyc.  19-20    (59-33)  ;  W.  P.  688   (1)  ;  745    (39). 


BOSS  v.  DRINK AED'S  ADM'R. 

35   ALABAMA,   434.— 1860. 

Action  by  administrator  on  two  bills  of  exchange  drawn  by  B.  on 
defendant  and  by  him  accepted.  Defense,  that  it  was  represented  to 
defendant  and  to  the  drawer  of  the  bill  by  the  payee,  that  the  bills 
were  promissory  notes  and  that  defendant  was  signing  as  surety  for 
B.  Judgment  for  plaintiff.  Defendant  appeals. 

A.  J.  WALKER,  C.  J.  .  .  .  We  do  not  deem  it  necessary  to  criticise 
the  charges,  as  to  what  would  constitute  a  fraud  in  the  execution  of 
the  bill.  We  deem  it  sufficient  for  the  guidance  of  the  court  upon  a 
future  trial  to  say  that,  if  the  person  who  took  the  bill,  procured  it  by 
a  false  statement  that  it  was  an  ordinary  note,  when  he  knew  it  to 
be  a  bill  of  exchange;  and  if  the  parties  who  gave  the  bill,  did  it  in 
ignorance  that  it  was  a  bill  of  exchange,  and,  trusting  in  the  statement 
made  to  them,  were  misled  by  it,  a  fraud  has  been  committed,  and  the 
defendant  would  be  entitled  to  relief,  to  the  extent  of  the  injury  done 
by  the  fraud,  as  against  an  indorsee  who  did  not  pay  value.  We 
think  the  law  upon  this  point  is  correctly  stated  in  Townsend  &  Milli- 
ken  v.  Cowles  (31  Ala.  428)  in  the  following  words: 

i  "Trust  and  confidence  reposed  in  a  brother-in-law  by  his  widowed  sister- 
in-law  requires  the  utmost  good  faith  and  fair  dealing  in  any  contract  of 
sale  between  them.  A  misrepresentation  of  the  law  by  the  brother-in-law 
to  his  aister-in-law,  whereby  she  is  led  to  believe  her  title  to  property  held 
by  her  is  invalid,  and  on  this  account  she  sells  it  to  him,  which  sale  is  much 
to  his  advantage,  vitiates  the  sale  at  her  election,  even  though  such  repre- 
sentation was  made  in  good  faith." — Sims  v.  Ferrill,  45  Ga.  585,  598. 


REALITY  OF  CONSENT:  FRAUD.  333 

"If  the  defendant  was  in  fact  ignorant  of  the  law,  and  the  other  party, 
knowing  him  to  be  so  and  knowing  the  law,  took  advantage  of  such  igno- 
rance to  mislead  him  by  a  false  statement  of  the  law,  it  would  constitute  a 
fraud." 

It  is  conceivable  that  injury  might  result  from  a  fraudulent  repre- 
sentation that  a  bill  of  exchange  was  an  ordinary  promissory  note ;  for, 
under  our  law,  the  incident  of  damages  upon  protest  does  not  attach 
to  notes,  and  the  makers  of  such  notes  are  not  precluded  from  making 
defenses  existing  between  the  original  parties,  when  they  have  passed 
into  the  hands  of  an  innocent  holder,  as  is  the  case  with  bills  of  ex- 
change, which  are  governed  by  the  commercial  law. 

The  judgment  of  the  court  below  is  reversed,  and  the  cause  re- 
manded. 

9  Cyc.  421   (3)  ;  20  Cyc.  20   (64-65)  ;  W.  P.  689   (2). 


DAWE  v.  MORRIS. 

149  MASSACHUSETTS,  188.— 1889. 

Tort.  Defendant  demurred.  The  Superior  Court  sustained  the 
demurrer,  and  plaintiff  appeals. 

DEVENS,  J.  The  alleged  misrepresentations  of  the  defendant,  by 
which  the  plaintiff  avers  that  he  was  induced  to  enter  into  a  contract 
for  building  thirty  miles  of  the  Florida  Midland  Railway,  are  that 
the  defendant  had  purchased  a  certain  quantity  of  rails  at  a  certain 
price,  and  that  he  would  sell  those  rails  to  the  plaintiff  at  the  same 
price  if  he  would  make  such  contract.  The  plaintiff's  declaration 
alleges  that  the  defendant  had  not  then  purchased  the  rails,  and  did 
not  sell,  and  did  not  intend  to  sell,  any  rails  so  purchased  to  the  plain- 
tiff; and  that  by  reason  of  the  contract  into  which  the  plaintiff  was 
induced  to  enter^,  he  was  obliged  to  purchase  a  large  number  of  rails 
at  a  much  higher  price  than  that  named  by  the  defendant,  to  his  great 
injury.  If  the  formalities  required  by  law  in  order  that  contracts 
for  the  sale  and  delivery  of  goods  of  the  value  here  in  question  had 
been  complied  with,  that  these  facts  would  constitute  a  contract  upon 
a  valuable  consideration,  will  not  be  questioned.  The  plaintiff  does 
not  seek  to  recover  upon  this  contract,  but  in  an  action  of  tort  in  the 
nature  of  deceit,  because  he  was  induced  to  enter  into  the  contract 
with  the  Florida  Railway  Company  by  reason  of  the  representations 
above  set  forth. 

A  representation,  in  order  that,  if  material  and  false,  it  may  form 
the  ground  of  an  action  where  one  has  been  induced  to  act  by  reason 
thereof,  should  be  one  of  some  existing  fact.  A  statement  promissory 
in  its  character  that  one  will  thereafter  sell  goods  at  a  particular  price 


334  FORMATION    OF    CONTRACT. 

or  time,  will  pay  money,  or  do  any  similar  thing,  or  any  assurance  as 
to  what  shall  thereafter  be  done,  or  as  to  any  further  event,  is  not 
properly  a  representation,  but  a  contract,  for  the  violation  of  which 
a  remedy  is  to  be  sought  by  action  thereon.  The  statement  by  the  de- 
fendant that  he  would  thereafter  sell  rails  at  a  particular  price  if  the 
plaintiff  would  contract  with  the  railway  company  was  a  promise,  the 
breach  of  which  has  occasioned  the  injury  to  the  plaintiff.  Knowlton 
v.  Keenan,  146  Mass.  86. 

The  plaintiff  contends  that,  even  if  this  is  so,  the  representation 
that  the  defendant  had  thus  purchased  the  rails  at  the  price  named 
was  material  and  false;  but  if  the  allegation  that  the  defendant  had 
purchased  the  rails  be  separated  from  that  of  the  promise  to  sell  them 
to  the  plaintiff,  it  is  seen  at  once  to  be  quite  unimportant  and  imma- 
terial. Had  the  defendant  actually  sold,  or  had  he  been  ready  to 
sell,  the  rails  at  the  time  and  price  he  promised  that  he  would,  no 
action  could  have  been  maintained  by  reason  of  any  false  represen- 
tation that  he  had  purchased  them  when  he  made  his  promise,  and 
no  possible  injury  could  thereby  have  resulted  to  the  plaintiff. 

It  is  urged  that,  independent  of  any  promise  to  sell  to  him,  if  the 
plaintiff  had  believed  that  the  defendant  had  purchased  rails  at  the 
price  at  which  he  said  he  had  purchased  them,  the  plaintiff  might 
thus  have  been  induced  to  believe  that  he  himself  could  thereafter 
purchase  them  at  the  same  price.  But  the  injury  from  a  false  repre- 
sentation must  be  direct,  and  the  probability  or  possibility  that,  be- 
cause the  defendant  had  purchased  at  a  particular  price,  the  plaintiff 
would  be  able,  or  might  believe  himself  to  be  able,  to  do  so  also,  is 
too  remote  to  afford  any  ground  for  action. 

It  must  be  shown,  not  only  that  the  defendant  has  committed  a 
tort  and  that  the  plaintiff  has  sustained  damage,  but  that  the  damage 
is  the  clear  and  necessary  consequence  of  the  tort,  and  such  as  can 
be  clearly  denned  and  ascertained.  Lamb  v.  Stone^  11  Pick.  527; 
Bradley  v.  Fuller,  118  Mass.  239.  Quite  a  different  case  would  be 
presented  if  the  defendant  had  falsely  represented  to  the  plaintiff,  if 
unskilled  in  the  price  of  rails,  what  their  market  value  then  was,  and 
what  was  the  price  at  which  they  could  then  be  purchased. 

It  is  also  said,  that  if  the  plaintiff  believed  that  the  defendant  had 
actually  purchased  the  rails,  at  the  time  of  the  transaction,  and  that 
if  he  knew  that  the  completion  of  the  railroad  was  of  vital  importance 
to  the  interests  of  the  defendant,  he  would  more  readily  have  confided 
in  the  defendant's  promise  to  sell  them,  and  thus  that  this  repre- 
sentation was  material.  But  in  order  that  a  false  representation  may 
form  the  foundation  of  an  action  of  deceit,  it  must  be  as  to  some 
subject  material  to  the  contract  itself.  If  it  merely  affect  the  proba- 
bility that  it  will  be  kept,  it  is  collateral  to  it.  "Kepresentations  aa 
to  matters  which  are  merely  collateral,  and  do  not  constitute  essential 


REALITY  OF  CONSENT:  FRAUD.  335 

elements  of  the  contract  into  which  the  plaintiff  is  induced  to  enter, 
are  not  sufficient/'     Hedden  v.  Griffin,  136  Mass.  229. 

Whether  the  allegation  as  to  the  purchase  of  the  rails  by  the  de- 
fendant was  material  was  a  question  for  the  court,  which  was  to 
construe  the  contract,  and  determine  its  legal  effect  on  the  duties  and 
liabilities  of  the  parties.  It  was  for  it  to  determine  (there  being  on 
the  declaration  of  the  plaintiff  no  dispute  as  to  the  facts)  whether  the 
alleged  misrepresentations  were  material,  and  such  as  would  invali- 
date the  contract  or  form  the  foundation  of  an  action  of  tort.  Penn 
Ins.  Co.  v.  Crane,  134  Mass.  56. 

The  plaintiff  further  contends  that,  as  when  goods  have  been  ob- 
tained under  the  form  of  a  purchase  with  the  intent  not  to  pay  for 
them,  the  seller  may,  on  discovery  of  this,  rescind  the  contract  and 
repossess  himself  of  the  goods  as  against  the  purchaser  or  any  one 
obtaining  the  goods  from  him  with  notice  or  without  consideration, 
an  action  of  tort  should  be  maintained  on  an  unfulfilled  promise 
which,  at  the  time  of  making,  the  promisor  intended  not  to  perform, 
by  reason  of  which  non-performance  the  plaintiff  has  suffered  injury 
in  having  been  induced  to  enter  into  a  contract  which  depended  for 
its  successful  and  profitable  performance  upon  the  performance  by 
the  defendant  of  his  promise. 

Assuming  that  the  plaintiff's  declaration  enables  him  to  raise  this 
question, — which,  may  be  doubted,  as  the  averment  that  "said  de- 
fendant had  not  then  purchased  said  rails,  or  any  part  of  them,  which 
the  defendant  then  knew,  and  therefore  did  not  sell,  and  did  not 
intend  to  sell,  said  rails  already  purchased  by  them  to  the  plaintiff/' 
is  not  an  averment  that  the  defendant  intended  not  to  perform  his 
contract, — there  is  an  obvious  difference  between  the  case  where  a 
contract  is  rescinded,  and  thus  ceases  to  exist,  and  one  in  which  the 
injury  results  from  the  non-performance  of  that  which  it  is  the  duty 
of  the  defendant  to  perform,  and  where  there  is  no  other  wrong  than 
such  non-performance.  To  term  this  a  tort  would  be  to  confound 
a  cause  of  action  in  contract  with  one  in  tort,  and  would  violate  the 
policy  of  the  statute  of  frauds  by  relieving  a  party  from  the  necessity 
of  observing  those  statutory  formalities  which  are  necessary  to  the 
validity  of  certain  executory  contracts. 

It  was  not  disputed  that  the  plaintiff's  declaration  sets  forth  in  the 
second  count  a  good  cause  of  action.  The  result  is,  that  as  to  the  first 
count  the  entry  must  be, 

Judgment  for  the  defendant  affirmed. 

9  Cyc.  418-420  (94-97)  ;  20  Cyc.  20  (72)  ;  W.  P.  650  (1)  ;  689  (3)  ;  693 
(7). 


336  FORMATION    OF   CONTRACT. 

SHELDON  v.  DAVIDSON. 
85   WISCONSIN,   138.— 1893. 

Action  for  deceit.  Demurrer  to  complaint  sustained.  Plaintiff 
appeals. 

The  complaint  set  up  that  defendant  leased  to  the  plaintiff  certain 
premises  on  the  front  of  which  there  was  a  brick  dwelling-house  and 
store,  and  on  the  east  sixty  feet  a  barn,  the  lease  stipulating  that  it 
should  not  take  effect  as  to  the  east  sixty  feet  until  the  expiration  (six 
months  later)  of  an  existing  lease  between  defendant  and  one  Veidt; 
that  plaintiff  made  due  inquiry  of  defendant  as  to  the  terms  and  con- 
ditions of  Veidt's  lease,  and  that  the  defendant, 

"With  intent  to  deceive  and  defraud  the  plaintiff,  and  for  the  purpose 
of  inducing  him  to  sign  said  lease,  falsely  and  fraudulently  concealed  from 
the  plaintiff  the  fact  that  the  barn  standing  upon  the  said  east  sixty  feet 
[of  said  lot]  was  not  the  property  of  said  defendant,  but  was  the  property 
of  said  Veidt,  and  that  the  plaintiff  could  not  obtain  possession  thereof  on 
the  10th  day  of  September  next  ensuing,  and  falsely  represented  to  the 
plaintiff,  and  for  the  purpose  of  inducing  the  plaintiff  to  execute  said  lease, 
that  he  could  have  possession  of  said  sixty  feet  and  the  stable  standing 
thereon  on  and  after  September  10th  next  ensuing;  that  the  plaintiff,  relying 
upon  the  said  representations,  was  thereby  induced  to  sign  the  aforesaid 
lease,  and  did  so  sign  it  within  a  few  days  thereafter." 

The  complaint  further  alleged  that  the  representation  was  false  in 
that  the  barn  belonged  to  Veidt  and  was  removed  by  him  at  the  ex- 
piration of  his  lease.  There  was  no  stipulation  in  the  lease  regarding 
the  buildings. 

ORTON,  J.  [After  stating  the  above  facts.]  The  gravamen  of  the 
complaint  is  the  fraudulent  concealment  of  the  fact  that  the  building 
on  the  east  sixty  feet  of  the  lot  was  not  the  property  of  the  defendant, 
but  was  the  property  of  Veidt,  the  lessee ;  and  the  false  representation 
that  the  plaintiff  could  have  possession  of  the  said  sixty  feet,  and  the 
stable  standing  thereon,  on  and  after  September  10th  next  ensuing. 

1.  As  to  the  concealment  as  a  cause  of  action.  That  barn  on  the 
sixty  feet  must  have  been  placed  there  by  the  tenant,  Veidt,  tem- 
porarily for  his  own  use,  with  the  privilege  of  removal  at  the  end  of 
his  term,  and  was  never  a  part  of  the  realty.  It  could  not  have  been 
so  attached  to  the  soil  as  to  become  a  part  of  the  realty.  If  it  had 
been,  the  plaintiff  would  have  been  entitled  to  it  by  the  terms  of  his 
lease,  and  he  could  have  prevented  its  removal.  We  conclude,  there- 
fore, that  the  barn  was  a  tenant's  fixture  in  fact  as  well  as  by  the 
terms  of  the  Veidt  lease,  and  removable  by  him  during  his  term. 
The  Veidt  lease  is  referred  to  in  the  plaintiff's  lease.  The  plaintiff 
does  not  state  that  he  did  not  know  all  about  that  lease,  and  all  about 
the  character  of  that  building  as  having  been  placed  there  by  the 


REALITY  OF  CONSENT:  FRAUD.  337 

tenant,  and  removable.  He  states  only  that  he  inquired  of  the  de- 
fendant about  the  terms  and  conditions  of  that  lease,  and  does  not 
state  whether  the  defendant  told  him  what  they  were  or  not.  He 
does  not  state  that  the  defendant  knew,  or  had  reason  to  know,  that 
he,  the  plaintiff,  was  ignorant  of  the  fact  that  the  defendant  did  not 
own  the  barn.  The  defendant  might  well  have  supposed  that  the 
plaintiff  knew  the  terms  of  that  lease  referred  to  in  his  own  lease,  and 
the  character  of  the  barn  as  a  fixture  was  open  to  common  observation. 
But  more  material  than  even  this  is  the  absenQe  of  any  averment 
that  the  plaintiff  was  induced  to  sign  the  lease  by  such  fraudulent 
concealment.  It  states  merely  that  the  concealment  was  for  the  pur- 
pose of  inducing  him  to  do  so,  but  fails  to  state  that  he  was  actually 
induced  to  do  so  by  it.  It  is  very  clear  that  there  are  not  sufficient 
allegations  in  the  complaint  to  make  the  fraudulent  concealment  a 
cause  of  action. 

2.  As  to  the  false  representation  that  the  plaintiff  "could  have  pos- 
session of  said  east  sixty  feet,  and  the  stable  standing  thereon,  on  and 
after  September  10th  next  ensuing."  The  plaintiff  did  have  posses- 
sion of  the  sixty  feet,  so  that  such  part  of  the  representation  at  least 
was  not  false.  As  to  the  other  part  of  the  representation,  it  relates 
to  a  future  event,  and  is  not  of  an  existing  fact  or  of  a  past  event,  and 
therefore  is  not  actionable  if  such  event  should  not  occur.  It  is  a 
mere  opinion,  prediction,  or  promise  of  a  future  condition  of  things, 
upon  which  the  plaintiff  had  no  right  to  rely.  In  Morrison  v.  Koch 
(32  Wis.  254)  the  representation  was  that  a  certain  dam  "would 
always  in  the  future  continue  to  furnish  the  full  amount  of  power 
conveyed."  Mr.  Justice  Lyon  said  in  the  opinion:  "It  seems  quite 
clear  that  no  charge  of  fraud  can  be  predicated  upon  it.  At  most 
there  was  a  mere  expression  of  opinion  that  in  the  future  the  con- 
ditions on  which  the  water  supply  depended  would  remain  favorable 
to  a  continuance  of  the  supply.  ...  It  is  wanting  in  all  the  essential 
elements  which  constitute  a  fraud."  In  Patterson  v.  Wright  ( 64  Wis. 
289)  the  representation  was  that  the  party  "said  or  promised  that  he 
would  pay  a  certain  sum  of  money  as  a  consideration  of  and  to  induce 
the  giving  of  certain  notes,  and  upon  which  they  were  obtained."  It 
was  held  "that  the  representation  must  relate  to  a  present  or  past 
Btate  of  facts,  and  that  relief  as  for  deceit  cannot  be  obtained  for  the 
non-performance  of  a  promise  or  other  statement  looking  to  the 
future";  citing  the  above  case,  Bigelow,  Frauds,  11,  12,  and  Fenwick 
v.  Grimes,  5  Cranch  C.  C.  439.  In  Maltby  v.  Austin  (65  Wis.  527) 
the  representation  was  "of  the  value  of  a  certain  tract  of  land,"  and 
in  Prince  v.  Overholser  (75  Wis.  646)  it  was  "that  a  certain  bounty 
land  warrant  would  locate  any  kind  of  government  land,"  and  neither 
was  held  actionable.  The  principle  has  become  elementary  in  respect 
to  all  representations  relating  to  the  future  and  as  mere  expressions 


338  FORMATION   OF   CONTRACT. 

of  opinion.  This  representation  is  not  fraudulent  or  actionable  for 
both  reasons.  It  relates  to  a  future  event,  and  is  a  mere  opinion,  viz., 
"that  the  plaintiff  could  have  possession  of  the  building  on  the  east 
sixty  feet  of  the  lot  on  and  after  September  10th  next  ensuing." 
This  statement  was  made  before  March  16,  1891. 

This  disposes  of  all  the  pretended  deceit  or  fraud  alleged  in  the 
complaint.  The  demurrer  was  properly  sustained. 

By  the  court.  The  order  of  Superior  Court  is  affirmed,  and  the 
cause  remanded  for  further  proceedings  according  to  law.1 

9  Cyc.  418-420  (94-97)  ;  20  Cyc.  20  (72)  ;  W.  P.  689  (3)  ;  12  H.  L.  R.  438; 
11  C.  L.  R.  677. 


c.  The  representation  must  be  made  with  knowledge  of  its  false- 
hood or  without  belief  in  its  truth. 

CHATHAM  FUKNACE  CO.  v.  MOFFATT. 

147  MASSACHUSETTS,  403.— 1888. 

Tort  for  false  and  fraudulent  representations  made  by  the  de- 
fendant, whereby  the  plaintiff  was  induced  to  take  a  lease  of  a  mine, 
and  to  purchase  certain  mining  machinery.  Judgment  for  plaintiff. 

C.  ALLEN,  J.  It  is  well  settled  in  this  commonwealth  that  the 
charge  of  fraudulent  intent,  in  an  action  for  deceit,  may  be  maintained 
by  proof  of  a  statement  made,  as  of  the  party's  own  knowledge,  which 
is  false,  provided  the  thing  stated  is  not  merely  a  matter  of  opinion, 
estimate,  or  judgment,  but  is  susceptible  of  actual  knowledge ;  and  in 
such  case  it  is  not  necessary  to  make  any  further  proof  of  an  actual 
intent  to  deceive.  The  fraud  consists  in  stating  that  the  party  knows 

i  In  Adams  v.  Gillig,  199  N.  Y.  314,  "defendant  purposely,  intentionally 
and  falsely  stated  to  the  plaintiff  that  he  desired  to  purchase  a  portion  of  her 
vacant  lot,  located  in  a  residence  district,  for  the  purpose  of  building  a 
dwelling  or  dwellings  thereon.  These  representations  were  false  and  fraudu- 
lent and  made  with  the  intent  to  deceive  the  plaintiff  who  relied  thereon  and 
executed  a  conveyance  to  defendant.  Defendant  while  negotiating  intended 
to  build,  and  immediately  after  the  purchase  proceeded  to  arrange  for  build- 
ing, a  public  automobile  garage  on  the  lot,  the  construction  of  which  will 
greatly  damage  plaintiff's  remaining  property.  The  plaintiff  without  delay 
communicated  with  the  defendant  and  offered  to  procure  another  site  for  his 
garage,  pay  all  the  expenses  he  had  incurred  up  to  that  time  and  restore 
the  consideration  he  had  paid  for  the  property  if  he  would  reconvey  the 
property  to  her.  This  the  defendant  refused  to  do.  Held,  that  since  equity 
will  interfere  to  grant  relief  where  necessary  to  prevent  the  consummation  of 
a  fraud,  the  false  statements  made  by  the  defendant  of  his  intention  should, 
under  the  circumstances,  be  deemed  to  be  a  statement  of  a  material,  existing 
fact  of  which  the  court  will  lay  hold  for  the  purpose  of  defeating  the  wrong 
that  would  otherwise  be  consummated  thereby."  (Syllabus.)  Accord,  Me- 
Ready  v.  Phillipps,  56  Neb.  446;  and  see  12  H.  L.  R.  438;  11  C.  L.  R.  677. 


REALITY  OF  CONSENT:  FRAUD.  339 

the  thing  to  exist,  when  lie  does  not  know  it  to  exist;  and  if  he  does 
not  know  it  to  exist,  he  must  ordinarily  be  deemed  to  know  that  he 
does  not.  Forgetfulness  of  its  existence  after  a  former  knowledge,  or 
a  mere  belief  of  its  existence,  will  not  warrant  or  excuse  a  statement  of 
actual  knowledge.  This  rule  has  been  steadily  adhered  to  in  this 
commonwealth,  and  rests  alike  on  sound  policy  and  on  sound  legal 
principles.  Cole  v.  Cassidy,  138  Mass.  437;  Savage  v.  Stevens,  126 
Mass.  207 ;  Tucker  v.  White,  125  Mass.  344 ;  Litchfield  v.  Hutchinson, 
117  Mass.  195;  Milliken  v.  Thorndike,  103  Mass.  382;  Fisher  v. 
Mellen,  103  Mass.  503;  Stone  v.  Denny,  4  Met.  151;  Page  v.  Bent, 
2  Met.  371 ;  Hazard  v.  Irwin,  18  Pick.  95.  And  though  this  doctrine 
has  not  always  been  fully  maintained  elsewhere,  it  is  supported  by 
the  following  authorities,  amongst  others:  Cooper  v.  Schlesinger, 
111  U.  S.  148;  Bower  v.  Fenn,  90  Penn.  St.  359;  Brownlie  v.  Camp- 
bell, 5  App.  Cas.  925,  953,  by  Lord  Blackburn;  Eeese  Eiver  Mining 
Co.  v.  Smith,  L.  E,  4  H.  L.  64,  79,  80,  by  Lord  Cairns;  Slim  v. 
Croucher,  1  De  G.,  F.  &  J.  518,  by  Lord  Campbell.  See  also  Peek 
v.  Derry,  59  L.  T.  (N.  S.)  78,  which  has  been  published  since  this 
decision  was  announced. 

In  the  present  case,  the  defendant  held  a  lease  of  land,  in  which 
there  was  iron  ore.  The  mine  had  formerly  been  worked,  but  oper- 
ations had  ceased,  and  the  mine  had  become  filled  with  water  and 
debris.  The  defendant  sought  to  sell  this  lease  to  the  plaintiff,  and 
represented  to  the  plaintiff,  as  of  his  own  knowledge,  that  there  was 
a  large  quantity  of  iron  ore,  from  8000  to  10,000  tons,  in  his  ore  bed, 
uncovered  and  ready  to  be  taken  out,  and  visible  when  the  bed  was 
free  from  water  and  debris.  The  material  point  was,  whether  this 
mass  of  iron  ore,  which  did  in  truth  exist  under  the  ground,  was 
within  the  boundaries  of  the  land  included  in  the  defendant's  lease, 
and  the  material  part  of  the  defendant's  statement  was,  that  this  was 
in  his  ore  bed;  and  the  representations  were  not  in  fact  true  in  this, 
that  while  in  a  mine  connecting  with  the  defendant's  shafts  there  was 
ore  sufficient  in  quantity  and  location  relative  to  drifts  to  satisfy  his 
representations,  if  it  had  been  in  the  land  covered  by  the  defendant's 
lease,  that  ore  was  not  in  the  defendant's  mine,  but  was  in  the  adjoin- 
ing mine;  and  the  defendant's  mine  was  in  fact  worked  out. 

During  the  negotiations,  the  defendant  exhibited  to  the  plaintiff 
a  plan  of  a  survey  of  the  mine,  which  had  been  made  for  him,  and  the 
plaintiff  took  a  copy  of  it.  In  making  this  plan,  the  surveyor,  with 
the  defendant's  knowledge  and  assent,  did  not  take  the  course  of  the 
first  line  leading  from  the  shaft  through  which  the  mine  was  entered, 
but  assumed  it  to  be  due  north;  and  the  defendant  never  took  any 
means  to  verify  the  course  of  this  line.  In  point  of  fact,  this  line  did 
not  run  due  north,  but  ran  to  the  west  of  north.  If  it  had  run  due 
north,  the  survey,  which  was  in  other  respects  correct,  would  have 


340  FORMATION   OF    CONTRACT. 

correctly  shown  the  mass  of  iron  ore  in  question  to  have  been  within 
the  boundaries  of  the  land  covered  by  the  defendant's  lease;  but  in 
consequence  of  this  erroneous  assumption  the  survey  was  misleading, 
the  iron  ore  being  in  fact  outside  of  those  boundaries.  It  thus  ap- 
pears that  the  defendant  knew  that  what  purported  to'  be  a  survey  was 
not  in  all  respects  an  actual  survey,  and  that  the  line  upon  which  all 
the  others  depended  had  not  been  verified,  but  was  merely  assumed; 
and  this  was  not  disclosed  to  the  plaintiff.  The  defendant  took  it 
upon  himself  to  assert,  as  of  his  own  knowledge,  that  this  large  mass 
of  ore  was  in  his  ore  bed,  that  is,  within  his  boundaries;  and  in  sup- 
port of  this  assertion  he  exhibited  the  plan  of  the  survey,  the  first 
line  of  which  had  not  been  verified,  and  was  erroneous.  Now  this 
statement  was  clearly  of  a  thing  which  was  susceptible  of  knowledge. 
A  real  survey,  all  the  lines  of  which  had  been  properly  verified,  would 
have  shown  with  accuracy  where  the  ore  was  situated.  It  was  within 
the  defendant's  knowledge  that  the  first  line  of  the  plan  had  not  been 
verified.  If  under  such  circumstances  he  chose  to  take  it  upon  him- 
self to  sa}r  that  he  knew  that  the  mass  of  ore  which  had  been  dis- 
covered was  in  his  ore  bed,  in  reliance  upon  a  plan  which  he  knew 
was  not  fully  verified,  it  might  properly  be  found  that  the  charge  of 
fraudulent  misrepresentation  was  sustained,  although  he  believed  his 
statement  to  be  true. 

The  case  of  Milliken  v.  Thorndike  (103  Mass.  382)  bears  a  con- 
siderable resemblance  to  the  present  in  its  facts.  That  was  an  action 
by  a  lessor  to  recover  rent  of  a  store,  which  proved  unsafe,  certain  of 
the  walls  having  settled  or  fallen  in  shortly  after  the  execution  of  the 
lease.  The  lessor  exhibited  plans,  and,  in  reply  to  a  question  if  the 
drains  were  where  they  were  to  be  according  to  the  plans,  said  that 
the  store  was  built  according  to  the  plans  in  every  particular ;  but  this 
appeared  by  the  verdict  of  the  jury  to  be  erroneous.  The  court  said, 
by  Mr.  Justice  Colt,  that  the  representation  "was  of  a  fact,  the  exist- 
ence of  which  was  not  open  and  visible,  of  which  the  plaintiff  (the 
lessor)  had  superior  means  of  knowledge,  and  the  language  in  which 
it  was  made  contained  no  words  of  qualification  or  doubt.  The  evi- 
dence fully  warranted  the  verdict  of  the  jury." 

In  respect  to  the  rule  of  damages,  the  defendant  does  not  in  argu- 
ment contend  that  the  general  rule  adopted  by  the  judge  was  incorrect, 
but  that  it  does  not  sufficiently  appear  what  considerations  entered 
into  his  estimate.  No  requests  for  rulings  upon  this  subject  were 
made,  and  there  was  no  error  in  the  course  pursued  by  the  judge. 

Exceptions  overruled.1 

9  Cyc.  422  (10);  424  (15);  20  Cyc.  27  (92);  29  (93);  Williston,  Sales, 
p.  1060  (49). 

i  That  a  defendant  is  not  liable  in  an  action  for  deceit  where  the  misrepre- 
sentation was  made  innocently,  see  Cowley  v.  Smyth,  46  N.  J.  L.  380;  Da  Lee 


REALITY   OF   CONSENT:    FRAUD.  341 

McKOWN  v.  FURGASON. 

47   IOWA,  636.— 1878. 

Action  for  deceit  in  the  sale  of  a  note.  Judgment  for  plaintiff. 
Defendant  appeals. 

DAY,  J.     The  court  instructed  the  jury  as  follows : 

"3.  If  [you  find  that]  at  the  time  defendant  sold  the  note  in  question  to 
the  plaintiff,  he  represented  said  note  was  good,  and  that  the  maker  thereof, 
H.  E.  Stewart,  was  solvent;  that  the  plaintiff  relied  upon  said  representa- 
tions in  purchasing  said  note;  and  that  said  representations  were  untrue  at 
the  time  they  were  made;  and  that  said  defendant  knew  they  were  untrue, 
or  had  no  reasonable  grounds  for  believing  them  true,  your  verdict  should  be 
for  the  plaintiff  for  the  amount  paid  for  said  note,  together  with  six  per  cent 
interest  from  the  date  of  said  payment." 

The  giving  of  this  instruction  is  assigned  as  error.  It  was  not 
proper  to  give  this  instruction  under  the  issues  presented.  The  plain- 
tiff claims  of  defendant  damages  for  fraudulently  making  represen- 
tations, with  full  knowledge  when  he  made  them  that  they  were  false. 
Upon  this  question  the  case  of  Pearson  v.  Howe  (1  Allen,  207)  is 
directly  in  point.  In  that  case  it  was  held  that  in  an  action  for  deceit 
a  declaration  which  alleges  that  the  representations  made  were  well 
known  by  defendant  to  be  untrue  is  not  supported  by  proof,  simply, 
that  the  defendant  had  reasonable  cause  to  believe  that  they  were 
untrue. 

Judgment  reversed.1 

9   Cyc.  423-424    (13-15);   20  Cyc.  24    (89);   26    (92). 

v.  Blackburn,  11  Kans.  150;  Tucker  v.  White,  125  Mass.  344;  Wakeman  v. 
Dalley,  51  N.  Y.  27.  Contra:  Holcomb  v.  Noble,  69  Mich.  396;  Davis  v. 
Nuzum,  72  Wis.  439,  in  which  States  no  such  distinction  is  taken.  If  an 
independent  action  of  deceit  could  not  be  maintained,  it  would  seem  that  a 
claim  for  damages  for  deceit  could  not  be  interposed  as  a  defense  to  an  action 
for  the  price.  Mclntyre  v.  Buell,  132  N.  Y.  192;  King  v.  Eagle  Mills,  10 
Allen,  548;  First  N.  B.  v.  Yocum,  11  Neb.  328.  Contra:  Mulvey  v.  King, 
39  Ohio  St.  491;  Loper  v.  Robinson,  54  Tex.  510. 

1  "The  plaintiff  requested  the  court  to  charge  that  if  the  defendant  knew  or 
had  reason  to  believe  there  was  not  one  hundred  and  twenty-five  acres  of  land, 
he  was  guilty  of  fraud  in  representing  that  there  was  that  quantity.  The  court 
declined  to  adopt  that  precise  language,  but  repeated  what  had  been  previously 
said,  that  if  defendant,  intending  to  cheat  and  defraud,  misrepresented  or  con- 
cealed a  material  fact,  he  was  liable  for  the  wrong.  The  request  was  erron- 
eous. It  sought  to  substitute  foi  the  fraudulent  intent  a  fact  which  might 
or  might  not,  in  the  minds  of  the  jury,  establish  that  intent.  The  defendant 
might  have  had  reason  to  believe  that  there  was  less  than  one  hundred  and 
twenty-five  acres  of  land,  and  yet  not  have  believed  it,  but  have  honestly  be- 
lieved the  reverse.  The  cases  cited  in  support  of  the  request  to  charge,  when 
carefully  read,  are  found  to  guard  against  any  such  misapprehension.  (Meyer 
v.  Amidon,  45  N.  Y.  169;  Wakeman  v.  Dalley,  51  Id.  27.)  They  treat  the  fact 
that  one  'has  reason  to  believe'  his  statement  to  be  false  merely  as  evidence 


342  FORMATION    OF   CONTRACT. 

d.  The  representation  must  be  made  with  the  intention  that  it 
should  be  acted  upon  by  the  injured  party. 

STEVENS  v.  LUDLUM. 
46  MINNESOTA,  160.— 1891. 
[Reported  herein  at  p.  315.] 


HUNNEWELL  v.  DUXBURY. 

154  MASSACHUSETTS,  286.— 1891. 

BARKER,  J.  The  action  is  tort  for  deceit,  in  inducing  the  plaintiff 
to  take  notes  of  a  corporation  by  false  and  fraudulent  representations, 
alleged  to  have  been  made  to  him  by  the  defendants,  that  the  capital 
stock  of  the  corporation,  amounting  to  $150,000,  had  been  paid  in, 
and  that  patents  for  electrical  advertising  devices,  of  the  value  of 
$149,650,  had  been  transferred  to  it. 

From  the  exceptions,  it  appears  that  the  corporation  was  organized 
in  January,  1885,  under  the  laws  of  Maine,  and  engaged  in  business 
in  Massachusetts;  that  it  filed  with  the  commissioner  of  corporations 
a  certificate  containing  the  above  statements,  dated  August  11,  1885, 
as  required  by  the  St.  of  1884,  c.  330,  §  3,  signed  by  the  defendants, 
with  a  jurat  stating  that  on  that  date  they  had  severally  made  oath 
that  the  certificate  was  true,  to  the  best  of  their  knowledge  and  belief ; 
that  before  the  plaintiff  took  the  notes  the  contents  of  this  certificate 
had  been  communicated  to  him  by  an  attorney  whom  he  had  employed 
to  examine  the  records ;  and  that  he  relied  upon  its  statements  in  ac- 
cepting the  notes.  There  was  no  other  evidence  of  the  making  of  the 
alleged  representations. 

The  main  question,  which  is  raised  both  by  the  demurrer  to  the 
second  count  of  the  declaration  and  by  the  exception,  is  whether  the 
plaintiff  can  maintain  an  action  of  deceit  for  alleged  mistatements 
contained  in  the  certificate.  In  the  opinion  of  a  majority  of  the  court 
this  question  should  have  been  decided  adversely  to  the  plaintiff.  The 
execution  by  the  defendants  of  the  certificate  to  enable  the  corporation 
to  file  it  under  the  St.  of  1884,  c.  330,  §  3,  was  too  remote  from  any 
design  to  influence  the  action  of  the  plaintiff  to  make  it  the  foundation 
of  an  action  of  deceit. 

To  sustain  such  an  action,  misrepresentations  must  either  have 

tending  to  prove  the  fraudulent  intent,  and  require  that  intent  to  be  estab- 
lished. The  court  applied  the  needed  correction  to  the  request,  and  declined 
to  make  conclusive  as  matter  of  law  what  was  properly  but  evidence  upon 
the  question  of  fact." — Finch,  J.,  in  Salisbury  v.  Howe,  87  N.  Y.  128,  135. 


REALITY  OF  CONSENT:  FRAUD.  343 

been  made  to  the  plaintiff  individually,  or  as  one  of  the  public,  or  as 
one  of  a  class  to  whom  they  are  in  fact  addressed,  or  have  been  in- 
tended to  influence  his  conduct  in  the  particular  of  which  he  com- 
plains. 

This  certificate  was  not  communicated  by  the  defendants,  or  by 
the  corporation,  to  the  public  or  to  the  plaintiff.  It  was  filed  with  a 
state  official  for  the  definite  purpose  of  complying  with  a  requirement 
imposed  as  a  condition  precedent  to  the  right  of  the  corporation  to  act 
in  Massachusetts.  Its  design  was  not  to  procure  credit  among  mer- 
chants, but  to  secure  the  right  to  transact  business  in  the  State. 

The  terms  of  the  statute  carry  no  implication  of  such  a  liability. 
Statutes  requiring  similar  statements  from  domestic  corporations  have 
been  in  force  here  since  1829,  and  whenever  it  was  intended  to  impose 
a  liability  for  false  statements  contained  in  them  there  has  been  an 
express  provision  to  that  effect;  and  a  requisite  of  the  liability  has 
uniformly  been  that  the  person  to  be  held  signed  knowing  the  state- 
ment to  be  false.  St.  1829,  c.  53,  §  9;  Rev.  Sts.  c.  38,  §  28;  Gen. 
Sts.  c.  60,  §  30 ;  St.  1870,  c.  224,  §  38,  cl.  5 ;  Pub.  Sts.  c.  106,  §  60, 
cl.  5.  To  hold  that  the  St.  of  1884,  c.  330,  §  3,  imposes  upon  those 
officers  of  a  foreign  corporation  who  sign  the  certificate,  which  is  a 
condition  of  its  admission,  the  added  liability  of  an  action  of  deceit, 
is  to  read  into  the  statute  what  it  does  not  contain. 

If  such  an  action  lies,  it  might  have  been  brought  in  many  instances 
upon  representations  made  in  returns  required  of  domestic  corpo- 
rations, and  yet  there  is  no  instance  of  such  an  action  in  our  reports. 
In  Fogg  v.  Pew  (10  Gray,  409)  it  is  held  that  the  misrepresentations 
must  have  been  intended  and  allowed  by  those  making  them  to  operate 
on  the  mind  of  the  party  induced,  and  have  been  suffered  to  influence 
him.  In  Bradley  v.  Poole  (98  Mass.  169)  the  representations  proved 
and  relied  on  were  made  personally  by  the  defendant  to  the  plaintiff, 
in  the  course  of  the  negotiation  for  the  shares  the  price  of  which  the 
plaintiff  sought  to  recover.  Felker  v.  Standard  Yarn  Co.  (148  Mass. 
226)  was  an  action  under  the  Pub.  Sts.  c.  106,  §  60,  to  enforce  a 
liability  explicitly  declared  by  the  statute. 

NOT  do  we  find  any  English  case  which  goes  to  the  length  necessary 
to  sustain  the  plaintiff's  action.  The  English  cases  fall  under  two 
heads :  1.  Those  of  officers,  members,  or  agents  of  corporations,  who 
have  issued  a  prospectus  or  report  addressed  to  and  circulated  among 
shareholders  or  the  public  for  the  purpose  of  inducing  them  to  take 
shares.  2.  Those  of  persons  who,  to  obtain  the  listing  of  stocks  or 
securities  upon  the  stock  exchange  in  order  that  they  may  be  more 
readily  sold  to  the  public,  have  made  representations  to  the  officials 
of  the  exchange,  which  in  due  course  have  been  communicated  to 
buyers.  Bagshaw  v.  Seymour,  32  L.  T.  81 ;  Bedford  v.  Bagshaw,  4 
H.  &  N.  538 ;  Watson  v.  Earl  of  Charlemont,  12  Q.  B.  856 ;  Clarke  v. 


344  FORMATION   OF   CONTRACT. 

< 

Dickson,  6  C.  B.  (N.  S.)  453;  Jarrett  v.  Kennedy,  6  C.  B.  319; 
Campbell  v.  Fleming,  1  A.  &  E.  40 ;  Peek  v.  Deny,  37  Ch.  D.  541, 
and  14  App.  Cas.  337;  Angus  v.  Clifford  (1891),  2  Ch.  449.  In 
these  cases  the  representations  were  clearly  addressed  to  the  plaintiffs 
among  others  of  the  public  or  of  a  class,  and  were  plainly  intended  and 
calculated  to  influence  their  action  in  the  specific  matter  in  which 
they,  claimed  to  have  been  injured.  So,  too,  in  the  American  cases 
relied  on  to  support  the  action.  Morgan  v.  Skiddy,  62  N.  Y.  319; 
Terwilliger  v.  Great  Western  Telegraph  Co.,  59  111.  249 ;  Paddock  v. 
Fletcher,  42  Vt.  389.  The  numerous  cases  cited  in  the  note  to  Pasley 
v.  Freeman,  in  2  Smith's  Lead.  Cas.  (9th  Am.  ed.)  1320,  are  of  the 
same  character. 

In  the  case  at  bar,  the  certificate  was  made  and  filed  for  the  definite 
purpose,  not  of  influencing  the  public,  but  of  obtaining  from  the 
State  a  specific  right,  which  did  not  affect  the  validity  of  its  contracts, 
but  merely  relieved  its  agents  in  Massachusetts  of  a  penalty.  It  was 
not  addressed  to  or  intended  for  the  public,  and  was  known  to  the 
plaintiff  only  from  the  search  of  his  attorney.  It  could  not  have 
been  intended  or  designed  by  the  defendants  that  the  plaintiff  should 
ascertain  its  contents  and  be  induced  by  them  to  take  the  notes.  It 
is  not  such  a  representation,  made  by  one  to  another  with  intent  to 
deceive,  as  will  sustain  the  action.  Its  statements  are  in  no  fair  sense 
addressed  to  the  person  who  searches  for,  discovers,  and  acts  upon 
them,  and  cannot  fairly  be  inferred  or  found  to  have  been  made  with 
the  intent  to  deceive  him. 

This  view  of  the  law  disposes  of  the  case,  and  makes  it  unnecessary 
to  consider  the  other  questions  raised  at  the  trial. 

Demurrer  and  exceptions  sustained. 

9  Cyc.  424-425   (18-19)  ;  20  Cyc.  35   (38-39)  ;  W.  P.  703   (23)  ;  704  (25). 


e.  The  representation  must  actually  deceive. 

LEWIS  v.  JEWELL. 
151    MASSACHUSETTS,   345.— 1890. 

Tort,  by  the  administratrix  of  the  estate  of  Edward  Lewis,  for 
false  and  fraudulent  representations  made  by  the  defendant  to  the 
intestate  in  a  sale  of  carpets  represented  to  amount  to  900  yards, 
which  in  fact  amounted  to  only  595  yards.  Exceptions  by  defendant 
to  refusal  of  court  to  charge  that  if  intestate  had  full  means  of  ascer- 
taining the  number  of  yards  and  had  an  opportunity  to  inspect  and 
measure  them,  the  representations  of  defendant,  though  false  and  in- 
tentional, would  not  entitle  plaintiff  to  recover,  and  to  the  charge  of 
the  court  that  if  defendant  made  an  intentional  false  representation 


REALITY  OF  CONSENT  I  FRAUD.  345 

to  induce  the  intestate  to  purchase,  and  if  the  intestate,  in  the  exer- 
cise of  due  care,  relied  on  it,  the  jury  would  be  justified  in  finding  for 
the  plaintiff.  Verdict  for  the  plaintiff. 

KNOWLTON,  J.  The  carpets  bought  by  the  plaintiff's  intestate 
covered  four  floors,  consisting  of  twelve  rooms,  besides  the  hall  and 
stairs,  in  a  dwelling-house.  The  number  of  yards  of  material  con- 
tained in  them  was  an  important  element  in  determining  their  value, 
which  might  be  the  subject  of  a  fraudulent  representation.  The  rep- 
resentation of  the  defendant  was  not  a  mere  estimate,  but  a  statement 
purporting  to  be  made  as  of  her  own  knowledge,  and  there  was  evi- 
dence tending  to  show  that  it  was  known  by  her  to  be  false.  There 
was  also  evidence  that  the  purchaser  relied  upon  it ;  and  if  the  testi- 
mony introduced  by  the  plaintiff  was  true,  the  defendant  was  liable 
for  fraud,  unless  the  purchaser  was  bound  to  measure  the  carpets  for 
himself,  or  to  avail  himself  of  his  other  opportunities  of  ascertaining 
the  quantity. 

Upon  the  evidence  presented,  it  could  not  properly  have  been  ruled, 
as  matter  of  law,  that  the  facts  were  so  obvious  or  so  easily  discover- 
able that  the  plaintiff's  intestate  had  no  right  to  rely  on  the  de- 
fendant's representations.  In  this  commonwealth,  and  in  other 
American  States,  in  regard  to  representations  by  a  vendor  in  a  sale 
of  land,  it  has  been  held  that,  in  the  absence  of  other  fraud,  a  vendee 
to  whom  boundaries  are  pointed  out  has  no  right  to  rely  on  the  vendor's 
statements  as  to  quantity,  but  if  he  deems  the  quantity  material,  he 
should  ascertain  it  for  himself.  Gordon  v.  Parmelee,  2  Allen,  212; 
Noble  v.  Googins,  99  Mass.  231,  and  cases  cited;  Parker  v.  Moulton, 
114  Mass.  99.  We  are  of  opinion  that  this  rule  should  not  be  extended 
so  as  to  include  a  case  like  the  present,  and  that  the  instructions  under 
which  the  questions  were  submitted  to  the  jury  were  correct  and 
sufficient. 

Exceptions  overruled.1 

9  Cyc.  428^30  (34-39)  ;  20  Cyc.  39-41   (54-65). 

i  "Where  the  means  of  knowledge  are  at  hand  and  equally  available  to  both 
parties,  and  the  subject  of  purchase  is  alike  open  to  their  inspection,  if 
the  purchaser  does  not  avail  himself  of  these  means  and  opportunities,  he 
will  not  be  heard  to  say  that  he  has  been  deceived  by  the  vendor's  misrepre- 
sentations. If,  having  eyes,  he  will  not  see  matters  directly  before  them, 
where  no  concealment  is  made  or  attempted,  he  will  not  be  entitled  to  favor- 
able consideration  when  he  complains  that  he  has  suffered  from  his  own 
voluntary  blindness,  and  has  been  misled  by  over  confidence  in  the  state- 
ments of  another.  And  the  same  rule  obtains  when  the  complaining  party 
does  not  rely  upon  the  misrepresentations,  but  seeks  from  other  quarters 
means  of  verification  of  the  statements  made,  and  acts  upon  the  information 
thus  obtained." — Mr.  Justice  Field,  in  Slaughter's  Adm'r  v.  Gerson,  13  Wall. 
(U.  S.)  379,  383. 

For  an  extreme  application  of  the  above  rule,  see  Long  v.  Warren,  68  N.  Y. 
426,  and  see  the  criticisms  on  it  in  Albany  City  Savings  Institution  v.  Bur- 
dick,  87  N.  Y.  40,  and  Schumaker  v.  Mather,  133  N.  Y.  590. 


346  FORMATION   OF   CONTRACT. 

(it.)  Remedies  for  fraud. 
BROWN,  J.,  IN  VAIL  v.  REYNOLDS. 

118  NEW  YORK,  297.— 1890. 

A  person  who  has  been  induced  by  fraudulent  representations  to 
become  the  purchaser  of  property,  has  upon  the  discovery  of  the  fraud 
three  remedies  open  to  him,  either  of  which  he  may  elect.  He  may 
rescind  the  contract  absolutely  and  sue  in  an  action  at  law  to  recover 
the  consideration  parted  with  upon  the  fraudulent  contract.  To 
maintain  such  action  he  must  first  restore,  or  offer  to  restore,  to  the 
other  party  whatever  may  have  been  received  by  him  by  virtue  of  the 
contract.  (Gould  v.  Cayuga  County  Nat.  Bank,  86  N.  Y.  75;  Thayer 
v.  Turner,  8  Met.  550;  Evans  v.  Gale,  17  N.  H.  573.)  He  may 
bring  an  action  in  equity  to  rescind  the  contract  and  in  that  action 
have  full  relief.  (Allerton  v.  Allerton,  50  N.  Y.  670.)  Such  an 
action  is  not  founded  upon  a  rescission,  but  is  maintained  for  a  re- 
scission, and  it  is  sufficient  therefore  for  the  plaintiff  to  offer  in  his 
complaint  to  return  what  he  has  received  and  make  tender  of  it  on 
the  trial.  Lastly,  he  may  retain  what  he  has  received  and  bring  an 
action  at  law  to  recover  damages  sustained.  This  action  proceeds 
upon  an  affirmance  of  the  contract  and  the  measure  of  the  plaintiff's 
recovery  is  the  difference  between  the  article  sold  and  what  it  should 
be  according  to  the  representations.  Krum  v.  Beach,  (96  N.  Y.  398.) 

9  Cyc.  432  (47^48)  ;  W.  P.  706  (26)  ;  8  C.  L.  R.  123;  1  Mich.  L.  R.  663. 


DANFORTH,  J.,  IN  CONROW  v.  LITTLE. 

115  NEW  YORK,  387.— 1889. 

The  contract  between  Branscom  and  the  plaintiffs  was,  upon  the 
discovery  of  Branscom's  fraud,  voidable  at  their  election.  As  to  him 
the  plaintiffs  could  affirm  or  rescind  it.  They  could  not  do  both,  and 
there  must  be  a  time  when  their  election  should  be  considered  final. 
We  think  that  time  was  when  they  commenced  an  action  for  the  sum 
due  under  the  contract,  and  in  the  course  of  its  prosecution  applied 
for  and  obtained  an  attachment  against  the  property  of  Branscom  as 
their  debtor.  They  then  knew  of  the  fraud  practiced  by  him,  and  dis- 
closed that  knowledge  in  the  affidavit  on  which  the  attachment  was 
granted,  and  became  entitled  to  that  remedy  because  it  was  made  to  ap- 
pear that  a  cause  of  action  existed  in  their  favor  by  reason  of  a  breach 
of  contract  to  pay  for  goods  and  money  loaned  obtained  by  fraud.  The 
attachment  was  levied  and  the  action  pending  when  the  present  action, 
which  repudiates  the  contract  and  has  no  support  except  on  the  theory 


REALITY  OF  CONSENT:  FRAUD.  347 

of  its  disaffirmance,  was  commenced.  The  two  remedies  are  inconsist- 
ent. By  one  the  whole  estate  of  the  debtor  is  pursued  in  a  summary 
manner  and  payment  of  a  debt  sought  to  be  enforced  by  execution ;  by 
the  other  specific  articles  are  demanded  as  the  property  of  the  plaintiff. 
One  is  to  recover  damages  in  respect  of  the  breach  of  the  contract,  the 
other  can  be  maintained  only  by  showing  that  there  was  no  contract. 
After  choosing  between  these  modes  of  proceeding  the  plaintiffs  no 
longer  had  an  option.  By  bringing  the  first  action,  after  knowledge  of 
the  fraud  practiced  by  Branscom,  the  plaintiffs  waived  the  right  to  dis- 
affirm the  contract,  and  the  defendants  may  justly  hold  them  to  their 
election.  The  principle  applied  in  Foundry  Company  v.  Hersee  (103 
N".  Y.  26)  and  Hays  v.  Midas  (104  Id.  602)  requires  this  construc- 
tion, for  the  present  contains  the  element  lacking  in  those  cases,  viz. : 
knowledge  of  the  fraud  practiced  by  the  vendee;  and  by  reason  of 
it  the  plaintiffs  were  put  to  their  election.  It  is  not  at  all  material 
to  the  question  that  the  plaintiff  discontinued  the  first  suit  before 
bringing  the  present  to  trial,  for  it  is  the  fact  that  the  plaintiffs 
elected  this  remedy,  and  acted  affirmatively  upon  that  election,  that 
determines  the  present  issue.  Taking  any  step  to  enforce  the  contract 
was  a  conclusive  election  not  to  rescind  it  on  account  of  anything 
known  at  the  time.  After  that  the  option  no  longer  existed,  and  it 
is  of  no  consequence  whether  or  not  the  plaintiffs  made  their  choice 
effective.1 

9  Cyc.  437    (76)  ;  W.  P.  708   (29). 

i  Restoration  of  consideration  upon  rescission. — In  Pearsoll  v.  Chapin,  44  Pa. 
St.  9,  the  court  says:  "The  court  instructed  the  jury  that,  if  the  sale  was 
induced  by  the  false  and  fraudulent  representations  of  the  vendor,  the  plain- 
tiff had  a  right  to  recover  back  the  price  without  first  tendering  a  recon- 
veyance, and  this  is  the  first  point  which  we  shall  discuss.  ...  If  the 
court  has  stated  this  point  correctly,  then  a  defrauded  vendee  may  recover 
back  the  price  without  rescinding  the  contract,  and  while  retaining  the  title 
acquired  by  it,  and  perhaps  without  liability  to  return  it,  since  the  vendor 
cannot  allege  his  own  fraud  in  order  to  reclaim  it;  he  may  rescind  for  what 
he  gave  and  affirm  for  what  he  got,  and  is  thus  allowed  by  the  law  to  re- 
turn injustice  for  fraud,  and  invited  to  learn  the  art  of.  being  duped  as  a 
mode  of  profitable  speculation.  We  do  not  so  understand  the  law. 

If  this  be  indeed  the  law  of  such  cases,  then  the  fraud  is  not  corrected, 
but  punished  by  this  remedy.  And  the  punishment  is  grossly  unjust  because 
grossly  unequal,  and  it  can  be  only  by  mere  accident  that  it  is  at  all  pro- 
portionate to  the  offence.  No  matter  how  small  the  fraud,  it  forfeits  the 
whole  value  contracted  for,  be  it  ten  or  ten  thousand  dollars.  And,  if  noth- 
ing can  confirm  the  contract  in  favour  of  the  defrauder,  then  the  other  party 
may  get  all  he  bargained  for,  and  afterwards  recover  back  all  he  gave;  in 
order  to  make  the  punishment  as  severe  as  possible,  he  may,  knowing  of 
the  fraud,  wait  until  he  obtains  full  performance  from  his  adversary,  and 
then  set  up  the  fraud  as  a  ground  for  rescinding  the  contract  for  all  he 
paid  under  it.  This  is  making  a  person  who  is  guilty  of  a  fraud  practi- 
callv  an  outlaw,  for  all  his  interests  that  are  involved  in  the  fraudulent  con- 


348  FORMATION    OF   CONTRACT. 

Duress. 

MORSE  v.  WOODWORTH. 

155  MASSACHUSETTS,  233.— 1892. 

Action  of  contract  to  recover  the  amount  of  three  promissory  notes 
given  by  defendant  to  plaintiff,  and  delivered  tip  to  defendant  by 
plaintiff  and  mutual  releases  executed  under  threats  of  prosecution 
and  arrest  on  a  criminal  charge  of  embezzling  defendant's  money. 

The  court  charged  the  jury  in  substance  that  to  constitute  duress 
by  threats  of  imprisonment  the  threats  must  be  such  as  actually 
overcame  the  will  of  the  plaintiff,  and  that  in  testing  the  question  the 
jury  might  consider  whether  they  were  such  as  would  overcome  the  will 
of  a  man  of  ordinary  firmness ;  and  refused  to  charge,  at  the 
request  of  defendant,  that  if  the  defendant  believed  plaintiff  had 
wrongfully  taken  money  belonging  to  defendant,  and  no  civil  or  crim- 
inal proceeding  had  been  begun,  then  mere  threats  of  prosecution  or 
arrest  would  not  constitute  duress,  that  mere  threats  of  criminal  pros- 
ecution or  arrest,  when  no  warrant  has  been  issued  or  proceedings 
commenced,  do  not  constitute  duress.  The  court  referred  to  the 
ambiguity  in  the  word  "mere,"  and  reiterated  its  former  charge. 
Defendant  excepted.  Verdict  for  plaintiff. 

KNOWLTON,  J.  .  .  .  The  only  remaining  exceptions  relate  to  the 
requests  of  the  defendant  and  the  rulings  of  the  court  in  regard  to 
duress.  The  plaintiff  contended  that  he  gave  up  the  notes  and  signed 
the  release  under  duress  by  threats  of  imprisonment.  The  question 
of  law  involved  is  whether  one  who  believes  and  has  reason  to  believe 
that  another  has  committed  a  crime,  and  who,  by  threats  of  prosecu- 
tion and  imprisonment  for  the  crime,  overcomes  the  will  of  the  other, 

tract."  This  case  contains  a  discussion  of  the  use  and  meaning  of  the 
words  "void"  and  "voidable"  as  used  with  respect  to  contracts. 

In  Masson  v.  Bovet,  1  Denio.  69,  the  court  held  that  in  rescission  for 
fraud  "the  law  only  requires  the  injured  party  to  restore  what  he  has  re- 
ceived and,  as  far  as  he  can,  undo  what  had  been  done  in  execution  of  the 
contract.  This  is  all  that  the  party  defrauded  can  do,  and  all  that  hon- 
esty and  fair  dealing  require  of  him."  In  Moore  v.  Mutual  Reserve  Assoc., 
121  N.  Y.  Appellate  Div.  335,  a  policyholder  who  had  been  fraudulently 
induced  by  the  company  to  take  out  the  policy,  was  allowed,  by  rescission, 
to  recover  back  the  premiums  paid,  without  deduction  of  the  value  of  insur- 
ance under  the  policy  to  the  time  of  rescission.  This  upon  the  ground  that 
he  "does  not  possess  and  is  not  seeking  to  retain  anything  that  would  imply 
an  affirmance  of  the  contract,  or  that  would  be  inequitable  for  him  to  keep"; 

(but  Chester -J.  dissented).  Compare  State  ex  rel.  Schaefer  v.  Ins.  Co..  104 
Minn.  447.  See  also,  upon  the  question  of  restoration  of  consideration  in 
rescission  for  fraud,  8  C.  L.  R.  123  (note)  ;  Johnson,  Rescission  of  contracts 
— restoration  of  consideration,  18  Central  Law  Jour.  482;  9  Cyc.  437-442 

(81-96) ;  W.  P.  713   (38). 


REALITY   OF   CONSENT:   DURESS.  349 

and  induces  him  to  execute  a  contract  which  he  would  not  have  made 
voluntarily,  can  enforce  the  contract  if  the  other  attempts  to  avoid 
it  on  the  ground  of  duress. 

Duress  at  the  common  law  is  of  two  kinds,  duress  by  imprison- 
ment and  duress  by  threats.  Some  of  the  definitions  of  duress  per 
minas  are  not  broad  enough  to  include  constraint  by  threats  of  im- 
prisonment. But  it  is  well  settled  that  threats  of  unlawful  imprison- 
ment may  be  made  the  means  of  duress,  as  well  as  threats  of  grievous 
bodily  harm.  The  rule  as  to  duress  per  minas  has  now  a  broader  ap- 
plication than  formerly.  It  is  founded  on  the  principle  that  a  con- 
tract rests  on  the  free  and  voluntary  action  of  the  minds  of  the  parties 
meeting  in  an  agreement  which  is  to  be  binding  upon  them.  If  an  in- 
fluence is  exerted  on  one  of  them  of  such  a  kind  as  to  overcome  his 
will  and  compel  a  formal  assent  to  an  undertaking  when  he  does  not 
really  agree  to  it,  and  so  to  make  that  appear  to  be  his  act  which  is 
not  his  but  another's,  imposed  on  him  through  fear  which  deprives  him 
of  self-control,  there  is  no  contract  unless  the  other  deals  with  him  in 
good  faith,  in  ignorance  of  the  improper  influence,  and  in  the  belief 
that  he  is  acting  voluntarily. 

To  set  aside  a  contract  for  duress  it  must  be  shown,  first,  that  the 
will  of  one  of  the  parties  was  overcome,  and  that  he  was  thus  sub- 
jected to  the  power  of  another,  and  that  the  means  used  to  induce 
him  to  act  were  of  such  a  kind  as  would  overcome  the  mind  and  will 
of  an  ordinary  person.  It  has  often  been  held  that  threats  of  civil 
suits  and  of  ordinary  proceedings  against  property  are  not  enough, 
because  ordinary  persons  do  not  cease  to  act  voluntarily  on  account  of 
Buch  threats.  But  threats  of  imprisonment  may  be  so  violent  and 
forceful  as  to  have  that  effect.  It  must  also  be  shown  that  the  other 
party  to  the  contract  is  not,  through  ignorance  of  the  duress  or  for 
any  other  reason,  in  a  position  which  entitles  him  to  take  advantage  of 
a  contract  made  under  constraint  without  voluntary  assent  to  it.  If 
he  knows  that  means  have  been  used  to  overcome  the  will  of  him  with 
whom  he  is  dealing,  so  that  he  is  to  obtain  a  formal  agreement  which 
is  not  a  real  agreement,  it  is  against  equity  and  good  conscience  for  him 
to  become  a  party  to  the  contract,  and  it  is  unlawful  for  him  to  at- 
tempt to  gain  a  benefit  from  such  an  influence  improperly  exerted.1 

A  contract  obtained  by  duress  of  unlawful  imprisonment  is  voidable. 
And  if  the  imprisonment  is  under  legal  process  in  regular  form,  it  is 
nevertheless  unlawful  as  against  one  who  procured  it  improperly  for 
the  purpose  of  obtaining  the  execution  of  a  contract;  and  a  contract 
obtained  by  means  of  it  is  voidable  for  duress.  So  it  has  been  said 
that  imprisonment  under  a  legal  process  issued  for  a  just  cause  is 
duress  that  will  avoid  a  contract  if  such  imprisonment  is  unlawfully 

i  As  to  duress  by  a  third  party,  see  note  12  C.  L.  R.  468. 


350  FORMATION   OF   CONTRACT. 

used  to  obtain  the  contract.  Kichardson  v.  Duncan,  3  N.  H.  508. 
See  also  Foshay  v.  Ferguson,  5  Hill  (N.  Y.),  154;  United  States  v. 
Huckabee,  16  Wall.  414,  431;  Miller  v.  Miller,  68  Penn.  St.  486; 
Walbridge  v.  Arnold,  21  Conn.  424;  Wood  v.  Graves,  144  Mass.  365, 
and  cases  cited. 

It  has  sometimes  been  held  that  threats  of  imprisonment,  to  con- 
stitute duress,  must  be  of  unlawful  imprisonment.  But  the  question 
is,  whether  the  threat  is  of  imprisonment  which  will  be  unlawful  in 
reference  to  the  conduct  of  the  threatener  who  is  seeking  to  obtain  a 
contract  by  his  threat.  Imprisonment  that  is  suffered  through  the  exe- 
cution of  a  threat  which  was  made  for  the  purpose  of  forcing  a  guilty 
person  to  enter  into  a  contract  may  be  lawful  as  against  the  authori- 
ties and  the  public,  but  unlawful  as  against  the  threatener,  when  con- 
sidered in  reference  to  his  effort  to  use  for  his  private  benefit  processes 
provided  for  the  protection  of  the  public  and  the  punishment  of  crime. 
One  who  has  overcome  the  mind  and  will  of  another  for  his  own  ad- 
vantage, under  such  circumstances,  is  guilty  of  a  perversion  and  abuse 
of  laws  which  were  made  for  another  purpose,  and  he  is  in  no  position 
to  claim  the  advantage  of  a  formal  contract  obtained  in  that  way,  on 
the  ground  that  the  rights  of  the  parties  are  to  be  determined  by 
their  language  and  their  overt  acts,  without  reference  to  the  influences 
which  moved  them.  In  such  a  case,  there  is  no  reason  why  one  should 
be  bound  by  a  contract  obtained  by  force,  which  in  reality  is  not  his, 
but  another's. 

We  are  aware  that  there  are  cases  which  tend  to  support  the  con- 
tention of  the  defendant.  Harmon  v.  Harmon,  61  Maine,  227 ;  Bodine 
v.  Morgan,  10  Stew.  426,  428 ;  Landa  v.  Obert,  45  Texas,  539 ;  Knapp 
v.  Hyde,  60  Barb.  80.  But  we  are  of  opinion  that  the  view  of  the 
subject  heretofore  taken  by  this  court,  which  we  have  followed  in  this 
opinion,  rests  on  sound  principles,  and  is  in  conformity  with  most  of 
the  recent  decisions  in  such  cases,  both  in  England  and  America. 
Hackett  v.  King,  6  Allen,  58;  Taylor  v.  Jaques,  106  Mass.  291 ;  Harris 
v.  Cannody,  131  Mass.  51 ;  Bryant  v.  Peck  &  Whipple  Co.,  154  Mass. 
460 ;  Williams  v.  Bayley,  L.  E.  1  H.  L.  200 ;  S.  C.,  4  Giff .  638,  663, 
note ;  Eadie  v.  Slimmon,  26  N.  Y.  9 ;  Adams  v.  Irving  National  Bank, 
116  N.  Y.  606;  Foley  v.  Greene,  14  E.  I.  618;  Sharon  v.  Gager,  46 
Conn.  189;  Bane  v.  Detrick,  52  111.  19;  Fay  v.  Oatley,  6  Wis.  42. 

We  do  not  intimate  that  a  note  given  in  consideration  of  money 
embezzled  from  the  payee  can  be  avoided  on  the  ground  of  duress, 
merely  because  the  fear  of  arrest  and  imprisonment,  if  he  failed  to 
pay,  was  one  of  the  inducements  to  the  embezzler  to  make  the  note. 
But  if  the  fact  that  he  is  liable  to  arrest  and  imprisonment  is  used  as 
a  threat  to  overcome  his  will  and  compel  a  settlement  which  he  would 
not  have  made  voluntarily,  the  case  is  different.  The  question  in  every 
such  case  is,  whether  his  liability  to  imprisonment  was  used  against 


REALITY    OF    CONSENT:    DURESS.  351 

him,  by  way  of  a  threat,  to  force  a  settlement.  If  so,  the  use  was  im- 
proper and  unlawful,  and  if  the  threats  were  such  as  would  naturally 
overcome  the  mind  and  will  of  an  ordinary  man,  and  if  they  over- 
came his,  he  may  avoid  the  settlement.  The  rulings  and  refusals  to 
rule  were  correct. 

Exceptions  overruled. 
9  Cyc.  450  (44)  ;  451   (47). 


SILSBEE  v.  WEBBER. 
171    MASSACHUSETTS,    378.— 1898. 

Contract,  to  recover  $1150,  alleged  to  have  been  obtained  by  duress. 
The  trial  judge  directed  a  verdict  for  defendant  and  reported  the 
case  for  the  consideration  of  the  Supreme  Court. 

HOLMES,  J.  This  is  an  action  to  recover  money  alleged  to  have 
been  got  from  the  plaintiff  by  duress.  In  the  court  below,  a  verdict 
was  directed  for  the  defendant,  and  the  case  was  reported.  The  plain- 
tiff's son  had  been  in  the  defendant's  employ,  had  been  accused  by 
him  of  stealing  the  defendant's  money,  had  signed  a  confession 
(whether  freely  or  under  duress  is  not  material),  and  had  agreed  to 
give  security  for  $1500.  There  was  a  meeting  between  the  plaintiff 
and  the  defendant,  in  the  course  of  which,  as  the  plaintiff  testified,  the 
defendant  said  he  should  have  to  tell  the  young  man's  father,  the  plain- 
tiff's husband.  At  that  time,  according  to  her,  her  husband  had 
trouble  in  his  head,  was  melancholy,  very  irritable,  and  unable  to 
sleep,  so  that  she  feared  that,  if  he  were  told,  the  knowledge  would 
make  him  insane.  The  plaintiff  further  testified  that  she  previously 
had  talked  with  the  defendant  about  her  husband's  condition,  and 
that  she  begged  him  not  to  tell  her  husband,  and  told  him  that  he 
knew  what  her  husband's  condition  was ;  but  that  he  twice  threatened 
to  do  it  in  the  course  of  his  inquiries  as  to  what  property  she  had, 
and  that,  to  prevent  his  doing  so,  she,  the  next  day,  went,  by  agree- 
ment, to  the  office  of  the  defendant's  lawyer,  and  executed  an  assign- 
ment of  her  share  in  her  father's  estate.  Her  son  was  present,  and,  as 
he  says,  protested  that  this  was  extortion  and  blood  money.  It  is 
under  this  assignment  that  the  money  sued  for  was  collected. 

In  the  opinion  of  a  majority  of  the  court,  if  the  evidence  above 
stated  was  believed,  we  cannot  say  that  the  jury  would  not  have  been 
warranted  in  finding  that  the  defendant  obtained  and  knew  that  he 
was  obtaining  the  assignment  from  the  plaintiff  solely  by  inspiring 
the  plaintiff  with  fear  of  what  he  threatened  to  do;  that  the  ground 
for  her  fear  was,  and  was  known  to  be,  her  expectation  of  serious 
effects  upon  her  husband's  health  if  the  defendant  did  as  he  threatened ; 
and  that  the  fear  was  reasonable,  and  a  sufficiently  powerful  motive 


352  FORMATION   OF   CONTRACT. 

naturally  to  overcome  self-interest,  and,  therefore,  that  the  plaintiff 
had  a  right  to  avoid  her  act.  Harris  v.  Carmody,  131  Mass.  51,  53,  54; 
Morse  v.  Woodworth,  155  Mass.  233,  250. 

It  is  true  that  it  has  been  said  that  the  duress  must  be  such  as  would 
overcome  a  person  of  ordinary  courage.  We  need  not  consider  whether, 
if  the  plaintiff  reasonably  entertained  her  alleged  belief,  the  well- 
grounded  apprehension  of  a  husband's  insanity  is  something  which  a 
wife  ought  to  endure,  rather  than  to  part  with  any  money,  since  we 
are  of  opinion  that  the  dictum  referred  to,  if  taken  literally,  is  an  at- 
tempt to  apply  an  external  standard  of  conduct  in  the  wrong  place. 
If  a  party  obtains  a  contract  by  creating  a  motive  from  which  the 
other  party  ought  to  be  free,  and  which,  in  fact,  is,  and  is  known  to 
be,  sufficient  to  produce  the  result,  it  does  not  matter  that  the  motive 
would  not  have  prevailed  with  a  differently  constituted  person,  whether 
the  motive  be  a  fraudulently  created  belief  or  an  unlawfully  created 
fear.  Even  in  torts, — the  especial  sphere  of  external  standards, — if  it 
is  shown  that  in  fact  the  defendant,  by  reason  of  superior  insight,  con- 
templated a  result  which  the  man  of  ordinary  prudence  would  not 
have  foreseen,  he  is  answerable  for  it ;  and,  in  dealing  with  contributory 
negligence,  the  personal  limitations  of  the  plaintiff,  as  a  child,  a  blind 
man,  or  a  foreigner  unused  to  our  ways,  always  are  taken  into  ac- 
count. Late  American  writers  repudiate  the  notion  of  a  general  ex- 
ternal measure  for  duress,  and  we  agree  with  them.  Clark,  Cont.  357 ; 
Bish.  Cont.  (ed.  1887)  §  719.  See  James  v.  Eoberts,  18  Ohio,  548, 
562 ;  Eadie  v.  Slimmon,  26  K.  Y.  9,  12. 

The  strongest  objection  to  holding  the  defendant's  alleged  action 
illegal  duress  is  that,  if  he  had  done  what  he  threatened,  it  would  not 
have  been  an  actionable  wrong.  In  general,  duress  going  to  motives 
consists  in  the  threat  of  illegal  acts.  Ordinarily,  what  you  may  do 
without  liability  you  may  threaten  to  do  without  liability.  See  Vege- 
lahn  v.  Guntner,  167  Mass.  92,  107;  Allen  v.  Flood  [1898]  App.  Cas. 
1,  129,  165.  But  this  is  not  a  question  of  liability  for  threats  as  a 
cause  of  action,  and  we  may  leave  undecided  the  question  whether, 
apart  from  special  justification,  deliberately  and  with  foresight  of  the 
consequences,  to  tell  a  man  what  you  believe  will  drive  him  mad,  is 
actionable  if  it  has  the  expected  effect.  Spade  v.  Eailroad,  168  Mass. 
285,  290;  White  v.  Sander,  168  Mass.  296.  If  it  should  be  held  not 
to  be,  contrary  to  the  intimations  in  the  cases  cited,  it  would  be  only 
on  the  ground  that  a  different  rule  was  unsafe  in  the  practical  admin- 
istration of  justice.  If  the  law  were  an  ideally  perfect  instrument,  it 
would  give  damages  for  such  a  case  as  readily  as  for  a  battery.  When 
it  comes  to  the  collateral  question  of  obtaining  a  contract  by  threats, 
it  does  not  follow  that,  because  you  cannot  be  made  to  answer  for  the 
act,  you  may  use  the  threat.  In  the  case  of  the  threat,  there  are  no 
difficulties  of  proof,  and  the  relation  of  cause  and  effect  is  as  easily 


REALITY   OF   CONSENT:    DURESS.  353 

shown  as  when  the  threat  is  of  an  assault.  If  a  contract  is  extorted  by 
brutal  and  wicked  means,  and  a  means  which  derives  its  immunity, 
if  it  have  immunity,  solely  to  the  law's  distrust  of  its  own  powers  of 
investigation,  in  our  opinion  the  contract  may  be  avoided  by  the  party 
to  whom  the  undue  influence  has  been  applied.  Some  of  the  cases  go 
further,  and  allow  to  be  avoided  contracts  obtained  by  the  threat  of  un- 
questionably lawful  acts.  Morse  v.  Woodworth,  155  Mass.  233,  251; 
Adams  v.  Bank,  116  N.  Y.  606;  Williams  v.  Bayley,  L.  E.  1.  H.  L. 
200,  210. 

In  the  case  at  bar  there  are  strong  grounds  for  arguing  that  the 
plaintiff  was  not  led  to  make  the  assignment  by  the  duress  alleged. 
They  are  to  be  found  in  the  fact  that  the  plaintiff  sought  the  defend- 
ant ;  in  her  testimony  that  when  she  made  the  assignment  she  wanted 
the  defendant  to  have  full  security  for  all  her  son  owed  him ;  and  in 
the  plaintiff's  later  conduct ;  but  we  are  considering  whether  there  was 
a  case  of  duress  for  the  jury. 

The  assignment  was  on  October  10,  1894.  Before  March  12,  1895, 
the  plaintiff  had  joined  with  her  sisters  in  employing  a  lawyer  to 
secure  her  share  in  her  father's  estate,  intending  it  to  be  paid  over  to 
the  defendant.  On  March  12,  1895,  to  the  same  end,  she  signed  a 
petition  for  distribution,  setting  forth  the  assignment,  and  after- 
wards took  some  further  steps,  and  never  made  any  claim  that  the 
assignment  was  not  valid  until  December,  1895,  before  which  time 
it  had  come  to  the  knowledge  of  her  husband.  Apart  from  the  weight 
which  these  facts  may  give  to  the  argument  that  the  plaintiff  did  not 
act  under  duress,  they  found  an  independent  one, — that,  if  she  did 
act  under  duress,  she  has  ratified  her  act.  The  assignment  was  for- 
mally valid.  The  only  objection  to  it,  if  any,  was  the  motive  for  it. 
Fairbanks  v.  Snow,  145  Mass.  153,  154.  Therefore  it  might  be  ratified 
by  the  plaintiff  when  she  was  free.  But  the  acts  relied  on  were  done  in 
connection  with  a  member  of  the  bar,  who  had  been  the  defendant's 
lawyer  before  he  undertook  to  act  for  the  plaintiff,  and  who  plainly 
appeared  to  be  acting  for  the  plaintiff  only  in  the  defendant's  in- 
terest. We  cannot  say  that  the  jury  might  not  find  that  the  later  acts 
of  the  plaintiff,  if  not  done  under  the  active  influence  of  her  supposed 
original  fear,  at  least  were  done  before  the  plaintiff  had  gained  an 
independent  foothold,  or  realized  her  independence  or  her  rights. 
We  are  of  opinion  that  the  case  should  have  been  left  to  the  jury. 
Adams  v.  Bank,  116  N.  Y.  606,  614,  615. 

KNOWLTON,  J.,  dissented  upon  the  ground  that  there  was  not 
sufficient  evidence  to  go  to  the  jury  that  defendant  knew  that  telling 
the  father  would  be  likely  to  drive  him  insane,  or  seriously  injure  his 
mental  condition,  and  that  there  was  not  sufficient  evidence  that  de- 
fendant believed  that  the  statement  that  he  should  tell  her  husband 
would  overcome  the  plaintiff's  will.  "Upon  his  understanding  of  the 


354  FORMATION    OF    CONTRACT. 

facts,  such  a  suggestion  would  not  be  expected  to  overcome  the  will 
of  a  person  of  ordinary  firmness,  and  there  is  no  evidence  that  she  was 
supposed  by  him  to  be,  or  that  she  was  in  fact,  less  firm  than  other 
women.  Whether  the  rule  so  often  stated  in  the  books,  that  to  avoid  a 
contract  on  the  ground  of  duress  by  threats,  a  threat  must  be  such  as 
would  overcome  the  will  of  a  person  of  ordinary  firmness,  be  of  univer- 
sal application  or  not,  it  undoubtedly  furnishes  a  correct  guide  in 
cases  in  which  there  is  nothing  to  show  that  the  party  who  seeks  to 
avoid  the  contract  was  not  of  ordinary  courage  and  firmness."  FIELD, 
C.  J.,  and  LATHROP,  P.,  concurred  in  the  dissent. 
Verdict  set  aside.  Case  to  stand  for  trial. 

9  Cyc.  451    (47);  W.  P.  747    (46). 


MARSHALL,  J.,  IN  GALUSHA  v.  SHERMAN. 

105  WISCONSIN,  263.— 1900.- 

It  [duress]  is  a  branch  of  the  law  that,  in  the  process  of  develop- 
ment from  the  rigorous  and  harsh  rules  of  the  ancient  common  law, 
has  been  so  softened  by  the  more  humane  principles  of  the  civil  law 
and  of  equity,  that  the  teachings  of  the  older  writers  on  the  subject, 
standing  alone,  are  not  proper  guides.  The  change  from  the  ancient 
doctrine  has  been  much  greater  in  some  jurisdictions  than  in  others. 
There  are  many  adjudications  based  on  citations  of  authorities  not  in 
themselves  harmonious,  and  many  statements  in  legal  opinions  based 
on  the  ancient  theory  of  duress,  which  together  create  much  confusion 
on  the  subject,  not  only  as  it  is  treated  by  text  writers,  but  by  judges 
in  legal  opinions. 

Anciently,  duress  in  law  by  putting  in  fear  could  exist  only  where 
there  was  such  a  threat  of  danger  to  the  object  of  it  as  was  deemed 
sufficient  to  deprive  a  constant  or  courageous  man  of  his  free  will, 
and  the  circumstances  requisite  to  that  condition  were  distinctly  fixed 
by  law;  that  is  to  say,  the  resisting  power  which  every  person  was 
bound  to  exercise  for  his  own  protection  was  measured,  not  by  the 
standard  of  the  individual  affected,  but  by  the  standard  of  a  man  of 
courage;  and  those  things  which  could  overcome  a  person,  assuming 
that  he  was  a  prudent  and  constant  man,  were  not  left  to  be  deter- 
mined as  facts  in  the  particular  case,  but  were  a  part  of  the  law  it- 
self. Co.  Litt.  253.  .  .  . 

Early  in  the  development  of  the  law,  the  legal  standard  of  resistance 
that  a  person  was  bound  to  exercise  for  his  own  protection  was  changed 
from  that  of  a  constant  or  courageous  man  to  that  of  a  person  of 
ordinary  firmness.  That  will  be  found  by  reference  to  some  of  the 
earlier  editions  of  Chitty  on  Contracts.  See  1  Chit.  Cont.  (llth  ed.) 
p.  272 ;  2  Greenl.  Ev.  301.  But  the  ancient  theory  that  duress  was  a 


REALITY    OF   CONSENT:    DURESS.  355 

matter  of  law  to  be  determined  prima  facie  by  the  existence  or  non- 
existence  of  some  circumstance  deemed  in  law  sufficient  to  deprive  the 
alleged  wronged  person  of  freedom  of  will  power,  was  adhered  to 
generally,  the  standard  of  resisting  power,  however,  being  changed, 
so  that  circumstances  less  dangerous  to  personal  liberty  or  safety  than 
actual  deprivation  of  liberty  or  imminent  danger  of  loss  of  life  or  limb, 
came  to  be  considered  sufficient  in  law  to  overcome  such  power.  The 
oppressive  acts,  though,  were  still  referred  to  as  duress,  instead  of  the 
actual  effect  of  such  acts  upon  the  will  power  of  the  alleged  wronged 
person.  It  is  now  stated,  oftener  than  otherwise,  in  judicial  opinions, 
that  in  determining  whether  there  was  or  was  not  duress  in  a  given 
case,  the  evidence  must  be  considered,  having  regard  to  the  assump- 
tion that  the  alleged  oppressed  person  was  a  person  of  ordinary  cour- 
age. .  .  .  Duress,  in  its  broad  sense,  now  includes  all  instances  where 
a  condition  of  mind  of  a  person,  caused  by  fear  of  personal  injury 
or  loss  of  limb,  or  injury  to  such  person's  property,  wife,  child,  or 
husband,  is  produced  by  the  wrongful  conduct  of  another,  rendering 
such  person  incompetent  to  contract  with  the  exercise  of  his  free  will 
power,  whether  formerly  relievable  at  law  on  the  ground  of  duress  or 
in  equity  on  the  ground  of  wrongful  compulsion. 

The  making  of  a  contract  requires  the  free  exercise  of  the  will 
power  of  the  contracting  parties,  and  the  free  meeting  and  blending  of 
their  minds.  In  the  absence  of  that,  the  essential  of  a  contract  is 
wanting;  and  if  such  absence  be  produced  by  the  wrongful  conduct 
of  one  party  to  the  transaction,  or  conduct  for  which  he  is  responsible, 
whereby  the  other  party,  for  the  time  being,  through  fear,  is  bereft 
of  his  free  will  power,  for  the  purpose  of  obtaining  the  contract,  and 
it  is  thereby  obtained,  such  contract  may  be  avoided  on  the  ground 
of  duress.  There  is  no  legal  standard  of  resistance  which  a  party 
so  circumstanced  must  exercise  at  his  peril  to  protect  himself.  The 
question  in  each  case  is,  was  the  alleged  injured  person,  by  being  put 
in  fear  by  the  other  party  to  the  transaction  for  the  purpose  of  obtain- 
ing an  advantage  over  him,  deprived  of  the  free  exercise  of  his  will 
power,  and  was  such  advantage  thereby  obtained?  If  the  proposi- 
tion be  determined  in  the  affirmative,  no  matter  what  the  nature  of  the 
threatened  injury  to  such  person,  or  his  property,  or  the  person  or 
liberty  of  his  wife  or  child,  the  advantage  thereby  obtained  cannot  be 
retained. 

The  idea  is  that  what  constitutes  duress  is  wholly  a  matter  of  law 
and  is  simply  the  deprivation  by  one  person  of  the  will  power  of  an- 
other by  putting  such  other  in  fear  for  the  purpose  of  obtaining,  by 
that  means,  some  valuable  advantage  of  him.  The  means  by  which 
that  condition  of  mind  is  produced  are  matters  of  fact,  and  whether 
such  condition  was  in  fact  produced  is  usually  wholly  matter  of  fact, 
though  of  course  the  means  may  be  so  oppressive  as  to  render  the  re- 


356  FORMATION   OF   CONTRACT. 

suit  an  inference  of  law.  It  is  a  mistaken  idea  that  what  constitutes 
duress  is  different  in  case  of  an  aged  person  or  a  wife  or  child  than  in 
case  of  a  man  of  ordinary  firmness.  As  said  in  Wolff  v.  Bluhm  (95 
Wis.  257),  the  condition  of  mind  of  a  person  produced  by  threats  of 
come  kind,  rendering  him  incapable  of  exercising  his  free  will,  is 
what  constitutes  duress.  The  means  used  to  produce  that  condition, 
the  age,  sex,  and  mental  characteristics  of  the  alleged  injured  party, 
are  all  evidentiary,  merely,  of  the  ultimate  fact  in  issue,  of  whether 
such  person  was  bereft  of  the  free  exercise  of  his  will  power.  Obvi- 
ously, what  will  accomplish  such  result  cannot  justly  be  tested  by  any 
other  standard  than  that  of  the  particular  person  acted  upon.  His 
resisting  power,  under  all  the  circumstances  of  the  situation,  not  any 
arbitrary  standard,  is  to  be  considered  in  determining  whether  there 
was  duress.  The  more  modern  text  writers  so  state  the  law  to  be.  ... 

The  true  doctrine  of  duress,  at  the  present  day,  both  in  this  country 
and  England,  is  that  a  contract  obtained  by  so  oppressing  a  person  by 
threats  regarding  his  personal  safety  or  liberty,  or  that  of  his  property, 
or  of  a  member  of  his  family,  as  to  deprive  him  of  the  free  exercise  of 
his  will  and  prevent  the  meeting  of  minds  necessary  to  a  valid  contract, 
may  be  avoided  on  the  ground  of  duress,  whether  the  oppression  caus- 
ing the  incompetence  to  contract  be  produced  by  what  was  deemed 
duress  formerly,  and  relievable  at  law  as  such,  or  wrongful  compulsion 
remediable  by  an  appeal  to  a  court  of  equity.  The  law  no  longer 
allows  a  person  to  enjoy,  without  disturbance,  the  fruits  of  his  iniquity, 
because  his  victim  was  not  a  person  of  ordinary  courage;  and  no 
longer  gauges  the  acts  that  shall  be  held  legally  sufficient  to  produce 
duress  by  any  arbitrary  standard,  but  holds  him  who,  by  putting  an- 
other in  fear,  shall  have  produced  in  him  a  state  of  mental  incom- 
petency  to  contract,  and  then  takes  advantage  of  such  condition,  no 
matter  by  what  means  such  fear  be  caused,  liable  at  the  option  of  such 
other  to  make  restitution  to  him  of  everything  of  value  thereby  taken 
from  him.  .  .  . 

An  arbitrary  rule,  that  a  threatened  lawful  arrest  and  imprisonment 
implying  harsh  or  unreasonable  use  of  criminal  process,  and  where  no 
warrant  has  been  issued  and  there  is  no  danger  of  the  threat  being 
immediately  carried  out,  is  not  sufficient  to  produce  duress,  seems  un- 
reasonable. Such,  however,  is  the  doctrine  of  the  Supreme  Court  of 
Maine,  and  the  cases  supporting  it  will  be  found  very  generally  cited 
by  text  writers  and  judges.  That  rule  goes  naturally  with  the  doctrine 
that  every  person,  without  regard  to  actual  mental  power,  is  bound  to 
come  up  to  the  standard  of  average  men  in  that  regard  or  suffer  the 
consequences.  .  .  . 

9  Cyc.  451    (47)  ;  26  L.  R.  A.  48;  26  H.  L.  R.  255. 


REALITY   OF   CONSENT:    UNDUE   INFLUENCE.  357 

Undue  influence. 

HALL  v.  PERKINS. 

3  WENDELL   (N.  Y.),  626.— 1829. 

Bill  in  equity  against  defendants,  as  executors,  for  an  accounting. 
Decree  for  an  accounting.  Defendants  appeal. 

Complainant  when  nine  years  old  was  apprenticed  to  his  maternal 
grandfather,  the  testator,  it  being  agreed  that  he  should  serve  until  he 
was  twenty-one  and  should  then  receive  the  sum  of  $500.  After  he 
became  twenty-one  the  testator  deeded  to  him  forty  acres  of  land,  the 
deed  being  executed  on  an  election  day  in  order  to  make  complainant 
a  voter.  The  deed  recited  the  consideration  of  $500  and  reserved  a 
rent,  but  was  never  delivered.  After  the  death  of  the  testator,  a 
settlement  took  place  between  defendant,  G.  H.,  an  uncle  of  complain- 
ant, and  the  complainant,  at  which  it  was  agreed  that  the  land  should 
be  taken  in  payment  of  the  $500  and  a  further  sum  of  $39.58  should  be 
paid  complainant  for  services  rendered  after  he  arrived  at  age.  In 
pursuance  of  this  agreement  defendants  gave  complainant  a  quit- 
claim deed  of  the  land  and  the  sum  mentioned  and  complainant  gave 
defendants  a  receipt  in  full  of  all  claims  against  the  estate. 

SAVAGE,  C.  J.  This  is  a  short  and  simple  case,  addressing  itself  to 
the  common  sense  and  common  justice  of  the  plainest  man,  and  seems 
to  require  no  legal  learning  to  decide  it.  The  deed  from  the  testator  to 
the  complainant  when  executed  was  a  fraud  upon  the  elective  fran- 
chise ;  it  conveyed  no  estate,  for  it  was  never  delivered  by  the  grantor. 
It  was  not  considered  by  him  as  a  compensation  for  services,  for  he 
spoke  of  it  as  a  gift,  and  at  the  same  time  admitted  he  owed  the  com- 
plainant $500.  There  can  be  no  dispute  that  at  the  death  of  Rowland 
Hall  the  estate  honestly  owed  Perkins  $500.  How  has  this  acknowl- 
edged debt  of  $500  been  paid  ?  I  answer  by  compelling  or  persuading 
this  simple  and  ignorant  young  man  to  receive  the  forty  acres  of  rocks 
in  compensation  for  his  services.  The  land  is  estimated  by  some  of  the 
witnesses  at  $4,  and  by  others  at  $8  or  $9 ;  a  fair  medium  is  $6.  "We 
may  therefore  consider  the  land  worth  $6  per  acre,  amounting  to  $240, 
which  these  uncles  gave  their  nephew  instead  of  $500  and  about  two 
years'  interest. 

It  is  said  that  inadequacy  alone  is  no  evidence  of  fraud.  It  has  in- 
deed been  so  decided ;  but  inadequacy  here  does  not  stand  alone.  The 
contracting  parties  and  their  capacities  should  also  be  considered:  on 
the  one  side,  a  simple,  uneducated  boy,  who  knew  only  how  to  work  on 
a  farm ;  on  the  other,  a  man  who  had  been  a  justice  of  the  peace,  and 
therefore  may  be  presumed  to  have  some  knowledge  of  law.  He  was 
no  longer  a  justice,  but  his  practice  was  that  of  advocating  causes 
before  justices,  and  probably  he  was  not  unacquainted  with  the  tricks 


358  FORMATION   OF   CONTRACT. 

and  quibbles  which  too  often  disgrace  inferior  tribunals,  and  bring  a 
reproach  upon  that  branch  of  our  jurisprudence.  The  inadequacy  then 
consists,  1.  In  conveying  40  acres  of  mountain  rocks,  worth  $240,  in 
satisfaction  of  a  debt  of  about  $565,  much  less  than  half ;  2.  One  of 
the  contracting  parties  arrived  at  mature  age,  perfectly  acquainted 
with  the  value  of  property,  and  from  his  very  "vocation,"  in  the  habit 
of  taking  every  advantage  which  the  law  would  permit;  the  other  an 
ignorant,  simple,  unsuspecting  boy,  unacquainted  with  property  and 
with  the  arts  and  intrigues  which  too  often  attend  more  advanced 
age;  3.  On  the  one  side  the  uncle,  and  the  other  the  nephew.  The 
grandfather  had  hitherto  been  the  guardian  and  guide  of  the  com- 
plainant; and  after  his  decease,  to  whom  could  this  ignorant  youth 
more  naturally  look  for  advice  and  protection  than  to  his  mother's 
brother,  the  executor  of  his  grandfather's  will,  as  one  every  way  ca- 
pable of  advising  him  ?  The  result,  however,  shows  that  there  was  some 
reason  in  the  ancient  law  which  refused  to  relations,  who  might  in- 
herit from  minors,  the  guardianship  of  their  persons,  because  it  was,  as 
Lord  Coke  says,  "quasi  agnum  lupo  committere  ad  devorandum."  I 
have  thus  far  cited  no  authority;  it  seems  to  me  that  none  can  be 
necessary  beyond  an  appeal  to  the  moral  sense. 

It  is  contended  by  the  appellants  that  there  is  not  in  the  bill  a  suffi- 
cient allegation  of  fraud  to  justify  the  admission  of  evidence  on  that 
subject,  and  if  there  be  a  sufficient  allegation,  there  is  no  evidence  of 
fraud.  The  bill  charges,  that  if  the  defendants  should  produce  a 
receipt  in  full  from  the  complainant,  that  such  receipt  was  fraudulently 
and  unjustly  obtained.  This  is  sufficient.  The  ground  of  the  plain- 
tiff's claim  was  matter  of  contract,  and  he  resorted  to  a  court  of  equity 
because  the  written  contract  signed  by  Eowland  Hall  was  lost  or  de- 
stroyed ;  the  allegation  of  fraud  was  in  anticipation  of  the  defense  con- 
templated, and  it  seems  to  me  when  thus  set  up,  it  need  not  be  so  full 
as  if  made  the  substantive  ground  of  complaint.  Had  the  plaintiff 
below  been  in  possession  of  the  written  contract,  he  might  have  sued 
in  a  court  of  law,  and  the  question  of  fraud  might  have  been  inquired 
into  in  rebutting  the  defense. 

Fraud  is  often  the  subject  of  inquiry  in  a  court  of  law  as  well  as  in 
equity;  there  is  this  difference,  however,  that  at  law  fraud  must  be 
proved;  it  must  be  what  Lord  Hardwicke  calls  dolus  mains,  actual 
fraud  arising  from  facts  and  circumstances  of  imposition.  At  law, 
the  contract  of  every  man  who  is  compos  mentis,  is  binding  and  cannot 
be  avoided  in  general  without  proof  of  actual  fraud  in  obtaining  it. 
Neither  will  a  court  of  equity  measure  the  extent  of  men's  understand- 
ings and  say  there  is  an  equitable  incapacity  where  there  is  a  legal 
capacity;  yet  if  a  weak  man  gives  a  bond  for  a  pretended  consideration, 
when  in  truth  there  was  none  or  not  near  so  much  as  is  pretended, 
equity  will  relieve  against  it.  3  P.  W.  130,  131.  Fraud  is  sometimes 


REALITY  OF  CONSENT:  UNDUE  INFLUENCE.          369 

also  apparent  from  the  intrinsic  nature  of  the  contract.  It  may  be 
such  as  no  man  in  his  senses  and  not  under  delusion  would  make, 
and  such  as  no  honest  and  fair  man  would  accept,  which  is  Lord  Hard- 
wicke's  second  class  of  frauds;  and  his  third  is  that  which  may  be 
presumed  from  the  circumstances  and  condition  of  the  parties  con- 
tracting. 2  Vesey,  Sen.  155,  156. 

This  case  partakes  of  both  the  two  last  classes  of  frauds,  if  not  of 
the  first.  Here  was  a  contract  made  which  no  sensible  man  not  under 
delusion  would  make,  on  the  one  hand,  and  which  no  man  who  had 
not  lost  all  consciousness  of  shame  would  accept,  on  the  other.  One 
of  the  parties  was  a  weak  boy,  the  other  a  man  of  capacity,  who  may 
be  presumed,  from  the  circumstances  of  this  case,  an  artful  intriguer  in 
small  matters.  It  was  a  contract  made  by  an  unsuspecting  youth  with 
a  man  in  whom,  from  the  connection  existing  between  them,  he  must 
have  reposed  confidence,  and  to  whom  he  naturally  looked  for  advice 
and  protection.  It  is  clearly  a  case,  therefore,  where  from  the  nature 
of  the  transaction  and  the  situation  of  the  parties,  fraud  and  imposi- 
tion are  to  be  presumed.  4  Cowen,  220. 

I  am  of  opinion  the  decree  of  his  honor  the  chancellor  should  be 
affirmed  with  costs. 

Mr.  Senator  S.  Allen  also  delivered  an  opinion  in  favor  of  an  affirm- 
ance of  the  decree. 

And  this  being  the  unanimous  opinion  of  the  court,  the  decree  of 
the  chancellor  was  accordingly  affirmed,  with  costs  to  be  paid  by  the 
appellants.1 

9  Cyc.  456-461    (89-99,   1-16);   463    (21-23);   W.  P.  744    (35). 


GRAY,  J.,  IN  DOHENY,  et  al,  Administrators  of  GLEASON, 
.  deceased,  v.  LACEY. 

168  NEW  YORK,  213.— 1901. 

The  plaintiffs'  request  assumes  that  the  fact  of  the  existence  of 
"confidential  business  relations"  would  throw  upon  the  defendant  the 
burden  of  proving  the  fairness  and  validity  of  the  contract.  The  de- 
fendant was  cashier  of  his  uncle's  bank  and  they  were  intimately  as- 
sociated in  business,  as  in  social  ways.  He,  undoubtedly,  possessed  his 
uncle's  fullest  confidence.  Granting  all  that  we  may  as  to  their  confi- 
dential relations,  they  would  not  bring  their  dealings  within  the  opera- 
tion of  the  rule,  which,  upon  equitable  considerations,  was  adopted  at 

iThe  relation  of  an  alleged  spiritualistic  medium  to  one  relying  on  such 
medium  for  advice,  and  believing  implicitly  in  the  existence  of  the  medium's 
professed  power,  is  one  of  trust  and  confidence,  and  throws  on  the  medium 
the  burden  of  showing  that  a  contract  between  the  two  ia  free  from  undue 
influence.  Connor  v.  Stanley,  72  Cal.  556. 


360  FORMATION   OF   CONTRACT. 

commcjn  law  and  is  invoked  by  the  plaintiffs.  That  rule,  within  the 
cases,  requires  as  a  basis  for  its  application  that  a  fiduciary  relation 
exist  between  the  parties,  which  will  give  to  the  one,  in  legal  pre- 
sumption, a  controlling  influence  over  the  other.  Such  would  be  the 
relation  of  parent  and  child,  guardian  and  ward,  trustee  and  cestui 
que  trust,  physician  and  patient  and  attorney  and  client.  In  these 
confidential  relations,  the  situation  of  the  parties  is  regarded  as  un- 
equal and  as  conferring  upon  one  a  certain  control,  or  domination,  over 
the  will,  conduct,  and  interests  of  the  other.  Transactions  between 
them  are,  therefore,  scrutinized  closely  and  presumptions  arise  of 
their  impropriety,  which  must  be  met  where  an  advantage  is  derived 
by  the  presumably  dominant  party.  (Sears  v.  Shafer,  6  N.  Y.  268; 
Nesbit  v.  Lockman,  34  ib.  167;  Cowee  v.  Cornell,  75  ib.  91;  Matter  of 
Smith,  95  ib.  522.)  The  presumption  is  one  born  of  a  relation  of  par- 
ties, which  would  create  a  situation  of  more  or  less  dependence  by  one 
upon  the  other.  (Smith  v.  Kay,  7  H.  L.  Cas.  771.)  While  in  the  re- 
lations instanced  this  rule  is  generally  applied,  it  is,  also,  extended  to 
other  relations  of  trust,  confidence,  or  inequality ;  but  its  application 
will  then  demand  some  previous  proof  of  the  trust  and  confidence,  or  of 
the  superiority  on  one  side  and  of  the  weakness  on  the  other.  The 
law  will  not  presume  it  from  the  ordinary  relations  between  persons, 
in  the  business  world,  or  in  the  family  connection.  The  question  as 
to  parties  so  situated  is  a  question  of  fact  dependent  upon  the  circum- 
stances in  each  case.  (Cowee  v.  Cornell,  supra,  pp.  91—101.)  Most 
of  the  business  relations  between  persons,  in  a  sense  and  to  a  degree, 
rest  upon  confidence  reposed  by  the  one  in  the  other.  Without  it,  the 
commercial  dealings  of  the  community  would  be  seriously  restricted. 
But  the  common-law  presumption  of  impropriety,  or  of  unfairness, 
was  not  intended  to  reach  such  cases ;  or  any  cases  except  those  where 
the  circumstances  have  created  what  the  law  regards  as  a  fiduciary 
relation  and  where,  as  a  safer  general  assumption,  it  regards  one  as  the* 
stronger  party  and,  therefore,  as  bound,  in  every  transaction  with  the 
other,  to  establish,  affirmatively,  its  good  faith  and  propriety.  There 
was  nothing  in  the  relations  sustained  by  the  defendant  to  Gleason, 
which,  of  themselves,  created  any  presumption  of  undue  influence,  or 
of  undue  advantage  taken.  Whether  as  president  and  cashier  of  their 
bank,  as  employer  and  employe,  as  capitalist  and  business  manager,  or 
as  uncle  and  nephew,  their  relations  gave  rise  to  no  presumptions  of 
inequality  in  their  dealings.  Their  association  was  extraordinarily  in- 
timate, it  may  be  conceded;  but  any  question  about  their  relations  is 
one  of  fact  and  must  be  determined  upon  satisfactory  extrinsic  evi- 
dence. I  think  that  no  error  was  committed  by  the  trial  judge  in 
holding  that  the  affirmative  upon  the  issue  remained  with  the  plaintiffs. 
9  Cyc.  458-459  (2-11);  W.  P.  737  (21). 


CHAPTER  IV 
LEGALITY  OF  OBJECT. 

Nature  of  illegality  in  contract. 

(t.)  Contracts  which  are  made  in  breach  of  statute, 
a.  General  rules  of  construction. 
PANGBORN  v.  WESTLAKE. 

36  IOWA,  546.— 1873. 

Action  to  foreclose  a  mortgage  given  by  Westlake  and  wife  to  Pang- 
born,  to  secure  the  payment  of  a  note. 

The  defendant  Westlake,  by  his  answer,  admitted  the  due  execution 
of  the  note  and  mortgage,  and  that  the  same  was  executed  to  secure 
the  purchase  money  of  the  real  estate  therein  described;  and  also 
averred  that  the  sale  and  conveyance  of  said  real  estate  made  by  plain- 
tiff to  defendant  was  illegal  and  contrary  to  the  statute ;  that  the  lots 
sold  were  embraced  in  an  addition  to  Maquoketa,  which  was  laid  out 
and  platted  prior  to  the  sale,  but  was  neither  acknowledged  or  re- 
corded, or  filed  for  record  previous  to  the  sale  as  required  by  law.  To 
this  answer  the  plaintiff  demurred,  because  the  matters  contained 
therein  did  not  constitute  any  defense  to  the  action.  The  demurrer 
was  sustained  by  the  court.  The  defendant  appeals,  and  here  assigns 
that  ruling  as  error. 

COLE,  J.  The  single  question  presented  by  the  demurrer  is,  whether 
the  contract  for  the  sale  of  a  lot  in  a  town  or  city,  or  addition  thereto, 
the  plat  of  which  has  not  been  recorded,  is  void,  so  that  no  right  of 
action  can  be  based  thereon.  Our  statute  enacts  (Rev.  §  1027)  : 

"That  any  person  or  persona  who  shall  dispose  of,  or  offer  for  sale  or  lease, 
for  any  time,  any  out  or  in  lots,  in  any  town,  or  addition  to  any  town  or 
city,  or  any  part  thereof,  which  has  been  or  shall  hereafter  be  laid  out,  until 
the  plat  thereof  has  been  duly  acknowledged  and  recorded,  as  provided  for 
in  chapter  41  of  the  Code  of  Iowa,  shall  forfeit  and  pay  $50  for  each  and 
every  lot  or  part  of  lot  sold  or  disposed  of,  leased,  or  offered  for  sale." 

There  is  no  doubt  that  the  well-settled  general  rule  is  that  when  a 
statute  prohibits  or  attaches  a  penalty  to  the  doing  of  an  act,  the  act 
is  void  and  will  not  be  enforced,  nor  will  the  law  assist  one  to  recover 
money  or  property  which  he  has  expended  in  the  unlawful  execution 
of  it ;  or,  in  other  words,  a  penalty  implies  a  prohibition  though  there 

361 


362  FORMATION    OF   CONTRACT. 

are  no  prohibitory  words  in  the  statute,  and  the  prohibition  makes 
the  act  illegal  and  void.  Bartlett  v.  Vinor,  Garth.  252;  Lyon  v. 
Strong,  6  Vt.  219;  Robeson  v.  French,  12  Mete.  (Mass.)  24;  Gregg  v. 
Wyman,  4  Gush.  322;  Pattee  v.  Greely,  13  Mete.  (Mass.)  284;  Etna 
Ins.  Co.  v.  Harvey,  11  Wis.  394;  Miller  v.  Larson,  19  Id.  463;  Pike  v. 
King,  16  Iowa,  50,  and  cases  cited ;  Cope  v.  Rowlands,  2  Mees.  &  Welsb. 
149,  and  very  numerous  other  cases  there  cited.  But,  notwithstand- 
ing this  general  rule,  it  must  be  apparent  to  every  legal  mind,  that 
when  a  statute  annexes  a  penalty  for  the  doing  of  an  act,  it  does  not 
always  imply  such  a  prohibition  as  will  render  the  act  void.  Suppose, 
for  instance,  the  act  itself  expressly  provided  that  the  penalty  annexed 
should  not  have  the  effect  of  rendering  the  act  void.  Surely  in  such 
case  the  courts  would  not  give  such  force  to  the  legal  implication,  under 
the  general  rule  above  quoted,  as  to  override  the  express  negation  of  it 
in  the  statute  itself.  Then,  upon  this  conclusion,  we  are  prepared  for 
the  next  step,  which  is  equally  plain,  that  if  it  is  manifest  from  the 
language  of  the  statute,  or  from  its  subject  matter  and  the  plain  in- 
tent of  it,  that  the  act  was  not  to  be  made  void,  but  only  to  punish 
the  person  doing  it  with  the  penalty  prescribed,  it  is  equally  clear  that 
the  courts  would  readily  construe  the  statute  in  accordance  with  its 
language  and  its  plain  intent.  We  are,  therefore,  brought  to  the  true 
test,  which  is,  that  while,  as  a  general  rule,  a  penalty  implies  a  pro- 
hibition, yet  the  courts  will  always  look  to  the  language  of  the  statute, 
the  subject  matter  of  it,  the  wrong  or  evil  which  it  seeks  to  remedy  or 
prevent,  and  the  purpose  sought  to  be  accomplished  in  its  enactment; 
and  if,  from  all  these,  it  is  manifest  that  it  was  not  intended  to  imply 
a  prohibition  or  to  render  the  prohibited  act  void,  the  courts  will  so 
hold,  and  construe  the  statute  accordingly.  The  following  cases  will 
abundantly  vindicate  as  well  as  illustrate  this  statement  of  the  law: 
Fergusson  v.  Norman,  5  Bingham's  New  Cases,  76  (opinion  of  Tindal, 
C.  J.,  p.  83)  ;  S.  C.  in  35  E.  C.  L.  Rep.  37  (i.  e.  40) ;  Harris  v.  Run- 
nels, 12  How.  (U.  S.)  79;  Johnson  v.  Hudson,  11  East,  180;  Brown 
v.  Duncan,  10  Barn.  &  Cress.  93 ;  Hodgson  v.  Temple,  5  Taunt.  181 ; 
Fackler  v.  Ford  et.  al,  24  How.  (U.  S.)  322;  The  Oneida  Bank  v. 
The  Ontario  Bank,  21  N.  Y.  490  (see  opinion  by  Comstock,  C.  J.,  on 
p.  495). 

We  are  relieved  from  the  necessity  of  making  an  analysis  of  and 
construing  our  statute  as  an  original  interpretation  of  it,  because  our 
statute  above  quoted,  like  our  general  municipal  incorporations  act, 
was  taken  from  the  Ohio  statute,  and  is  essentially  the  same  as  that. 
See  Swan's  Rev.  Stat.  of  Ohio,  Derby's  edition,  1854,  §  10,  p.  940. 
Prior  to  our  adoption  of  that  statute,  it  had  received  a  judicial  con- 
struction by  the  Supreme  Court  of  that  State,  and  it  was  held  that  the 
penalty  did  not  render  the  contract  illegal,  so  as  to  prevent  a  recovery 
by  the  vendor  of  the  consideration  agreed  to  be  paid  by  the  vendee, 


LEGALITY    OF   OBJECT.  363 

for  a  lot  sold  him  prior  to  the  proper  survey  and  making  and  record- 
ing of  the  plat.  Strong  &c.  v.  Darling,  9  Ohio,  201.  And  it  is  a  well- 
settled  rule  that  when  the  legislature  of  one  State  adopts  a  statute  from 
another  which  has  received  judicial  construction  there,  such  con- 
struction will  be  presumed  to  have  been  known  to  and  approved  by  the 
legislature,  and  will  be  followed  by  the  courts  of  the  State  adopting 
the  statute.  See  Bemis  v.  Becker,  1  Kan.  226  (t.  e.  249),  where  the 
rule  was  applied  to  a  statute  like  the  one  now  in  question.  Under 
this  rule  we  must  hold  that  the  note  and  mortgage  in  this  case  are 
not  illegal  and  may,  therefore,  be  enforced. 

There  are  two  cases  in  Missouri,  to  which  our  attention  has  been 
called,  construing  a  statute  similar  to  ours:  Downing  v.  Ringer,  7 
Mo.  585,  and  Mason  v.  Pitt,  21  Id.  391.  In  the  former,  and  appar- 
ently without  much  investigation,  it  was  held,  under  the  general  rule 
first  above  stated,  that  the  penalty  rendered  the  contract  illegal,  and 
that  the  vendor  of  a  lot  in  an  unrecorded  plat  could  not,  under  the 
Missouri  statute,  recover  from  the  vendee  the  consideration  agreed  to 
be  paid  therefor.  In  the  last  case  it  was  held,  that  the  failure  to  re- 
cord the  plat  prior  to  the  conveyance,  did  not  prevent  the  title  from 
passing  to  the  vendee.  The  Kansas  court,  in  Bemis  v.  Becker,  supra, 
followed  the  last,  without  referring  to  the  former. 

But,  further  than  this,  the  question  has  been,  in  effect,  determined 
by  this  court  in  Watrous  &  Snouffer  v.  Blair  (32  Iowa,  58),  where 
it  was  held,  that  the  vendees  of  certain  lots,  having,  as  in  this  case, 
actual  knowledge  that  at  the  time  of  their  purchase  the  plat  had  not 
been  recorded,  were  entitled  to  a  specific  performance,  by  their  vendor, 
of  their  contract  of  purchase.  Surely,  we  could  hardly  be  expected 
to  compel  a  vendor  to  convey,  and  then  to  deny  him  the  right  to  recover 
the  consideration  for  such  conveyance.  In  that  case  we  required  the 
conveyance  to  the  vendee;  in  this,  we  enforce  the  payment  by  the 
vendee. 

Affirmed. 

9  Cyc.  476-477  (2-5)  ;  12  L.  R.  A.  (N.  8.)  575;  16  L.  R.  A.  423;  W.  P. 
402  (54)  ;  404  (57). 


6.  Contracts  in  breach  of  Sunday  statutes. 
HANDY  v.  ST.  PAUL  GLOBE  PUBLISHING  CO. 

41  MINNESOTA,  188.— 1889. 

GILFILLAN,  C.  J.  The  action  is  upon  a  contract  pleaded  in  the 
complaint,  not  in  hcec  verba,  but  according  to  its  supposed  effect.  The 
answer  denied  it;  and,  on  the  trial,  the  plaintiff  offered  in  evidence 
a  written  contract  between  the  parties,  the  provisions  of  which  material 
to  this  controversy  were  as  follows :  The  plaintiff,  in  consideration  of 


364  FORMATION   OF   CONTRACT. 

being  allowed  the  difference  between  the  rates  he  might  charge  for 
advertising  in  the  various  issues  of  the  St.  Paul  Globe  newspaper  and 
the  rates  thereinafter  mentioned,  agreed  and  contracted  to  take  entire 
charge  and  control  of  the  real-estate  advertising  business  in  the  daily 
and  Sunday  and  weekly  Globe,  and  the  defendant  agreed,  in  considera- 
tion of  such  services,  to  put  under  his  full  charge  and  control  all  real- 
estate  advertising  business  of  defendant  in  the  daily  and  Sunday  and 
weekly  Globe.  The  plaintiff  agreed  to  pay  the  defendant  certain  speci- 
fied rates  for  said  real-estate  advertising,  and  the  defendant  agreed 
to  receive  said  rates  as  full  payment  for  all  said  real-estate  advertise- 
ments which  might  appear  in  the  daily,  weekly,  or  Sunday  Globe, 
without  regard  ,to  the  amount  plaintiff  might  charge  and  receive  from 
advertisers.  The  contract  was  to  continue  for  the  term  of  five  years, 
with  the  option  in  plaintiff  to  renew  it  for  another  term  of  five  years,  or 
for  a  shorter  time;  he  to  have  the  right  to  annul  the  agreement  on 
giving  thirty  days'  notice  of  his  intention  to  do  so.  It  was  admitted 
by  plaintiff,  at  the  time  of  making  the  offer  of  this  contract,  that  the 
Sunday  Globe  referred  to  in  the  contract  was  issued,  published,  and 
circulated  on  Sundays,  though  set  up  and  printed  on  Saturdays.  The 
contract  was  objected  to  as  void  upon  its  face  for  want  of  mutuality, 
and  as  being  against  public  policy ;  and  it  appears  to  have  been  argued 
that  it  was  against  public  policy  because  it  was  an  agreement  for  a 
violation  of  the  law  in  regard  to  Sunday.  The  court  below  sustained 
the  objection.  The  plaintiff,  of  course,  failed  in  his  action,  and  he 
appeals  from  an  order  denying  his  motion  for  a  new  trial.  The  same 
objections  are  made  to  the  contract  here  as  were  made  below. 

The  plaintiff  contends  that,  not  having  pleaded  the  illegality  of  the 
contract,  defendant  could  not  assert  it  on  the  trial.  It  is  sometimes 
necessary  to  plead  the  facts  upon  which  the  illegality  of  a  contract  or 
transaction  depends,  but  it  is  never  necessary  to  plead  the  law.  When 
the  facts  appear,  either  upon  the  pleadings  or  proofs,  either  party 
may  insist  upon  the  law  applicable  to  such  facts.  In  this  case  the 
plaintiff  had,  under  the  pleadings,  to  prove  the  contract  upon  which 
he  sued.  If  it  be  void  on  its  face,  he,  not  the  defendant,  showed  its 
illegality. 

Though  the  contract  appears  in  some  respects  a  much  more  favorable 
one  to  the  plaintiff  than  to  the  defendant,  it  is  not  wanting  in  mutu- 
ality of  promises  and  engagements,  so  as  to  be  without  mutual  con- 
siderations. What  the  plaintiff  is  to  do  appears  by  implication  rather 
than  by  express  terms.  Fairly  construed,  the  contract  created  the 
relation  of  principal  and  agent  between  the  defendant,  as  principal, 
and  the  plaintiff,  as  agent,  for  the  management  of  defendant's  real- 
estate  advertising  business, — that  is,  in  the  charge  of  procuring  adver- 
tisements for  so  much  of  the  space  in  the  defendant's  paper  as  it 
devoted  to  real-estate  advertising, — and  in  this  business  there  would 


LEGALITY    OF   OBJECT.  365 

arise  the  duty  in  the  contract.  There  was,  by  implication,  the  promise 
of  plaintiff  to  manage  the  business  faithfully,  and  with  due  regard  to 
the  interest  of  his  principal. 

The  question  of  the  legality  of  the  contract  is,  therefore,  squarely 
presented ;  and  with  a  view  to  that  question,  and  to  some  propositions 
that  are  made  in  connection  with  it,  it  is  necessary  to  say  that  the 
contract  is  entire,  so  that  any  taint  of  illegality  in  one  part  affects 
the  whole  of  it.  There  is  no  way  of  severing  it,  so  we  can  say  that, 
although  its  stipulations  as  to  the  Sunday  Globe  may  be  in  violation 
of  law,  and  therefore  void,  yet  those  as  to  the  daily  and  weekly  Globe 
may  be  upheld,  or  so  that,  although  for  what  was  to  be  done  under  it 
prior  to  January  1,  1886,  when  the  Penal  Code  went  into  effect,  it 
was  void,  it  might  yet  be  upheld  for  all  that  it  provided  for  after  that 
date.  To  attempt  that  would  be  to  attempt  making  another  contract 
for  the  parties, — one  that  the  present  contract  furnishes  no  reason  to 
suppose  they  would  have  made  for  themselves.  All  of  the  provisions 
of  the  contract  must,  therefore,  stand  or  fall  together. 

The  plaintiff  insists  that  the  contract  was  not  illegal,  for  it  neither 
was  executed  on  Sunday  nor  required  plaintiff  or  defendant  to  do  any- 
thing on  Sunday.  It  bound  defendant  to  maintain  and  issue  a 
weekly,  a  daily,  and  Sunday  Globe  for  the  time  specified  in  it,  and  it 
required  plaintiff's  services  in  the  preparation  and  procuring,  so  far 
as  related  to  the  real-estate  advertisements,  of  material  for  each  of 
those  editions  of  the  paper.  According  to  the  terms  of  the  contract, 
the  defendant  was  no  more  at  liberty  to  discontinue  its  Sunday  edi- 
tion than  to  discontinue  its  daily  or  weekly  edition,  or  all  its  editions. 
The  theory  of  the  complaint  is  that  it  was  bound  to  continue  them  all ; 
so  that,  if  to  issue,  publish,  and  circulate  a  newspaper  on  Sunday  was 
against  the  law  as  it  existed  when  this  contract  was  made,  then  the 
parties  contemplated  and  stipulated  for  a  violation  of  the  law  by  each. 
The  law  in  reference  to  Sunday,  in  force  at  the  time  when  the  con- 
tract was  made,  was  section  20,  c.  100,  Gen.  St.  1878,  as  follows : 

"No  person  shall  keep  open  his  shop,  warehouse,  or  workhouse,  or  shall 
do  any  manner  of  labor,  business,  or  work,  except  only  works  of  necessity 
and  charity,  on  the  Lord's  day,  commonly  called  Sunday;  and  every  person 
so  offending  shall  be  punished  by  a  fine,"  etc. 

A  contract  which  requires  or  contemplates  the  doing  of  an  act  pro- 
hibited by  law  is  absolutely  void.  No  cases  of  the  kind  have  been  more 
frequently  before  the  courts  than  contracts  which  were  made  on  Sun- 
day, or  which  required  or  provided  that  something  prohibited  by  the 
statute  should  be  done  on  Sunday;  and  in  no  instance  has  any  court 
failed  to  declare  such  a  contract  void.  Unless  the  issuing  and  cir- 
culating a  newspaper  on  Sunday  is,  within  the  meaning  of  the  statute, 
a  work  of  necessity,  it  is  prohibited  by  it  as  much  as  any  other  busi- 


366  FORMATION   OF   CONTRACT. 

ness  or  work.  The  newspaper  is  a  necessity  of  modern  life  and  busi- 
ness, but  it  does  not  follow  that  to  issue  and  circulate  it  on  Sunday 
is  a  necessity.  There  are  a  great  many  other  kinds  of  business  just 
as  necessary;  many,  indeed  most,  kinds  of  manufactures  and  mer- 
cantile business  are  indispensable  to  the  present  needs  of  men,  but  no 
one  would  say  that,  because  necessary  generally,  the  prosecution  of  such 
business  on  Sunday  is  a  work  of  necessity.  That  carrying  on  any 
business  on  Sunday  may  be  profitable  to  the  persons  engaged  in  it; 
that  it  may  serve  the  convenience  or  the  tastes  or  wishes  of  the  public 
generally, — is  not  the  test  the  statute  applies.  To  continue  on  that 
day  the  sale  of  dry  goods  or  groceries,  or  the  keeping  open  of  markets, 
saloons,  theaters,  or  places  of  amusement,  might  be  regarded  by 
many  as  convenient  and  desirable,  but  that  would  not  bring  such  busi- 
ness within  the  exception  in  the  statute. 

At  the  time  this  contract  was  made,  the  issuing,  publishing,  and  cir- 
culating a  newspaper  on  Sunday  was  contrary  to  law ;  and  as  the  con- 
tract provided  for  that,  and  as  it  was  indivisible,  it  was  thereby  rendered 
wholly  void.  The  Penal  Code  went  into  effect  January  1,  1886. 
Section  229  provides  that  certain  kinds  of  articles,  among  them  news- 
papers, may  be  sold  in  a  quiet  and  orderly  manner  on  Sunday.  Plain- 
tiff contends  that  the  recognition  of  this  contract,  and  the  continuance 
of  business  under  it  for  more  than  a  year  after  the  issuance  of  the 
Sunday  paper  became  legal  by  the  provisions  of  the  Penal  Code,  con- 
stituted such  a  ratification  of  the  contract  as  relieved  it  of  any  original 
taint  of  illegality.  There  is  a  difference  in  the  decisions  on  the  ques- 
tion whether  a  contract,  void  merely  because  it  was  made  on  Sunday, 
may  be  ratified  on  a  secular  day,  so  as  to  become  valid ;  but  there  is  no 
conflict  of  decisions  on  the  proposition  that  a  contract,  void  because  it 
stipulates  for  doing  what  the  law  prohibits,  is  incapable  of  being  rati- 
fied. That  is  this  case.  The  contract  contemplated  the  doing  what 
the  law  then  in  force  prohibited,  and  for  that  reason  it  was  void.  It 
is  true,  the  law  was  so  changed  after  the  contract  was  made,  that,  from 
the  time  of  the  change,  it  became,  as  plaintiff  claims,  lawful  to  do 
those  things  provided  in  the  contract  which  were  unlawful  at  the  time 
it  was  made,  and  so  that,  as  he  claims,  a  contract  like  this,  made  after 
the  change  went  into  effect,  would  have  been  valid.  But  that  could 
not  affect  the  validity  of  the  previous  contract,  which  was  void  from  the 
beginning.  The  parties  might  have  made  a  new  contract  to  commence 
on  or  after  January  1,  1886 ;  but,  because  of  the  illegality  in  it,  they 
could  not  at  any  time  ratify  this  contract  from  the  beginning;  and, 
because  it  is  entire  and  indivisible,  they  could  do  nothing  amounting 
to  less  than  the  making  of  a  new  contract,  which  could  give  vitality  to 
it  for  the  time  since  January  1,  1886.  An  entire  contract  must  be 
ratified,  if  at  all,  as  an  entirety. 

Order  affirmed. 

37  Cyc.  568-569   (22-29)  ;  W.  P.  515   (81). 


LEGALITY   OF   OBJECT.  367 

KEYNOLDS  v.  STEVENSON. 

4  INDIANA,   619.— 1853. 

DAVISON,  J.  Debt  by  the  plaintiff  in  error  against  the  defendant 
on  a  promissory  note.  The  note  is  dated  the  1st  of  April,  1850.  The 
defendant  pleaded  two  pleas.  1.  Nil  debet.  2.  That  the  said  note 
was  not  made  and  executed  on  the  day  the  same  bears  date ;  but  it  was 
made,  executed,  and  delivered  on  the  31st  of  March,  1850,  which  last- 
mentioned  day  was  the  first  day  of  the  week,  commonly  called  Sunday ; 
wherefore  the  said  note  was  void.  Demurrer  to  the  second  plea  over- 
ruled. 

A  statute  in  force  when  this  note  was  given  provides  that  "if  any 
person,  etc.,  shall  be  found  on  the  first  day  of  the  week,  commonly 
called  Sunday,  rioting,  etc.,  or  at  common  labor,  works  of  charity  and 
necessity  only  expected,  such  person  shall  be  fined,"  etc.  There  is  a 
proviso  to  the  statute,  but  it  has  no  bearing  in  this  case.  E.  S.  1843, 
c.  53,  s.  123. 

It  is  admitted  that  the  note  in  question  was  made  on  Sunday.  Then 
the  record  presents  this  question :  Did  the  making  of  it  constitute  an 
act  of  "common  labor"?  We  think  the  statute  intended  to  prohibit 
every  description  of  secular  business  not  within  the  exceptions  pointed 
out  by  itself.  The  executing  of  this  note  was  secular  business,  and  not 
embraced  by  the  exceptions.  This  view  is  sustained  by  various  ad- 
judications made  upon  statutes  the  provisions  of  which  are,  in  effect, 
the  same  as  ours.  Allen  v.  Deming,  14  N.  H.  133 ;  Towle  v.  Larra- 
bee,  26  Me.  464;  Adams  v.  Hamell,  2  Doug.  (Mich.)  73.  In  Link  v. 
Clemmens  (7  Blackf.  479)  it  was  held  "that  a  replevin  bond  executed 
on  Sunday  was  void."  This  authority  is  decisive  of  the  case  before  us. 
The  note,  no  doubt,  was  made  in  violation  of  the  statute.  Therefore  it 
must  be  considered  a  nullity. 

Per  Cwriam.     The  judgment  is  affirmed  with  costs.1 

37  Cyc.  563    (64)  ;   13  C.  L.  R.  545. 

i  Contra:  "A  contract  made  on  Sunday  is  not  void,  and  to  invalidate  a 
transaction  under  the  statute  the  contract  must  necessarily  require  the  act 
to  be  performed  on  Sunday.  Boynton  v.  Page,  13  Wend.  425;  Watts  v.  Van 
Ness,  1  Hill,  76."— Wright,  J.,  in  Merritt  v.  Earle,  29  N.  Y.  117. 

Holidays  other  than  Sunday. — "The  legal  effect  of  the  agreement  be- 
tween the  plaintiff  and  the  defendant  was  to  require  the  defendant,  if  re- 
quested so  to  do  by  the  plaintiff  on  the  first  day  of  January,  1898,  to  take 
plaintiff's  stock  in  the  Hoffman  Machine  Co.  at  the  price  named  therein. 
The  plaintiff  failed  to  tender  his  stock  and  make  the  request  on  the  day 
named,  but  did  so  on  the  third  of  January.  As  the  first  day  of  January  was 
a  holiday  and  the  second  came  on  Sunday,  the  plaintiff  insists  that  his  tender 
and  request  were  in  time.  But  the  difficulty  with  his  contention  is  that  legal 
holidays  have  not  been  placed  on  the  same  basis  as  Sunday  by  the  statute. 
Indeed,  in  only  two  respects  has  the  legislature  attempted  to  interfere  with 


368  FORMATION    OF    CONTRACT. 

c.  Wagers  in  general. 
LOVE  v.  HARVEY. 

114  MASSACHUSETTS,  80.— 1873. 

Contract.  The  plaintiff  and  the  defendant  made  a  bet  as  to  the 
place  of  burial  in  Holyhood  Cemetery  of  the  body  of  one  Dr.  Cahill, 
the  plaintiff  betting  that  it  was  buried  on  the  left-hand  side  of  the 
main  avenue,  and  the  defendant  betting  that  it  was  buried  on  the 
right-hand  side  of  that  avenue.  The  money  was  deposited,  twenty 
dollars  by  each  party,  in  the  hands  of  one  James  Stack  as  stake- 
holder. It  was  determined  that  the  body  was  buried  on  the  left-hand 
side  of  the  avenue,  yet  the  stakeholder  delivered  to  the  defendant  the 
plaintiff's  twenty  dollars,  and  the  defendant,  though  requested,  re- 
fused to  repay  the  same  to  the  plaintiff.  The  declaration  contained 
another  count  for  money  had  and  received  by  the  defendant  to  the 
plaintiff's  use.  The  answer  was  a  general  denial. 

The  presiding  judge  ruled  and  instructed  the  jury  that  courts  did 
not  sit  to  decide  wagers;  that  it  did  not  matter  whether  the  plaintiff 
was  right  or  not,  regarding  the  situation  of  the  burial-place  in  ques- 
tion, or  whether  the  defendant  received  from  the  stakeholder  the  same 
money  that  was  deposited  with  him  by  the  plaintiff,  if  the  money  was 
paid  and  received  as  money  of  the  plaintiff;  that  if,  before  the  money 
was  paid  over  to  the  defendant,  the  plaintiff  forbade  payment  thereof 
in  the  defendant's  presence,  then  the  defendant  received  it  without 
consideration  and  wrongfully,  and  was  liable  in  the  action  for  money 
had  and  received. 

GRAY,  C.  J.  In  England  and  in  New  York,  actions  on  wagers 
upon  questions  in  which  the  parties  had  no  previous  interest  were  fre- 
quently sustained,  until  the  legislature  interposed  and  declared  all 
wagers  to  be  void.  1  Chit.  Con.  (llth  Am.  ed.)  735-738;  3  Kent. 

the  ordinary  course  of  business  whether  public  or  private  on  a  holiday  other 
than  Sunday.'  The  first  act  provides  that  a  negotiable  instrument  maturing 
on  a  holiday  is  payable  on  the  next  succeeding  business  day  (Laws  1887, 
chapter  289),  and  the  second  that  holidays  shall  be  considered  as  Sunday  for 
all  purposes  whatsoever,  as  regards  the  transaction  of  business  in  the  public 
offices  of  the  State  or  the  counties  of  the  State.  (Laws  1897,  chapter  614, 
section  1.)  If  the  legislature  had  omitted  the  limitation  of  the  preceding 
statute  to  the  transaction  of  business  in  the  public  offices  of  the  State  or 
counties  of  the  State  thus  providing  that  holidays  should  be  considered  as 
Sunday  for  all  purposes  whatsoever  the  plaintiff's  contention  would  be  well 
founded.  But  in  the  present  state  of  the  statutes,  we  are  of  the  opinion 
that  upon  holidays  other  than  Sunday,  all  transactions  may  be  carried  on  as 
on  any  other  day,  with  the  exceptions  above  noted." — Page  v.  Shainwald,  169 
N.  Y.  246.  See,  Law  of  holidays  as  applied  to  contracts  other  than  negotiable 
instruments,  19  L.  R.  A.  316. 


LEGALITY   OF   OBJECT.  369 

Com.  277,  278.  In  Scotland,  the  courts  refused  to  entertain  such 
actions.  Bruce  v.  Eoss,  3  Paton,  107,  112;  S.  C.  cited  3  T.  K.  697, 
705. 

In  Massachusetts,  the  English  law  on  this  subject  has  never  been 
adopted,  used,  or  approved,  and,  although  the  question  has  not  been 
directly  adjudged,  it  has  long  been  understood  that  all  wagers  are 
unlawful.  Const.  Mass.  c.  6,  art.  6;  Amory  v.  Oilman,  2  Mass.  1, 
6;  Ball  v.  Gilbert,  12  Met.  397,  399;  Sampson  v.  Shaw,  101  Mass. 
145,  150;  Met.  Con.  239.  There  are  decisions  or  opinions  to  the 
same  effect  in  each  of  the  New  England  States.  Lewis  v.  Little- 
field,  15  Maine,  233;  Perkins  v.  Eaton,  3  N.  H.  152;  Hoit  v.  Hodge, 
6  N.  H.  104;  Collamer  v.  Day,  2  Vt.  144;  West  v.  Holmes,  26  Vt. 
530 ;  Stoddard  v.  Martin,  1  B.  I.  1,  2 ;  Wheeler  v.  Spencer,  15  Conn. 
28>  30.  See  also  Edgell  v.  M'Laughlin,  6  Whart.  176 ;  Eice  v.  Gist, 
1  Strob.  82. 

It  is  inconsistent  alike  with  the  policy  of  our  laws,  and  with  the 
performance  of  the  duties  for  which  courts  of  justice  are  established, 
that  judges  and  juries  should  be  occupied  in  answering  every  friv- 
olous question  upon  which  idle  or  foolish  persons  may  choose  to  lay 
a  wager. 

The  ruling  at  the  trial  was  therefore  correct,  and  the  defendant, 
having  received  the  money  from  the  stakeholder  after  notice  from  the 
plaintiff  not  to  pay  it  over,  was  liable  to  the  plaintiff  under  the 
count  for  money  had  and  received.  McKee  v.  Manice,  11  Gush.  357. 

Exceptions  overruled. 

20  Cyc.  922    (36-40)  ;  W.  P.  406    (60)  ;   501    (64)  ;  6  H.  L.  R.  203. 


FEEGUSON  v.  COLEMAN. 
3  RICHARDSON  LAW   (S.  C.),  99.— 1846. 

This  was  an  action  on  an  instrument,  dated  31st  January,  1843, 
whereby  the  defendant  promised  "to  pay  on  the  first  of  January, 
1844,  to  W.  S.  Ferguson  or  bearer,  nine  hundred  and  two  dollars, 
fifty-eight  cents,  if  cotton  should  rise  to  eight  cents  by  the  first  No- 
vember next,  and  if  not,  to  pay  five  hundred  dollars,  for  value  re- 
ceived." It  was  admitted  at  the  trial  that  this  instrument  was  given 
in  part  payment  of  a  tract  of  land  which  the  defendant  had  purchased 
of  the  plaintiff;  and  it  was  proved  on  the  part  of  the  plaintiff,  that 
between  the  date  of  the  agreement  and  the  first  of  November,  1843, 
the  highest  prices  of  cotton  were,  in  Columbia,  8y2  and  8%  cents, 
•and  in  Charleston,  9  and  91/j.  cents.  The  defendant  contended,  1st, 
that  the  agreement  was  a  wager  on  the  price  of  cotton. 

CURIA,  per  FROST,  J.     The  objection  chiefly  urged  against  the  in- 


370  FORMATION    OF    CONTRACT. 

structions  of  the  circuit  judge,  affects  the  construction  of  the  agree- 
ment to  pay  the  larger  sum  expressed  in  the  note,  "if  cotton 
should  rise  to  eight  cents  by  the  first  of  November  next."  It  ap- 
peared by  admissions  at  the  trial  that  the  defendant  was  treating 
with  plaintiff  for  the  purchase  of  a  tract  of  land;  and  declining  to 
give  the  price  which  the  plaintiff  asked,  it  was  agreed  that  the  de- 
fendant should  pay  a  certain  sum  if  cotton  advanced,  or  less  if  it  did 
not.  .  .  .  The  objection  to  the  agreement  that  it  is  a  wager  is  plainly 
inapplicable ;  for  the  parties  had  an  interest  in  the  contingency.  The 
defendant  purchased  the  land  at  the  lowest  price,  unconditionally, 
but  contracted  to  pay  a  larger  sum  if  the  value  should  be  enhanced 
by  the  increased  value  of  its  product.  .  .  . 

20  Cyc.  921   (30-34)  ;  40  Cyc.  237-238  (88-95)  ;  W.  P.  405  (59). 


d.  Wagers  on  rise  and  fall  of  prices. 
MOHE  v.  MIESEN. 

47  MINNESOTA,  228.— 1891. 

Appeal  by  defendant  from  an  order  of  the  District  Court  for  Ram- 
sey County,  refusing  a  new  trial  after  a  verdict  of  $2005.78  for 
plaintiffs.  The  jury  found  specially  that  "the  arrangement  between 
plaintiffs  and  defendant  with  reference  to  the  transaction  in  con- 
troversy contemplated  the  purchase  and  sale  of  actual  grain  for  future 
delivery,  and  did  not  contemplate  the  making  of  gambling  contracts 
only/'  and  also  that  "the  contracts  in  evidence  were  made  by  and 
between  the  plaintiffs  and  other  members  of  the  chamber  of  com- 
merce, for  the  purchase  and  sale  of  grain  actually  to  be  delivered  by 
warehouse  receipts,  if  either  party  to  them  should  require  it,  and  that 
said  contracts  were  not  simply  gambling  contracts." 

VANDERBURGH,  J.  The  plaintiffs  sue  defendant  for  money  paid 
and  expended  for  his  use  in  the  purchase  and  sale  of  grain.  The 
answer  sets  up  that  the  purchases  and  sales  referred  to  were  not 
actual  or  veritable  purchases  and  sales  of  grain,  but  were  merely 
colorable,  and  "were  gambling  transactions,  whereby  the  plaintiffs 
in  form  undertook  to  buy  and  sell  on  the  Chicago  or  Milwaukee  boards 
of  trade,  ostensibly  for  future  deliveries,  but  without  any  intention 
or  expectation  on  the  part  of  the  plaintiffs  or  defendant  that  the  same 
would  be  actually  delivered,  large  quantities  of  wheat  and  barley, 
with  the  expectation  and  intention  on  the  part  of  both  plaintiffs  and 
defendant  of  wagering  on  the  market  prices,  and  that  the  amounts 
which  defendant  would  win  or  lose  would  be  governed  by  and  de- 
termined upon  the  fluctuations  in  the  quotations  of  the  boards  of 


LEGALITY    OF   OBJECT.  371 

trade."  The  record  shows  that  the  plaintiffs  were  members  of  the 
Milwaukee  chamber  of  commerce,  and  were  brokers  negotiating  pur- 
chases and  sales  of  grain,  and  accustomed  to  buy  upon  margins  under 
the  rules  of  the  chamber,  and  to  make  advances  for  customers,  and 
to  charge  commissions  for  their  services.  The  defendant  during  the 
time  of  the  transactions  in  controversy  was  a  dealer  in  wines  and 
liquors  in  the  city  of  St.  Paul.  These  transactions  opened  by  the 
receipt  by  plaintiffs  of  a  telegraphic  dispatch  from  the  defendant 
on  November  11,  1886,  directing  them  to  "sell  ten  thousand  bushels 
May  wheat/'  On  the  following  day  they  accordingly  executed  the 
order.  February  10th  defendant  directed  the  plaintiffs  to  buy  ten 
thousand  bushels  May  wheat,  which  order  was  in  like  manner  exe- 
cuted the  same  day.  This  closed  the  transaction  so  far  as  the  de- 
fendant was  concerned.  The  two  contracts  were  adjusted  on  the 
basis  of  the  difference  in  prices  at  the  dates  specified,  and  a  state- 
ment showing  the  difference  sent  to  defendant,  that  is  to  say,  the  two 
contracts  were  adjusted  on  the  basis  of  such  difference  in  prices, 
without  waiting  for  their  literal  fulfilment,  and  without  any  actual 
delivery  of  wheat.  A  large  number  of  other  similar  purchases  and 
sales  of  wheat  and  barley  amounting  to  hundreds  of  thousands  of 
bushels,  were  made  by  plaintiffs  for  defendant,  and  disposed  of  in 
like  manner,  during  the  year  1887.  Some  of  the  "deals"  were  closed 
with  a  profit,  others  with  a  loss,  to  defendant,  which  was  charged 
up  to  him  by  the  plaintiffs.  During  this  time  the  defendant  paid 
out  no  money  for  grain  whatever,  but  at  plaintiffs'  instance,  to  cover 
margins  for  which  advances  had  been  made  by  them  on  a  falling 
market,  he  had  paid  them,  between  the  10th  day  of  November,  1886, 
and  the  1st  day  of  January,  1888,  the  sum  of  $2462.50,  leaving  due 
them,  as  they  claim,  the  amount  demanded  in  this  action.  The  last 
transactions,  as  per  statement  sent  to  defendant  by  plaintiffs,  were 
the  reported  sale  of  10,000  bushels  February  barley,  December  30, 
1887,  and  the  purchase  of  10,000  bushels  February  barley,  January 
3,  1888,  difference  (loss)  reported  January  4,  1888,  at  $275. 

Contracts  for  the  purchase  or  sale  of  grain  or  other  commodities 
to  be  delivered  at  a  future  time  are  not  per  se  unlawful,  if  the 
parties  intend  in  good  faith  to  perform  them  by  the  actual  delivery 
of  the  property  according  to  their  terms.  Nor  are  bona  fide  con- 
tracts for  the  future  delivery  of  goods  invalid  because  at  the  time 
of  the  sale  the  vendor  has  not  the  actual  or  potential  possession  of 
the  goods  which  he  has  agreed  to  sell.  He  may  afterwards  go  into 
the  market  and  procure  the  goods  which  he  has  agreed  to  furnish  his 
vendee.  Business  may  be  successfully  and  lawfully  conducted  in  that 
way;  and,  where  such  contracts  are  intended  in  good  faith  to  repre- 
sent actual  transactions,  they  are  not  unlawful.  The  law  places  no 
unreasonable  limitations  upon  commercial  dealings;  and  it  is  no 


372  FORMATION   OF    CONTRACT. 

legal  ground  of  objection  that  bona  fide  contracts  for  future  delivery 
are  entered  into  for  the  purpose  of  making  a  speculation  through  an 
anticipated  rise  in  the  price  of  commodities.  But  contracts  in  form 
for  the  future  delivery  of  goods  not  intended  to  represent  actual 
transactions, — that  is,  the  actual  delivery  and  receipt  of  the  goods, 
— but  merely  to  pay  and  receive  the  difference  between  the  agreed 
price  and  the  market  price  at  a  future  day,  and  upon  the  risk  of  the 
rise  or  fall  in  prices,  are  generally  held  to  be  in  the  nature  of  wagers 
on  the  future  price  of  the  commodity,  and  void  by  statute  or  as 
against  public  policy.  The  party  dealing  in  futures  in  substance  bets 
that  the  price  of  a  commodity  at  a  future  day  will  be  a  certain  sum 
more  or  less  than  the  market  prices,  which  involve  elements  of  risk 
and  uncertainty;  and  the  "stake"  is  the  amount  of  the  "margin" 
required  to  cover  differences  in  values,  and  according  to  the  price  of 
the  commodity  on  a  future  day  the  parties  to  the  contract  must 
respectively  gain  or  lose.  22  Am.  La  Eeg.  613,  note. 

In  Eumsey  v.  Berry  (65  Me.  570)  the  accepted  doctrine  is  stated 
as  follows: 

"A  contract  for  the  sale  and  purchase  of  wheat  to  be  delivered  in  good  faith 
at  a  future  time  is  one  thing,  and  is  not  inconsistent  with  the  law;  but  such  a 
contract  entered  into  without  an  intention  of  having  any  wheat  pass  from 
one  party  to  the  other,  but  with  an  understanding  that  at  the  appointed  time 
the  purchaser  is  merely  to  receive  or  pay  the  difference  between  the  contract 
and  the  market  price,  is  another  thing,  and  such  as  the  law  will  not  sustain. 
This  is  what  is  called  a  settling  of  the  differences,  and  as  such  is  clearly  and 
only  a  betting  upon  the  price  of  wheat,  against  public  policy,  and  not  only 
void,  but  deserving  of  the  severest  censure." 

"The  bargain  represents  not  a  transfer  of  property,  but  a  mere  stake  or 
wager  upon  its  future  price.  The  difference  requires  the  ownership  of  only  a 
few  hundreds  or  thousands  of  dollars,  while  the  capital  to  complete  an  actual 
purchase  or  sale  may  be  hundreds  of  thousands  or  millions.  Hence  ventures 
upon  prices  invite  men  of  small  means  to  enter  into  transactions  far  beyond 
their  capital,  which  they  do  not  intend  to  fulfil,  and  thus  the  apparent  busi- 
ness in  the  particular  trade  is  inflated  and  unreal,  and,  like  a  bubble,  needs 
only  to  be  pricked  to  disappear,  often  carrying  down  the  bona  fide  dealer  in 
its  collapse.  .  .  .  Such  transactions  are  destructive  of  good  morals  and  fair 
dealing  and  of  the  best  interests  of  the  community."  Kirkpatrick  v.  Bonsall, 
72  Pa.  St.  155. 

It  becomes  material,  therefore,  to  inquire  into  the  intention  of  the 
parties  in  entering  into  contracts  purporting  to  be  for  the  future 
delivery  of  commodities,  and  the  plaintiffs  must  be  shown  to  be  in 
pari  delicto  to  defeat  a  recovery  in  this  action.  The  language  or  form 
of  the  contract  is  not  conclusive.  The  real  nature  of  the  transaction 
and  the  understanding  and  purpose  of  the  parties  may  be  shown, 
notwithstanding  the  contract  is  fair  on  its  face.  Indeed,  in  view  of 
the  extent  to  which  stock  and  grain  gambling  is  carried  on  at  the 
exchanges  in  the  commercial  centers  of  the  country, — a  fact  of  which 


LEGALITY   OF  OBJECT.  373 

the  courts  are  bound  to  take  notice, — time  contracts  of  the  character 
under  consideration  will  be  very  carefully  scrutinized  by  the  courts, 
and  they  will  go  behind  and  outside  the  language  of  the  contract, 
and  look  into  the  facts  and  circumstances  surrounding  and  connected 
with  it,  in  order  to  determine  its  real  character,  as  in  the  case  of 
contracts  claimed  to  be  void  for  usury  or  fraud.  In  Barnard  v.  Back- 
haus  (52  Wis.  593,  600),  the  court,  speaking  of  contracts  for  future 
delivery,  went  so  far  as  to  say  that  "to  justify  a  court  in  upholding 
such  an  agreement  it  is  not  too  much  to  require  a  party  claiming 
rights  under  it  to  make  it  satisfactorily  and  affirmatively  appear  that 
the  contract  was  made  with  an  actual  view  to  the  delivery  and  receipt 
of  grain,  not  as  an  evasion  of  the  statute  against  gaming,  or  as  a 
cover  for  a  gambling  transaction."  The  effect  of  this  would  be  to 
shift  the  burden  of  proof  in  such  cases.  The  courts  of  some  of  the 
other  States  have  been  constrained  to  adopt  the  same  rule,  but  upon 
principle  the  proposition  can  hardly  be  sustained;  and  the  general 
rule  is  that  the  burden  of  establishing  the  illegality  rests  upon  the 
party  who  asserts  it,  and  such  is  the  great  weight  of  authority  in 
these  as  well  as  other  cases.  It  is  for  the  legislature  to  change  the 
rule  in  this  class  of  cases,  if  in  its  wisdom  and  for  reasons  of  public 
policy  it  shall  be  deemed  necessary  for  the  public  welfare.  Crawford 
v.  Spencer,  92  Mo.  498,  and  cases. 

The  testimony  of  the  defendant,  which  is  undisputed,  shows  or 
tends  to  show  that  he  did  not  intend  to  make  actual  bona  fide  pur- 
chases and  sales  of  grain,  but  intended  to  "deal  in  futures"  solely, 
and  the  manner  in  which  the  business  was  conducted  and  the  several 
"deals"  closed  and  adjusted  by  the  plaintiffs  is  consistent  with  this 
theory,  and  tends  to  support  it;  and,  while  this  circumstance  might 
not  alone  be  sufficient  to  establish  the  fact  that  plaintiffs,  or  the  third 
parties  with  whom  they  dealt  in  executing  the  orders  of  the  defend- 
ant, had  notice  that  defendant's  object  was  not  to  buy  and  sell  grain, 
but  to  speculate  in  the  price  of  grain  merely,  yet  the  manner  in 
which  the  business  involving  these  transactions  was  conducted  was 
certainly  an  element  to  be  considered  with  other  circumstances  in 
determining  the  question  of  their  good  faith.  Hill  v.  Johnson,  38 
Mo.  App.  383 ;  Crawford  v.  Spencer,  92  Mo.  498.  It  is  not  necessary 
to  prove  that  plaintiffs  had  express  notice  of  defendant's  purpose. 
The  understanding  between  the  parties  may  be  gathered  from  the 
facts  and  attending  circumstances.  This  is  well  settled,  and  upon 
this  point  evidence  of  the  defendant's  occupation,  residence,  financial 
ability;  that  he  never  delivered  or  received  or  proposed  to  deliver 
or  receive  any  grain;  that  he  was  not  a  dealer;  and  that  the  orders 
to  purchase  were  made  without  reference  to  or  far  in  excess  of  his 
ability  to  pay  for,  with  other  facts  of  like  character,  was  competent. 
Cobb  v.  Preil,  5  McCrary,  85;  Carroll  v.  Holmes,  24  111.  App.  453, 


374  FORMATION   OF   CONTRACT. 

458,  459;  In  re  Green,  7  Biss.  338,  344;  Crawford  v.  Spencer,  supra; 
Lowry  v.  Dillman,  59  Wis.  197;  Sprague  v.  Warren  (Neb.),  41  N. 
W.  Kep.  1115;  Watte  v.  Wickersham,  27  Neb.  457;  Williams  v.  Tiede- 
mann,  6  Mo.  App.  269,  276;  Hill  v.  Johnson,  38  Mo.  App.  383,  392. 
The  plaintiffs  concede  that  it  was  apparent  from  his  correspondence 
that  the  defendant's  transactions  were  mostly  for  speculative  purposes. 
They  knew  he  was  in  the  saloon  business,  and  not  in  the  grain 
business.  The  jury  might  find  from  the  facts  disclosed  by  the  evi- 
dence that  the  plaintiffs  knew  that  he  had  not  the  means  to  buy 
grain  with,  and  did  not  desire  or  need  it,  but  was  operating  for  the 
differences  only. 

The  statutes  of  Wisconsin,  where  the  business  was  done,  were  not 
introduced  in  evidence.  The  rights  of  the  parties  will  therefore  be 
determined  by  the  rules  of  the  common  law,  as  generally  accepted 
and  applied  in  this  country.  Harvey  v.  Merrill,  150  Mass.  1.  And 
it  is  generally  held  as  the  common-law  doctrine  that  all  wagering  con- 
tracts are  illegal  and  void  as  against  public  policy.  Irwin  v.  Williar, 
110  TJ.  S.  499,  510;  Harvey  v.  Merrill,  supra.  No  cause  of  action 
arises  in  favor  of  a  party  to  an  illegal  transaction;  nor  will  the  law 
lend  its  aid  to  enforce  any  contract  which  is  in  conflict  with  the  terms 
of  a  statute,  or  sound  public  policy  or  good  morals.  In  re  Green,  7 
Biss.  338;  Armstrong  v.  Toler,  11  Wheat.  258;  Kuckman  v.  Bryan, 
3  Denio,  340.  And  there  is  no  reason  why  a  broker  or  commission 
merchant  should  be  favored  or  exempted  from  consequences  resulting 
to  other  parties  who  aid  or  assist  in  unlawful  transactions.  Barnard 
v.  Backhaus,  supra.  It  was  through  the  agency  of  the  plaintiffs 
that  the  defendant  was  attempting  to  carry  on  an  unlawful  busi- 
ness. They  executed  his  orders,  advanced  money  for  mar- 
gins, and  settled  the  differences.  The  contracts  were  all  made 
in  their  names,  and  he  was  not  known  in  the  transactions  with  third 
parties,  and  they  were  personally  responsible  to  the  persons  with 
whom  they  dealt  in  making  the  purchases  and  sales  in  question. 
Under  such  circumstances  it  would,  of  course,  be  difficult  to  ascer- 
tain whether  the  latter  had  notice  of  the  nature  of  the  agreement 
or  understanding  existing  between  the  parties  to  this  action;  but 
it  was  clearly  important  and  material  to  show  that  the  plaintiffs 
were  cognizant  of  defendant's  illegal  purposes,  and  were  engaged 
in  promoting  them;  and,  if  they  were,  the  court  will  not  aid  them 
to  recover  moneys  advanced  in  furtherance  of  such  schemes.  The 
plaintiffs,  as  brokers  or  commission  merchants,  might  well  decline 
to  aid  in  transactions  of  that  character;  and,  if  they  would  do  so, 
a  great  deal  of  that  kind  of  gambling  would  cease,  as,  in  the  major- 
ity of  cases,  the  ventures  could  not  be  made  without  their  financial 
assistance.  As  between  them  and  their  customers,  the  same  strict 


LEGALITY    OF   OBJECT.  375 

rule  should  be  applied  as  in  other  cases.  Carroll  v.  Holmes,  24  111. 
App.  453,  460;  Hill  v.  Johnson,  38  Mo.  App.  383;  Tied.  Sales,  p. 
490,  §  302. 

The  plaintiffs'  counsel,  however,  concedes  in  his  brief  in  this  court 
that  if,  by  the  arrangement  between  the  parties  to  this  suit,  they 
were  to  undertake  gambling  transactions,  then  the  intent  of  third 
parties  was  not  material.  But  the  defendant's  counsel  insists  that 
the  charge  of  the  court  on  this  subject,  including  the  instructions 
asked  by  plaintiffs,  would  warrant  the  jury  to  infer  that  it  was  neces- 
sary for  the  defendant  to  make  it  appear  that  the  parties  with  whom 
plaintiffs  dealt  were  also  in  pari  delicto.  Upon  this  point  the  charge, 
taken  as  a  whole,  is  perhaps  not  entirely  clear,  but  we  think  if  there 
was  any  ambiguity  or  uncertainty  in  the  charge  on  the  question  the 
defendant  should  have  asked  more  specific  instructions. 

It  is  also  assigned  as  error  that  the  court  erred  in  refusing  defend- 
ant's second  request  to  charge,  which  was  in  substance  that,  in  order 
to  prove  notice  or  knowledge  on  the  part  of  the  plaintiffs  of  the  de- 
signs and  intentions  of  the  defendant,  it  is  not  necessary  that  de- 
fendant should  have  written  or  said  to  any  of  the  plaintiffs  that 
such  was  his  design;  but  the  jury  were  to  determine  the  understand- 
ing of  the  parties  from  all  the  circumstances  connected  with  the 
transactions  between  them,  and  that  upon  this  question  they  were 
"entitled  to  consider  the  fact  that  at  the  time  the  plaintiffs  sold  the 
barley  for  the  defendant  in  October,  November,  and  December,  1887, 
one  of  the  plaintiffs  stated  that  he  had  no  reason  to  believe  that  the 
defendant  had  the  barley  at  the  time  of  such  sales;  and  the  further 
fact  that  during  a  part,  at  least,  of  the  time  of  such  transactions, 
the  defendant  was  behind  with  his  margin,  and  was  being  pressed  by 
plaintiffs  for  money  to  make  the  margins  good;  and  that  plaintiffs 
immediately  after  closed  these  deals,  as  well  as  all  prior  deals,  con- 
sidered the  transaction  at  an  end  so  far  as  defendant  was  concerned, 
and,  instead  of  charging  him  with  the  purchase  of  any  wheat,  sent 
him  statements  charging  him  with,  or  crediting  him  with,  as  the 
case  might  be,  the  difference  between  the  purchase  and  the  selling 
price."  These  instructions  were  not  covered  by  the  general  charge, 
and  we  think  should  have  been  given.  Some  of  the  evidence  was  per- 
haps of  slight  importance,  but  we  think,  with  other  facts  and  circum- 
stances in  the  case,  it  was  all  proper  to  be  considered  by  the  jury  in 
determining  the  knowledge  of  the  plaintiffs  and  the  real  nature  of 
the  arrangement  between  the  parties;  and  without  such  instructions 
the  jury  were  in  danger  of  being  led  to  believe,  as  the  court  subse- 
quently stated,  that  there  must  be  an  express  agreement,  and  that  a 
mere  understanding  between  the  parties  was  not  sufficient. 

We  think  evidence  of  the  general  character  of  transactions  in  the 


376  FORMATION    OF    CONTRACT. 

chamber  between  other  dealers  was  properly  rejected;  but  for  the 
error  above  referred  to  there  should  be  a  new  trial. 

Order  reversed.1 

20  Cyc.  926-927   (57-58)  ;  W.  P.  406   (60). 


ASSIGNED  ESTATE  OF  L.  H.  TAYLOR  &  COMPANY. 
(Appeal  of  WILLIAM  H.  HOWARD.) 

192  PENNSYLVANIA  STATE,  304.— 1899. 

Exception  to  auditor's  report,  which  was  as  follows: 
Claim  of  W.  H.  Howard  for  $11,921.62.  Mr.  Howard  is  a  capi- 
talist and  a  farmer.  On  March  13^  1893,  he  bought  100  shares  of 
L.  C.  &  N.  Co.  for  $4337.50,  and  the  next  day  paid  L.  H.  Taylor 
&  Co.  $2000.  During  the  month  of  April,  1893,  he  appears  to  have 
ordered  bought  and  sold  about  1200  snares  of  stock.  On  April  30, 
1893,  he  ordered  sold  "short"  100  shares  of  B.  &  0.  and  100  shares 
of  P.  R.  &  N.  E.  In  November,  1895,  he  again  turned  "bear,"  sell- 
ing "short"  in  that  single  month  500  shares  of  Reading  R.  Co.,  200 
shares  of  American  Tobacco  Co.,  100  shares  of  Welsbach  Light  Co. 

1  "As  has  appeared,  the  plaintiff's  chamber  of  commerce  [Chicago  Board  of 
Trade]  is,  in  the  first  place,  a  great  market,  where,  through  its  eighteen  hun- 
dred members,  is  transacted  a  large  part  of  the  grain  and  provision  business 
of  the  world.  Of  course,  in  a  modern  market  contracts  are  not  confined  to 
sales  for  immediate  delivery.  People  will  endeavor  to  forecast  the  future  and 
to  make  agreements  according  to  their  prophecy.  Speculation  of  this  kind 
by  competent  men  is  the  self-adjustment  of  society  to  the  probable.  Its  value 
is  well  known  as  a  means  of  avoiding  or  mitigating  catastrophes,  equalizing 
prices  and  providing  for  periods  of  want.  It  is  true  that  the  success  of  the 
strong  induces  imitation  by  the  weak,  and  that  incompetent  persons  bring 
themselves  to  ruin  by  undertaking  to  speculate  in  their  turn.  But  legisla- 
tures and  courts  generally  have  recognized  that  the  natural  evolutions  of  a 
complex  society  are  to  be  touched  only  with  a  very  cautious  hand,  and  that 
such  coarse  attempts  at  a  remedy  for  the  waste  incident  to  every  social  func- 
tion as  a  simple  prohibition  and  laws  to  stop  its  being  are  harmful  and  vain. 
This  court  has  upheld  sales  of  stock  for  future  delivery  and  the  substitution 
of  parties  provided  for  by  the  rules  of  the  Chicago  Stock  Exchange.  Clews  v. 
Jamieson,  182  U.  S.  461.  ...  There  is  no  doubt,  from  the  rules  of  the  Board 
of  Trade  or  the  evidence,  that  the  contracts  made  between  the  members  are  in- 
tended and  supposed  to  be  binding  in  manner  and  form  as  they  are  made. 
There  is  no  doubt  that  a  large  part  of  those  contracts  is  made  for  serious  busi- 
ness purposes.  Hedging,  for  instance,  as  it  is  called,  is  a  means  by  which  col- 
lectors and  exporters  of  grain  or  other  products,  and  manufacturers  who  make 
contracts  in  advance  for  the  sale  of  their  goods,  secure  themselves  against  the 
fluctuations  of  the  market  by  counter  contracts  for  the  purchase  or  sale,  as  the 
case  may  be,  of  an  equal  quantity  of  the  product,  or  of  the  material  of  manu- 
facture. It  is  none  the  less  a  serious  business  contract  for  a  legitimate  and 
useful  purpose  that  it  may  be  offset  before  the  time  of  delivery  in  case  delivery 
should  not  be  needed  or  desired." — Board  of  Trade  of  the  City  of  Chicago  v. 
Christie  Grain  &  Stock  Co.,  198  U.  S.  236. 


LEGALITY   OF   OBJECT.  377 

In  December,  1895,  he  also  made  short  sales  of  Welsbach  Light  Co. 
and  American  Sugar  Refining  Co.  common.  The  account  had  been 
closed  in  1893,  but  reopened  thereafter.  No  stock  was  delivered  to 
him  after  March  13,  1893,  when  the  account  was  reopened.  He 
testified  that  he  did  not  intend  to  gamble.  The  account,  however, 
including  his  enormous  short  sales,  has  all  the  earmarks  of  a  gaming 
transaction,  and  I  so  find.  I  disallow  the  claim. 

MITCHELL,  J.  It  has  been  settled  by  this  court,  so  often  that  it 
ought  not  to  require  reiteration,  that  dealing  in  stocks,  even  on  mar- 
gins, is  not  gambling.  Stocks  are  as  legitimate  subjects  of  specula- 
tive buying  and  selling  as  flour  or  dry  goods  or  pig  iron.  A  man 
may  buy  any  commodity,  stock  included,  to  sell  on  an  expected  rise, 
or  sell  "short,"  to  acquire  and  deliver  on  an  expected  fall,  and  it 
will  not  be  gambling.  Margin  is  nothing  but  security,  and  a  man 
may  buy  on  credit,  with  security  or  without,  or  on  borrowed  money, 
and  the  money  may  be  borrowed  from  his  broker  as  well  as  from  a 
third  person.  The  test  is,  did  he  intend  to  buy,  or  only  to  settle  on 
differences?  If  he  had  bought  and  paid  for  his  stock,  held  it  for  a 
a  year  and  then  sold,  no  one  would  call  it  gambling;  and  yet  it  is 
just  as  little  so  if  he  had  it  but  an  hour,  and  sold  before  he  had  in 
fact  paid  for  it.  And  so  with  selling.  Every  merchant  who  sells 
you  something  not  yet  in  his  stock,  but  which  he  undertakes  to  get 
for  you,  is  selling  "short,"  but  he  is  not  gambling,  because,  though 
delivery  is  to  be  in  the  future,  the  sale  is  present  and  actual. 

The  true  line  of  distinction  was  laid  down  in  Peters  v.  Grim  (149 
Pa.  St.  163)  and  has  not  been  departed  from  or  varied:  "A  pur- 
chase of  stock  for  speculation,  even  when  done  merely  on  margin,  is 
not  necessarily  a  gambling  transaction.  If  one  buys  stock  from  A, 
and  borrows  the  money  from  B  to  pay  for  it,  there  is  no  element  of 
gambling  in  the  operation,  though  he  pledges  the  stock  with  B  as 
security  for  the  money.  So,  if  instead  of  borrowing  the  money  from 
B,  a  third  person,  he  borrows  it  from  A,  or,  in  the  language  of  brokers, 
procures  A  to  'carry*  the  stock  for  him,  with  or  without  margin,  the 
transaction  is  not  necessarily  different  in  character.  But  in  this  lat- 
ter case,  there  being  no  transfer  or  delivery  of  the  stock,  the  doubt 
arises  whether  the  parties  intended  there  should  ever  be  a  purchase 
or  delivery  at  all.  Here  is  the  dividing  line.  If  there  was  not  under 
any  circumstances  to  be  a  delivery,  as  part  of  and  completing  a  pur- 
chase, then  the  transaction  was  a  mere  wager  on  the  rise  and  fall  of 
prices ;  but  if  there  was,  in  good  faith,  p,  purchase,  then  the  delivery 
might  be  postponed,  or  made  to  depend  on  a  future  condition,  and 
the  stock  carried  on  margin,  or  otherwise,  in  the  meanwhile,  without 
affecting  the  legality  of  the  operation."  This  has  been  uniformly 
followed.  Hopkins  v.  O'Kane,  169  Pa.  St.  478;  Wagner  v.  Hilde- 
brand,  187  Pa.  St.  136.  And  the  rule  goes  so  far  that  an  agreement 


378  FORMATION   OF    CONTRACT. 

for  an  actual  sale  and  purchase  will  make  the  transaction  valid, 
though  it  originated  in  an  intention  merely  to  wager.  Anthony  v. 
Unangst,  174  Pa.  St.  10. 

Turning  now  to  the  facts  of  the  present  case,  it  is  clear  that  the 
law  was  not  correctly  applied  by  the  auditor  and  the  court  below. 
The  brokers  made  an  assignment  on  December  21,  1895,  on  which 
day  they  held  certain  stock  for  appellant,  which  they  had  bought  on 
his  order;  and  he  had  certain  other  stock,  which  they  had  sold  on 
his  order,  but  which  he  had  not  yet  delivered  to  them.  He  desired 
to  close  the  account,  complete  the  mutual  deliveries,  and  receive 
the  balance  which  the  transactions  left  in  his  favor.  He  was  entitled 
to  do  so.  Even  if  the  transactions  were  wagering  the  agreement  of 
the  parties  to  make  the  sales  actual  would,  under  Anthony  v.  Unangst 
(174  Pa.  St.  10),  have  made  them  valid.  It  is  true,  the  settlement 
was  not  actually  made  until  January  10th;  but  it  was  made  as  of 
December  20th,  the  day  before  the  assignment,  and  the  auditor  re- 
ports that  there  had  been  no  change  of  values  meanwhile.  The  time 
of  striking  a  balance  on  the  books  and  delivering  the  stock  was  not 
important.  Delivery  is  not  in  itself  a  material  fact.  Its  only  value 
is  as  evidence  of  the  intent  to  make  a  bona  fide  sale.  If  such  is  the 
intent,  the  delivery  may  be  present  or  future  without  affecting 
validity. 

But  there  was  no  sufficient  evidence  that  the  transactions  were 
illegal  at  any  time.  The  auditor  reports  that  "the  stocks  ordered 
to  be  bought  or  sold  by  the  customers  of  L.  H.  Taylor  &  Co.  were, 
as  shown  by  their  books,  actually  bought  and  sold;  and,  as  this  evi- 
dence is  uncontradicted,  I  must  and  do  so  find.  .  .  .  Thus,  so  far 
as  L.  H.  Taylor  &  Co.  were  concerned,  the  transactions  were  not 
fictitious,  but  were  actual  purchases  and  sales  of  stock."  This  finding 
should  have  been  a  warning  to  caution  in  taking  a  different  view 
of  the  appellant's  position  in  the  transactions.  It  is  true,  the  pur- 
chase or  sale  may  be  actual  on  part  of  the  broker,  and  merely  a 
wager  on  part  of  the  customer  (see  Champlin  v.  Smith,  164  Pa. 
St.  481)  ;  but  there  should  be  at  least  fairly  persuasive  evidence  of 
the  difference.  There  is  none  here.  The  transactions  covered  by  the 
account  began  with  a  small  cash  balance  to  appellant's  credit,  fol- 
lowed by  an  order  to  buy  200  shares  of  Wabash  common,  which  were 
bought  by  the  brokers,  paid  for  by  appellant,  and  delivered  to  him. 
The  close,  two  years  and  a  half  later,  showed,  as  already  said,  a  large 
number  of  shares  in  the  hands  of  the  brokers  bought  for  appellant, 
and  of  which  he  demanded  delivery,  and  other  shares  sold  for  him 
and  which  he  had  in  his  possession  ready  to  deliver.  As  to  the  inter- 
mediate transactions,  appellant  testified,  "It  was  always  the  inten- 
tion to  buy  the  stocks  out  and  out,  and  pay  for  them,  and  I  had 
money  to  do  it  with."  In  the  face  of  these  facts  and  this  uncon- 


LEGALITY    OF    OBJECT.  379 

tradicted  testimony,  the  auditor  found  that  "the  account,  including 
his  enormous  short  sales,  has  all  the  earmarks  of  a  gaming  trans- 
action, and  I  so  find  it."  This  was  a  mere  inference,  unwarranted 
by  the  account  itself,  and  wholly  opposed  to  all  the  evidence  in  the 
case. 

Judgment  so  far  as  it  relates  to  appellant's  claim,  reversed,  and 
claim  directed  to  be  allowed. 

20  Cyc.  928   (59)  ;  W.  P.  408  (63). 


e.  Wagering  policies. 
WAENOCK  v.  DAVIS. 

104  UNITED  STATES,  775.— 1881. 

Action  to  recover  a  balance  on  a  life  insurance  policy  issued  to 
plaintiff's  intestate  and  by  him  assigned  to  defendants  to  whom  the 
policy  was  paid.  Judgment  for  defendants.  Plaintiff  brings  error. 

The  intestate  entered  into  an  agreement  with  defendants  that  he 
would  take  out  a  policy  for  $5000  and  assign  nine-tenths  of  the 
same  to  defendants,  one-tenth  to  be  payable  to  his  wife;  that  he 
would  pay  defendants  $6  in  hand  and  annual  dues  amounting  to 
$2.50.  They  on  their  part  agreed  to  keep  up  the  annual  premiums 
on  the  policy,  and  on  the  death  of  intestate  collect  and  pay  over 
to  his  widow  one-tenth  of  the  policy.  In  pursuance  of  this  agree- 
ment a  policy  was  taken  out  by  the  intestate  and  assigned  to  defend- 
ants on  the  terms  stipulated.  On  the  death  of  intestate  the 
defendants  collected  the  policy  and  paid  over  to  the  widow  one-tenth 
of  the  amount,  less  certain  sums  due  under  the  agreement.  Plaintiff, 
as  administrator,  brings  an  action  for  the  balance  of  the  money  col- 
lected under  the  policy. 

ME.  JUSTICE  FIELD.  As  seen  from  the  statement  of  the  case,  the 
evidence  before  the  court  was  not  conflicting,  and  it  was  only  neces- 
sary to  meet  the  general  allegations  of  the  first  defense.  All  the 
facts  established  by  it  are  admitted  in  the  other  defenses.  The  court 
could  not  have  ruled  in  favor  of  the  defendants  without  holding  that 
the  agreement  between  the  deceased  and  the  Scioto  Trust  Association 
was  valid,  and  that  the  assignment  transferred  to  it  the  right  to 
nine-tenths  of  the  money  collected  on  the  policy.  For  alleged  error 
in  these  particulars  the  plaintiff  asks  a  reversal  of  the  judgment. 

The  policy  executed  on  the  life  of  the  deceased  was  a  valid  con- 
tract, and  as  such  was  assignable  by  the  assured  to  the  association 
as  security  for  any  sums  lent  to  him,  or  advanced  for  the  premiums 
and  assessments  upon  it.  But  it  was  not  assignable  to  the  association 
for  any  other  purpose.  The  association  had  no  insurable  interest  in 


380  FORMATION    OF    CONTRACT. 

the  life  of  the  deceased,  and  could  not  have  taken  out  a  policy  in  its 
own  name.  Such  a  policy  would  constitute  what  is  termed  a  wager 
policy,  or  a  mere  speculative  contract  upon  the  life  of  the  assured, 
with  a  direct  interest  in  its  early  termination. 

It  is  not  easy  to  define  with  precision  what  will  in  all  cases  con- 
stitute an  insurable  interest,  so  as  to  take  the  contract  out  of  the 
class  of  wager  policies.  It  may  be  stated  generally,  however,  to  be 
such  an  interest,  arising  from  the  relations  of  the  party  obtaining 
the  insurance,  either  as  creditor  of  or  surety  for  the  assured,  or  from 
the  ties  of  blood  or  marriage  to  him,  as  will  justify  a  reasonable 
expectation  of  advantage  or  benefit  from  the  continuance  of  his  life. 
It  is  not  necessary  that  the  expectation  of  advantage  or  benefit  should 
be  always  capable  of  pecuniary  estimation;  for  a  parent  has  an  in- 
surable interest  in  the  life  of  his  child,  and  a  child  in  the  life  of  his 
parent,  a  husband  in  the  life  of  his  wife,  and  a  wife  in  the  life  of  her 
husband.  The  natural  affection  in  cases  of  this  kind  is  considered 
as  more  powerful — as  operating  more  efficaciously — to  protect  the 
life  of  the  insured  than  any  other  consideration.  But  in  all  cases 
there  must  be  a  reasonable  ground,  founded  upon  the  relations  of  the 
parties  to  each  other,  either  pecuniary  or  of  blood  or  affinity,  to  expect 
some  benefit  or  advantage  from  the  continuance  of  the  life  of  the 
assured.  Otherwise  the  contract  is  a  mere  wager,  by  which  the  party 
taking  the  policy  is  directly  interested  in  the  early  death  of  the  as- 
sured. Such  policies  have  a  tendency  to  create  a  desire  for  the  event. 
They  are,  therefore,  independently  of  any  statute  on  the  subject,  con- 
demned, as  being  against  public  policy. 

The  assignment  of  a  policy  to  a  party  not  having  an  insurable 
interest  is  as  objectionable  as  the  taking  out  of  a  policy  in  his  name. 
Nor  is  its  character  changed  because  it  is  for  a  portion  merely  of 
the  insurance  money.  To  the  extent  in  which  the  assignee  stipulates 
for  the  proceeds  of  the  policy  beyond  the  sums  advanced  by  him,  he 
stands  in  the  position  of  one  holding  a  wager  policy.  The  law  might 
be  readily  evaded,  if  the  policy,  or  an  interest  in  it,  could,  in  con- 
sideration of  paying  the  premiums  and  assessments  upon  it,  and  the 
promise  to  pay  upon  the  death  of  the  assured  a  portion  of  its  proceeds 
to  his  representatives,  be  transferred  so  as  to  entitle  the  assignee  to 
retain  the  whole  insurance  money. 

The  question  here  presented  has  arisen,  under  somewhat  different 
circumstances,  in  several  of  the  state  courts;  and  there  is  a  conflict 
in  their  decisions.  In  Franklin  Life  Insurance  Company  v.  Haz- 
zard,  which  arose  in  Indiana,  the  policy  of  insurance,  which  was  for 
$3000,  contained  the  usual  provision  that  if  the  premiums  were  not 
paid  at  the  times  specified  the  policy  would  be  forfeited.  The  second 
premium  was  not  paid,  and  the  assured,  declaring  that  he  had  con- 
cluded not  to  keep  up  the  policy,  sold  it  for  twenty  dollars  to  one 


LEGALITY    OF    OBJECT.  381 

having  no  insurable  interest,  who  took  an  assignment  of  it  with  the 
consent  of  the  secretary  of  the  insurance  company.  The  assignee 
subsequently  settled  with  the  company  for  the  unpaid  premium.  In 
a  suit  upon  the  policy,  the  Supreme  Court  of  the  State  held  that  the 
assignment  was  void,  stating  that  all  the  objections  against  the  issuing 
of  a  policy  to  one  upon  the  life  of  another,  in  whose  life  he  has  no 
insurable  interest,  exist  against  holding  such  a  policy  by  mere  pur- 
chase and  assignment.  "In  either  case,"  said  the  court,  "the  holder 
of  such  policy  is  interested  in  the  death  rather  than  the  life  of  the 
party  assured.  The  law  ought  to  be,  and  we  think  it  clearly  is, 
opposed  to  such  speculations  in  human  life."  41  Ind.  116.  The 
court  referred  with  approval  to  a  decision  of  the  same  purport  by 
the  Supreme  Court  of  Massachusetts,  in  Stevens  v.  Warren,  101  Mass. 
564.  There  the  question  presented  was  whether  the  assignment  of  a 
policy  by  the  assured  in  his  lifetime,  without  the  assent  of  the  insur- 
ance company,  conveyed  any  right  in  law  or  equity  to  the  proceeds 
when  due.  The  court  was  unanimously  of  opinion  that  it  did  not; 
holding  that  it  was  contrary  not  only  to  the  terms  of  the  contract, 
but  contrary  to  the  general  policy  of  the  law  respecting  insurance,  in 
that  it  might  lead  to  gambling  or  speculative  contracts  upon  the 
chances  of  human  life.  The  court  also  referred  to  provisions  some- 
times inserted  in  a  policy  expressing  that  it  is  for  the  benefit  of 
another,  or  is  payable  to  another  than  the  representatives  of  the  as- 
sured, and,  after  remarking  that  the  contract  in  such  a  case  might 
be  sustained,  said,  "that  the  same  would  probably  be  held  in  the 
case  of  an  assignment  with  the  assent  of  the  assurers.  But  if  the 
assignee  has  no  interest  in  the  life  of  the  subject  which  would  sustain 
a  policy  to  himself,  the  assignment  would  take  effect  only  as  a  desig- 
nation, by  mutual  agreement  of  the  parties,  of  the  person  who  should 
be  entitled  to  receive  the  proceeds  when  due,  instead  of  the  personal 
representatives  of  the  deceased.  And  if  it  should  appear  that  the 
arrangement  was  a  cover  for  a  speculating  risk,  contravening  the 
general  policy  of  the  law,  it  would  not  be  sustained." 

Although  the  agreement  between  the  Trust  Association  and  the 
assured  was  invalid  as  far  as  it  provided  for  an  absolute  transfer  of 
nine-tenths  of  the  proceeds  of  the  policy  upon  the  conditions  named, 
it  was  not  of  that  fraudulent  kind  with  respect  to  which  the  courts 
regard  the  parties  as  alike  culpable  and  refuse  to  interfere  with  the 
results  of  their  action.  No  fraud  or  deception  upon  any  one  was 
designed  by  the  agreement,  nor  did  its  execution  involve  any  moral 
turpitude.  It  is  one  which  must  be  treated  as  creating  no  legal  right 
to  the  proceeds  of  the  policy  beyond  the  sums  advanced  upon  its 
security;  and  the  courts  will,  therefore,  hold  the  recipient  of  the 
moneys  beyond  those  sums  to  account  to  the  representatives  of  the 
deceased.  It  was  lawful  for  the  association  to  advance  to  the  assured 


382  FORMATION    OF    CONTRACT. 

the  sums  payable  to  the  insurance  company  on  the  policy  as  they  be- 
came due.  It  was,  also,  lawful  for  the  assured  to  assign  the  policy 
as  security  for  their  payment.  The  assignment  was  only  invalid  as 
a  transfer  of  the  proceeds  of  the  policy  beyond  what  was  required  to 
refund  those  sums,  with  interest.  To  hold  it  valid  for  the  whole  pro- 
ceeds would  be  to  sanction  speculative  risks  on  human  life,  and  en- 
courage the  evils  for  which  wager  policies  are  condemned. 

The  decisions  of  the  New  York  Court  of  Appeals  are,  we  are 
aware,  opposed  to  this  view.  They  hold  that  a  valid  policy  of  insur- 
ance effected  by  a  person  upon  his  own  life,  is  assignable  like  an 
ordinary  chose  in  action,  and  that  the  assignee  is  entitled,  upon  the 
death  of  the  assured,  to  the  full  sum,  payable  without  regard  to  the 
consideration  given  by  him  for  the  assignment,  or  to  his  possession 
of  any  insurable  interest  in  the  life  of  the  assured.  St.  John  v. 
American  Mutual  Life  Insurance  Company,  13  N.  Y.  31 ;  Valton  v. 
National  Fund  Life  Assurance  Company,  20  Id.  32.  In  the  opinion 
in  the  first  case  the  court  cite  Ashley  v.  Ashley  (3  Simons,  149)  in 
support  of  its  conclusions;  and  it  must  be  admitted  that  they  are 
sustained  by  many  other  adjudications.  But  if  there  be  any  sound 
reason  for  holding  a  policy  invalid  when  taken  out  by  a  party  who  has 
no  interest  in  the  life  of  the  assured,  it  is  difficult  to  see  why  that 
reason  is  not  as  cogent  and  operative  against  a  party  taking  an  assign- 
ment of  a  policy  upon  the  life  of  a  person  in  which  he  has  no  interest. 
The  same  ground  which  invalidates  the  one  should  invalidate  the 
other; — so  far,  at  least,  as  to  restrict  the  right  of  the  assignee  to  the 
sums  actually  advanced  by  him.  In  the  conflict  of  decisions  on  this 
subject  we  are  free  to  follow  those  which  seem  more  fully  in  accord 
with  the  general  policy  of  the  law  against  speculative  contracts  upon 
human  life. 

In  this  conclusion  we  are  supported  by  the  decision  in  Cammack 
v.  Lewis,  15  Wall.  643.  There  a  policy  of  life  insurance  for  $3000, 
procured  by  a  debtor  at  the  suggestion  of  a  creditor  to  whom  he  owed 
$70,  was  assigned  to  the  latter  to  secure  the  debt,  upon  his  promise 
to  pay  the  premiums,  and,  in  case  of  the  death  of  the  assured,  one- 
third  of  the  proceeds  to  his  widow.  On  the  death  of  the  assured,  the 
assignee  collected  the  money  from  the  insurance  company  and  paid 
to  the  widow  $950  as  her  proportion  after  deducting  certain  payments 
made.  The  widow,  as  administratrix  of  the  deceased's  estate,  sub- 
sequently sued  for  the  balance  of  the  money  collected,  and  recovered 
judgment.  The  case  being  brought  to  this  court,  it  was  held  that 
the  transaction,  so  far  as  the  creditor  was  concerned,  for  the  excesg 
beyond  the  debt  owing  to  him,  was  a  wagering  policy,  and  that  the 
creditor,  in  equity  and  good  conscience,  should  hold  it  only  as  security 
for  what  the  debtor  owed  him  when  it  was  assigned,  and  for  such 
advances  as  he  might  have  afterwards  made  on  account  of  it;  and 


LEGALITY    OF   OBJECT.  383 

that  the  assignment  was  valid  only  to  that  extent.     This  decision  is 
in  harmony  with  the  views  expressed  in  this  opinion. 

The  judgment  of  the  court  below  will,  therefore,  be  reversed,  and 
the  cause  remanded  with  direction  to  enter  a  judgment  for  the  plain- 
tiff for  the  amount  collected  from  the  insurance  company,  with  inter- 
est, after  deducting  the  sum  already  paid  to  the  widow,  and  the 
several  sums  advanced  by  the  defendants;  and  it  is 

So  ordered. 

25  Cyc.  702  (27). 


(it.)  Contracts  illegal  at  common  law. 

In  general. 
MATERNE  v.  HORWITZ. 

101  NEW  YORK,  469.— 1886. 

Action  for  damages  for  refusal  to  accept  goods  tendered  under  con- 
tract of  sale.  Complaint  dismissed.  Plaintiff  appeals  from  judg- 
ment of  the  General  Term  of  New  York  City  Superior  Court  affirming 
judgment.  (Reported  18  J.  &  S.  41,  where  the  facts  appear.) 

Plaintiffs  sold  defendants  400  cases  of  "domestic  sardines,"  the 
boxes  to  have  "fancy  labels"  on  them.  Domestic  sardines  were  fish 
packed  in  Maine,  and  fancy  labels  were  decorated  labels  containing 
a  statement  in  substance  that  the  sardines  were  packed  in  France  in 
olive  oil  by  persons  named  on  the  label.  Imported  sardines  were 
worth  about  50  per  cent  more  than  domestic.  The  goods  tendered 
had  on  them  labels  as  described.  Plaintiffs  and  defendants  were 
wholesale  dealers. 

MILLER,  J.  It  must  be  assumed,  we  think,  that  the  defendants 
knew  when  the  agreement  was  made  that  they  intended  to  purchase 
sardines  of  the  kind  that  were  tendered  to  them,  and  that  the  plain- 
tiffs understood  that  the  defendants  knew  it.  It  is  also  inferable  that 
the  defendants  entered  into  the  agreement,  to  the  knowledge  of  the 
plaintiffs,  for  the  purpose  of  selling  the  goods  to  others  in  the  condi- 
tion in  which  they  were  when  delivered.  It  is  also  evident  that  the 
labels  were  used  to  deceive  the  consumers  and  not  the  contractors, 
and  to  obtain  higher  prices  for  the  sardines.  The  plaintiffs  procured 
and  furnished  the  deceptive  labels,  after  binding  themselves  by  con- 
tract to  do  so,  and  this  was  done  for  an  unlawful  purpose,  and  with 
a  view  of  furnishing  goods  for  the  market  in  a  condition  calculated 
to  deceive  the  consumers  who  might  purchase  them.  It  is,  therefore, 
apparent  that  it  was  part  of  the  contract  that  an  unlawful  object 
was  intended,  of  which  both  parties  were  cognizant,  and  that  it  was 
designed  by  them,  under  the  contract,  to  commit  a  fraud  and  thus 


384  FORMATION    OF    CONTRACT. 

promote  an  illegal  purpose  by  deceiving  other  parties.  In  such  a  case 
the  courts  will  not  aid  either  party  in  carrying  out  a  fraudulent 
purpose. 

To  carry  out  this  contract  would  be  contrary  to  public  policy,  and 
in  such  a  case,  as  we  have  seen,  the  court  will  not  aid  either  party. 

Under  the  Penal  Code  (§  438),  it  is  made  a  misdemeanor  to  sell 
or  offer  for  sale  any  package  falsely  marked,  labeled,  etc.,  as  to  the 
place  where  the  goods  were  manufactured,  or  the  quality  or  grade, 
etc.  The  contract  in  question  would  seem  to  be  covered  by  this  pro- 
vision of  the  Code,  but  as  the  Penal  Code  did  not  go  into  effect  until 
May  1,  1882,  and  this  contract  was  made  June  30,  1881,  the  section 
cited  has,  we  think,  no  bearing  on  the  question  presented. 

The  case  was  properly  disposed  of  upon  the  ground  first  stated, 
which  is  fully  considered  and  elaborated  in  the  opinion  of  the  Gen- 
eral Term,  Sedgwick,  J.,  in  which  we  concur. 

The  judgment  should  be  affirmed.     All  concur. 

Judgment  affirmed.1 

9  Cyc.  468  (52-58)  ;  469  (72-77)  ;  W.  P.  376  (5)  ;  419  (n)  ;  485  (42). 

i  Where  a  note  was  given  for  the  sale  of  "prolific  oats"  at  fifteen  dollars  a 
bushel,  the  payee  agreeing  to  sell  eighty  bushels  for  the  maker  the  next  year  at 
fifteen  dollars  a  bushel,  the  court  said:  "That  this  contract  is  void  as  being 
against  public  policy,  we  have  no  doubt.  Any  contract  that  binds  the  maker  to 
do  something  opposed  to  the  public  policy  of  the  State  or  nation,  or  that  con- 
flicts with  the  wants,  interests  or  prevailing  sentiment  of  the  people,  or  our 
obligations  to  the  world,  or  is  repugnant  to  the  morals  of  the  times,  is  void. 
Any  contract  which  has  for  its  object  the  practice  of  deception  upon  the  public, 
or  upon  any  party  in  interest  as  to  the  ownership  of  property,  the  nature  of  a 
transaction,  the  responsibility  assumed  by  an  obligation,  or  which  is  made  in 
order  to  consummate  a  fraud  upon  the  people  or  upon  third  persons,  is  void. 
Greenh.  Pub.  Pol.  136,  152.  This  contract  is  so  out  of  the  usual  course  of 
dealings  as  to  awaken  suspicion  of  its  fairness.  Ordinarily,  contracts  are 
made  upon  the  basis  of  what  is  believed  to  be  actual  values,  but  this  is  con- 
fessedly upon  the  basis  of  most  extravagant  and  unreal  values.  To  carry  out 
this  contract  eighty  bushels  of  grain  had  to  be  sold  to  some  person  on  or  be- 
fore September  1,  1888,  for  more  than  thirty  times  their  value.  This  could 
only  be  done  by  grossly  deceiving  the  purchaser  as  to  their  value,  or  repeat- 
ing the  scheme  upon  which  this  contract  was  made,  or  one  similar.  That  such 
a  scheme  could  not  be  repeated  year  after  year  is  evident,  so  that  in  the  end 
some  person  must  be  deceived  into  paying  many  times  the  value  of  the  oats. 
If  it  was  not  intended  upon  the  part  of  the  company  to  carry  out  the  contract, 
then  the  fraud  was  consummated  the  sooner.  View  the  transaction  as  you 
may,  and  it  discloses  a  cunningly-devised  plan  to  cheat  and  defraud.  'When- 
ever any  contract  conflicts  with  the  morals  of  the  time  and  contravenes  any 
established  interests  of  society,  it  is  void  as  being  against  public  policy.' 
Story,  Confl.  Laws,  sec.  546.  Surely  a  contract  that  cannot  be  performed  with- 
out deception  and  fraud  conflicts  with  the  morals  of  the  time,  and  contravenes 
the  established  interest  of  society.  There  was  no  error  in  instructing  the 
jury  that  this  contract  is  fraudulent  and  void  as  between  the  original  parties 
to  it.  In  this  connection,  see  McNamara  v.  Gargett,  68  Mich.  454;  36  N.  W. 
Rep.  218,  wherein  tke  Supreme  Court  of  Michigan  held  a  similar  contract  void 


LEGALITY    OF    OBJECT.  385 

JOHNSTON  v.  FARGO. 

184  NEW  YORK,  379.— 1906. 

GRAY,  J.  The  plaintiff,  while  in  the  employment  of  the  American 
Express  Company,  the  defendant,  sustained  personal  injuries,  for 
which  he  has  recovered  this  judgment  in  the  Municipal  Court  of  the 
city  of  Syracuse,  which  has  been  affirmed  by  the  County  Court  of 
Onondaga  county  and  by  the  Appellate  Division  of  the  Supreme  Court 
in  the  Fourth  Department.  The  latter  court  was  divided  in  opinion 
and  has  permitted  the  defendant  to  further  appeal  to  this  court,  upon 
the  ground  that  there  was  a  question  of  law  in  the  case  which  ought 
to  be  reviewed  by  us.  The  injuries  were  occasioned  by  the  plaintiff's 
falling  with  an  elevator,  or  lift,  in  the  barn  of  the  express  company, 
while  it  was  being  used  for  carrying  down  some  vehicles,  and  the 
complaint  charges  that  it  was  in  a  defective  condition  and  that  the  oc- 
curence  was  due  to  the  fault  or  negligence  of  the  defendant.  The 
evidence  upon  the  trial  was  such  as  to  raise  questions  of  fact  as  to 
the  negligence  of  the  defendant  and  as  to  the  contributory  negligence 
of  the  plaintiff,  and  those  questions  were  properly  submitted  by  the 
trial  court  for  the  determination  of  the  jury.  They  demand  no  fur- 
ther consideration  by  us.  The  one  question  for  discussion  upon  this 
appeal  is  the  sufficiency  of  the  defense  made  by  the  company  upon 
an  agreement  which  the  plaintiff,  upon  entering  the  defendant's  em- 
ployment, executed  and  delivered  to  it.  It  was  in  these  words:  "I 
do  further  agree,  in  consideration  of  my  employment  by  said  Amer- 
ican Express  Company,  that  I  will  assume  all  risks  of  accident  or 
injury  which  I  shall  meet  with  or  sustain  in  the  course  of  such  em- 
ployment, whether  occasioned  by  the  negligence  of  said  company,  or 
any  of  its  members,  officers,  agents,  or  employes,  or  otherwise,  and 
that,  in  case  I  shall  at  any  time  suffer  any  such  injury,  I  will  at  once 
execute  and  deliver  to  said  company  a  good  and  sufficient  release, 
under  my  hand  and  seal,  of  all  claims,  demands,  and  causes  of  action 
arising  out  of  such  injury,  or  connected  therewith,  or  resulting  there- 
from ;  and  I  hereby  bind  myself,  my  heirs,  executors,  and  administra- 
tors, with  the  payment  to  said  express  company,  on  demand,  of  any 
sum  which  it  may  be  compelled  to  pay  in  consequence  of  any  such 
claim,  or  in  defending  the  same,  including  all  counsel  fees  and  ex- 
penses of  litigation  connected  therewith."  In  submitting  the  case 
to  the  jury,  the  trial  judge  charged  as  follows  with  respect  to  this 
defense:  "There  is  a  clause  in  the  contract  which  provides  that 
the  plaintiff  shall  release  the  defendant  from  any  injuries  which  he 

as  being  against  public  policy.  True,  in  that  case  the  contract  is  said  to  be  a 
gambling  contract,  but  it  is  declared  to  be  against  public  policy  on  other 
grounds." — Given,  J.,  in  Merrill  v.  Packer,  80  Iowa,  542. 


386  FORMATION    OF    CONTRACT. 

might  suffer  by  reason  of  the  negligence  of  the  defendant.  I  shall 
hold  as  matter  of  law  that  that  clause  in  that  contract  is  void  as  being 
without  consideration  and  as  against  public  policy."  At  the  Appel- 
late Division  the  judgment  was  upheld  on  this  point  upon  the  ground 
that  the  agreement  was  contrary  to  public  policy,  and  therefore  in- 
valid, and  Mr.  Justice  Hiscock,  who  delivered  the  opinion  of  the 
court,  has  presented  the  reasoning  in  support  of  that  view  very  fully 
and  ably. 

The  question  is  one  upon  which  this  court  has  not  pronounced  itself 
and  it  is  of  considerable  importance,  touching  as  it  does  the  principle 
of  freedom  of  contract.  In  the  case  of  Purdy.v.  K.,  W.  &  0.  R.  R. 
Co.,  125  N.  Y.  209,  26  N.  E.  255,  21  Am.  St.  Rep.  736,  such  a  con- 
tract to  release  the  employer  from  liability  for  injury  through  negli- 
gence was  involved;  but  it  was  held  to  have  been  void  for  being 
without  the  support  of  any  consideration.  It  was  said  that  no  intima- 
tion was  intended  that  it  would  have  been  valid  if  there  had  been  a 
consideration  for  it,  and  that  "it  might  even  then  be  urged  that  public 
policy  forbids  the  exaction  of  such  a  contract  from  its  employes  by 
railroad  and  other  corporations,  and  upon  that  question  we  desire 
to  express  no  opinion  at  the  present  time."  In  Kenney  v.  N.  Y.  C. 
&  H.  R,  R.  R.  Co.,  125  N.  Y.  422,  26  N.  E.  626,  the  contract  for 
exemption  from  liability  was  between  the  defendant  and  the  plain- 
tiff's employer,  an  express  company,  under  which  the  former  sought 
to  defeat  the  plaintiff's  action.  This  question  was  not  passed  upon ; 
nor  was  it  in  the  case  of  Dowd  v.  1ST.  Y.,  Ont.  &  W.  Ry.  Co.,  170  N. 
Y.  459,  63  X.  E.  541,  which  involved  the  proposition  of  the  implied 
assumption  by  the  employe  of  the  risks  incident  to  the  employment. 
The  question  of  the  validity  of  such  a  contract  between  an  employer 
and  a  person  in  his  employment,  as  affected  by  reasons  of  public  policy, 
it  must  be  conceded,  is  a  debatable  one.  In  support  of  the  right  to 
make  the  agreement  we  have  respectable  authority  in  decisions  of  the 
courts  of  England  and  of  the  State  of  Georgia.  Griffiths  v.  Earl  of 
Dudley,  L.  R.  9  Q.  B.  Div.  357 ;  Western,  etc.,  R.  R.  Co.  v.  Bishop,  50 
Ga.  465;  Same  v.  Strong,  52  Ga.  461.  The  great  weight  of  authority 
in  decisions  of  the  courts  of  the  various  States,  however,  sustains  the 
view  that  such  an  agreement  is  contrary  to  public  policy.  Railway 
Co.  v.  Spangler,  44  Ohio  St.  471,  8  N.  E.  467,  58  Am.  Rep.  833; 
Railroad  Co.  v.  Peavey,  29  Kan.  169,  44  Am.  Rep.  630;  Railroad 
Co.  v.  Jones,  2  Head  (Tenn.)  517;  Willis  v.  Railroad  Co.,  62  Me. 
488;  Railway  Co.  v.  Eubanks,  48  Ark.  466,  3  S.  W.  808,  3  Am.  St. 
Rep.  245;  Railroad  Co.  v.  Jones,  92  Ala.  218,  9  South.  276;  Maney 
v.  Railroad  Co.,  49  111.  App.  105 ;  M.  N".,  etc.,  Co.  v.  Eifert,  15  Ky. 
Law  Rep.  575;  Blanton  v.  Dold,  109  Mo.  64,  18  S.  W.  1149;  John- 
son's Adm'x  v.  Railroad  Co.,  86  Va.  975,  11  S.  E.  829.  In  the 
Supreme  Court  of  this  State  we  find,  in  addition  to  what  has  been 


LEGALITY    OF   OBJECT.  387 

held  below  in  this  case,  a  similar  view  taken  by  the  General  Term 
of  the  Second  Department  in  Simpson  v.  N.  Y.  Rubber  Co.,  80  Hun, 
415,  30  N.  Y.  Supp.  339. 

The  preponderance  of  authority  adverse  to  the  validity  of  such 
contracts  is  such  as  greatly  and  properly  influences  our  view  of  the 
question.  In  Griffiths  v.  Earl  of  Dudley,  supra,  where  such  an  agree- 
ment was  held  to  be  quite  consistent  with  public  policy,  the  view  of 
the  English  court,  as  expressed  by  Justice  Field,  was  that  "the  inter- 
est of  the  employed  only  would  be  affected,"  and  not  that  of  "all 
society,"  and  "that  workmen,  as  a  rule,  were  perfectly  competent  to 
make  reasonable  bargains  for  themselves."  It  is  to  be  observed,  how- 
ever, with  respect  to  the  situation  in  England,  that  subsequently,  in 
1897,  an  act  of  Parliament  was  passed,  entitled  the  "Workingmen's 
Compensation  Act"  which  in  effect  declares  the  public  policy  of  the 
State.  By  that  act,  in  reality,  though  not  in  form,  the  right  of  the 
workingman  to  contract  away  his  right  to  recover  compensation  from 
his  employer  is  nullified,  inasmuch  as  such  a  contract  is  only  valid 
when,  as  between  employer  and  employed,  there  exists  a  general 
scheme  for  compensation  which  secures  to  the  workingman  benefits 
as  great  as  those  he  would  derive  from  a  proceeding  under  the  com- 
pensation acts. 

The  attitude  of  this  court,  with  respect  to  the  freedom  to  contract 
for  immunity  from  the  consequences  of  negligence  has  been  from  an 
early  day  very  firm  where  the  contracts  of  common  carriers  are  con- 
cerned, as  may  be  seen  by  reference  to  Kenney  v.  N".  Y.  C.  &  H.  R. 
R.  R.  Co.,  supra,  where  the  cases  establishing  the  rule  were  reviewed; 
but  to  extend  the  application  of  the  doctrine  in  such  cases  to  the  rela- 
tions of  the  employer  and  the  employed  involves  considerations  so 
closely  touching  the  general  welfare  of  the  community  that  the  State 
must  be  necessarily  deeply  concerned.  This  court  has  not  been  in 
agreement  with  the  Supreme  Court  of  the  United  States  upon  the 
right  of  common  carriers  to  contract  against  their  negligence;  but 
recently,  in  Baltimore  &  Ohio  So.  Ry.  Co.  v.  Yoight,  176  U.  S.  498, 
20  Sup.  Ct.  385,  44  L.  Ed.  560,  the  doctrine  of  New  York  Central 
R.  R.  Co.  v.  Lockwood,  17  Wall.  357,  21  L.  Ed.  627,  seems  to  have 
been  somewhat  departed  from.  As  that  decision  touches  in  a  degree 
upon  the  question  we  are  considering,  I  shall  briefly  refer  to  it.  In 
that  case  Voight  was  an  express  messenger,  and  was  injured  as  the 
consequence  of  a  collision  upon  the  railroad.  The  company  showed, 
in  defense  of  a  claim  for  compensation,  a  contract  made  between  it 
and  the  express  company,  relating  to  the  latter's  business,  which 
agreed  to  protect  it  from  liability  to  messengers  by  reason  of  accidents 
occurring  through  negligence,  and  a  further  contract  between  Voight 
and  the  express  company,  by  which  he  assumed  the  risk  of  all  acci- 
dents from  negligence,  sustained  by  him  in  the  course  of  his  employ- 


388  FORMATION   OF    CONTRACT. 

ment,  and  agreed  to  hold  his  employer  harmless  from  any  claim  for 
personal  injuries.  It  was  held  that  the  contract  did  not  contravene 
public  policy.  Though  the  distinction  was  made  that  Voight  was  not 
a  passenger,  within  the  meaning  of  the  Lockwood  Case,  supra,  and 
that  his  contract  exonerated  the  railroad  company  from  liability  to 
him,  it  might,  perhaps,  be  said  that  the  decision  affords  some  sup- 
port, in  doctrine,  to  the  appellant's  argument. 

Contracts  are  illegal  at  common  law,  as  being  against  public  policy, 
when  they  are  such  as  to  injuriously  affect  or  subvert  the  public 
interests.  1  Story,  Eq.  Juris.  §  260n;  Chesterfield  v.  Janssen,  2 
Vesey,  Sr.  125,  156.  If  it  were  true  that  the  interest  of  the  employed 
only  would  be  affected  by  such  contracts  as  the  present  one,  as  it  was 
held  by  the  English  court,  in  Griffiths  v.  Earl  of  Dudley,  supra,  it 
would  be  difficult  to  defend,  upon  sound  reasoning,  the  denial  of  the 
right  to  enter  into  them;  but  that  is  not  quite  true.  The  theory  of 
their  invalidity  is  in  the  importance  to  the  State  that  there  shall  be 
no  relaxation  of  the  rule  of  law  which  imposes  the  duty  of  care  on 
the  part  of  the  employer  towards  the  employed.  The  State  is  inter- 
ested in  the  conservation  of  the  lives  and  of  the  healthful  vigor  of 
its  citizens,  and  if  employers  could  contract  away  their  responsibility 
at  common  law,  it  would  tend  to  encourage  on  their  part  laxity  of 
conduct  in,  if  not  an  indifference  to,  the  maintenance  of  proper  and 
reasonable  safeguards  to  human  life  and  limb.  The  rule  of  responsi- 
bility at  common  law  is  as  just  as  it  is  strict,  and  the  interest  of  the 
State  in  its  maintenance  must  be  assumed ;  for  its  policy  has,  in  recent 
years,  been  evidenced  in  the  progressive  enactment  of  many  laws 
which  regulate  the  employment  of  children  and  the  hours  of  work, 
and  impose  strict  conditions  with  reference  to  the  safety  and  health- 
fulness  of  the  surroundings  of  the  employed  in  the  factory  and  in 
the  shop.  The  employer  and  the  employed,  in  theory,  deal  upon 
equal  terms ;  but  practically  that  is  not  always  the  case.  The  artisan 
or  workman  may  be  driven  by  need,  or  he  may  be  ignorant,  or  of 
improvident  character.  It  is  therefore  for  the  interest  of  the  com- 
munity that  there  should  be  no  encouragement  for  any  relaxation  on 
the  employer's  part  in  his  duty  of  reasonable  care  for  the  safety  of 
his  employe.  That  freedom  of  contract  may  be  said  to  be  affected 
by  the  denial  of  the  right  to  make  such  agreements  is  met  by  the 
answer  that  the  restriction  is  but  a  salutary  one,  which  organized 
society  exacts  for  the  surer  protection  of  its  members.  While  it  is 
true  that  the  individual  may  be  the  one  who  directly  is  interested 
in  the  making  of  such  a  contract,  indirectly  the  State,  being  con- 
cerned for  the  welfare  of  all  its  members,  is  interested  in  the  mainte- 
nance of  the  rule  of  liability  and  in  its  enforcement  by  the  courts. 

To  a  certain  extent,  the  internal  activities  of  organized  society  are 
subject  to  the  restraining  action  of  the  State.  This  is  evidenced  by 


LEGALITY    OF   OBJECT.  389 

the  many  laws  upon  the  statute  book,  in  recent  years,  which  have  been 
passed  for  the  purpose  of  prohibiting,  restricting,  of  regulating  the 
conduct  of  a  private  business,  either  because  regarded  as  hurtful  to 
the  health  or  welfare  of  the  community,  or  because  deemed  from  its 
nature  or  magnitude  affected  with  a  public  interest.  It  has  been 
observed  that  it  is  still  the  business  of  the  State,  in  modern  times, 
to  defend  individuals  against  one  another,  and,  though  the  proposi- 
tion is  a  broad  one,  when  considered  with  reference  to  penal  legis- 
lation, and  all  legislation  intended  for  the  promotion  of  the  health, 
welfare,  and  safety  of  the  community,  it  is  not  without  truth.  It  is 
evident,  from  the  course  of  legislation  framed  for  the  purpose  of 
affording  greater  protection  to  the  class  of  the  employed,  that  the 
people  of  this  State  have  compelled  the  employer  to  do  many  things 
which  at  common  law  he  was  not  under  obligation  to  do.  Such  legis- 
lation may  be  regarded  as  supplementing  the  common-law  rule  of  the 
employer's  responsibility  and  is  illustrative  of  the  policy  of  the  State. 
Therefore  it  is,  when  an  agreement  is  sought  to  be  enforced  which 
suspends  the  operation  of  the  common-law  rule  of  liability  and  defeats 
the  spirit  of  existing  laws  of  the  State,  because  tending  to  destroy 
the  motive  of  the  employer  to  be  vigilant  in  the  performance  of  his 
duty  towards  his  employes,  that  it  is  the  duty  of  the  court  to  declare 
it  to  be  invalid  and  to  refuse  its  enforcement. 

I  think  that  the  judgment  below  was  correct,  and  should  be  af- 
firmed, with  costs. 

26  Cyc.  1094-1096   (9-13)  ;  26  H.  L.  R.  742. 


Agreements  which  injure  the  State  in  its  relations  with  other  States. 

GEAVES  v.  JOHNSON. 

153  MASSACHUSETTS,  211.— 1892. 

[Reported  herein  at  p.  435.] 


Agreements  which  tend  to  injure  the  public  service. 

TRIST  v.  CHILD. 
21  WALLACE  (U.  S.),  441.— 1874. 

Bill  to  enjoin  defendant  from  withdrawing  the  sum  of  $14,559 
from  the  United  States  Treasury,  and  for  a  decree  commanding  him 
to  pay  complainant  $5000,  and  for  general  relief.  Defense,  ille- 
gality. Decree  for  complainant.  Defendant  appeals. 

Defendant,  having  a  claim  against  the  United  States  for  services, 
made  an  agreement  with  complainant's  father  (to  whose  rights  as 


390  FORMATION    OF    CONTRACT. 

partner  and  personal  representative  complainant  succeeded)  that  he 
should  take  charge  of  the  claim  and  prosecute  it  before  Congress, 
and  receive  as  compensation  25  per  cent  of  whatever  sum  Congress 
might  appropriate.  The  father,  and  after  his  death,  the  complainant, 
prosecuted  the  claim  with  the  result  that  Congress  appropriated  the 
sum  of  $14,559  to  pay  it.  Defendant  refused  to  pay  the  25  per  cent 
stipulated  and  complainant  filed  this  bill  in  the  Supreme  Court  of 
the  District  of  Columbia.  From  the  evidence  it  appeared  that  per- 
sonal solicitations  were  used  to  carry  the  bill,  but  there  was  no  evi- 
dence that  bribes  were  offered  or  contemplated. 

MR.  JUSTICE  SWAYNE.  The  court  below  decreed  to  the  appellee 
the  amount  of  his  claim,  and  enjoined  Trist  from  receiving  from  the 
treasury  "any  of  the  money  appropriated  to  him"  by  Congress,  until 
he  should  have  paid  the  demand  of  the  appellee. 

This  decree,  as  regards  that  portion  of  the  fund  not  claimed  by  the 
appellee,  is  an  anomaly.  Why  the  claim  should  affect  that  part  of 
the  fund  to  which  it  had  no  relation,  is  not  easy  to  be  imagined. 
This  feature  of  the  decree  was  doubtless  the  result  of  oversight  and 
inadvertence.  The  bill  proceeds  upon  the  grounds  of  the  validity  of 
the  original  contract,  and  a  consequent  lien  in  favor  of  the  complain- 
ant upon  the  fund  appropriated.  We  shall  examine  the  latter  ground 
first.  Was  there,  in  any  view  of  the  case,  a  lien? 

It  is  well  settled  that  an  order  to  pay  a  debt  out  of  a  particular 
fund  belonging  to  the  debtor  gives  to  the  creditor  a  specific  equitable 
lien  upon  the  fund,  and  binds  it  in  the  hands  of  the  drawee.  Yeates 
v.  Groves,  1  Vesey,  Jr.  280 ;  Lett  v.  Morris,  4  Simons,  607 ;  Bradley 
v.  Root,  5  Paige,  632 ;  2  Story's  Equity,  §  1047.  A  part  of  the  par- 
ticular fund  may  be  assigned  by  an  order,  and  the  payee  may  enforce 
payment  of  the  amount  against  the  drawee.  Field  v.  The  Mayor, 
2  Selden,  179.  But  a  mere  agreement  to  pay  out  of  such  fund  is 
not  sufficient.  Something  more  is  necessary.  •  There  must  be  an 
appropriation  of  the  fund  pro  tanto,  either  by  giving  an  order  or  by 
transferring  it  otherwise  in  such  a  manner  that  the  holder  is  author- 
ized to  pay  the  amount  directly  to  the  creditor  without  the  further 
intervention  of  the  debtor.  Wright  v.  Ellison,  1  Wallace,  16;  Hoyt 
v.  Story,  3  Barbour's  Supreme  Court,  264;  Malcolm  v.  Scott,  3  Hare, 
39;  Rogers  v.  Hosack,  18  Wendell,  319. 

Viewing  the  subject  in  the  light  of  these  authorities,  we  are  brought 
to  the  conclusion  that  the  appellee  had  no  lien  upon  the  fund  here 
in  question.  The  understanding  between  the  elder  Child  and  Trist 
was  a  personal  agreement.  It  could  in  nowise  produce  the  effect 
insisted  upon.  For  a  breach  of  the  agreement,  the  remedy  was  at 
law,  not  in  equity,  and  the  defendant  had  a  constitutional  right  to 
a  trial  by  jury.  Wright  v.  Ellison,  1  Wallace,  16.  If  there  was  no 
lien,  there  was  no  jurisdiction  in  equity. 


LEGALITY    OF    OBJECT. 

There  is  another  consideration  fatally  adverse  to  the  claim  of  a 
lien.  The  first  section  of  the  act  of  Congress  of  February  26,  1853, 
declares  that  all  transfers  of  any  part  of  any  claim  against  the  United 
States,  "or  of  any  interest  therein,  whether  absolute  or  conditional, 
shall  be  absolutely  null  and  void,  unless  executed  in  the  presence  of 
at  least  two  attesting  witnesses  after  the  allowance  of  such  claim,  the 
ascertainment  of  the  amount  due,  and  the  issuing  of  a  warrant  there- 
for." That  the  claim  set  up  in  the  bill  to  a  specific  part  of  the 
money  appropriated  is  within  this  statute  is  too  clear  to  admit  of 
doubt.  It  would  be  a  waste  of  time  to  discuss  the  subject. 

But  there  is  an  objection  of  still  greater  gravity  to  the  appellee's 
case. 

Was  the  contract  a  valid  one?  It  was,  on  the  part  of  Child,  to 
procure  by  lobby  service,  if  possible,  the  passage  of  a  bill  providing 
for  the  payment  of  the  claim.  The  aid  asked  by  the  younger  Child 
of  Trist,  which  indicated  what  he  considered  needful,  and  doubtless 
proposed  to  do  and  did  do  himself,  is  thus  vividly  pictured  in  his 
letter  to  Trist  of  the  20th  February,  1871.  After  giving  the  names 
of  several  members  of  Congress,  from  whom  he  had  received  favorable 
assurances,  he  proceeds:  "Please  write  to  your  friends  to  write  to 
any  member  of  Congress.  Every  vote  tells,  and  a  simple  request  may 
secure  a  vote,  he  not  caring  anything  about  it.  Set  every  man  you 
know  at  work.  Even  if  he  knows  a  page,  for  a  page  often  gets  a 
vote." 

In  the  Eoman  law  it  was  declared  that  "a  promise  made  to  effect 
a  base  purpose,  as  to  commit  homicide  or  sacrilege,  is  not  binding." 
Institutes  of  Justinian,  lib.  3,  tit.  19,  par.  24.  In  our  jurisprudence 
a  contract  may  be  illegal  and  void  because  it  is  contrary  to  a  consti- 
tution or  statute,  or  inconsistent  with  sound  policy  and  good  morals. 
Lord  Mansfield  said  (Jones  v.  Eandall,  1  Cowper,  39)  :  "Many  con- 
tracts which  are  not  against  morality,  are  still  void  as  being  against 
the  maxims  of  sound  policy." 

It  is  a  rule  of  the  common  law  of  universal  application,  that  where 
a  contract  express  or  implied  is  tainted  with  either  of  the  vices  last 
named,  as  to  the  consideration  or  the  thing  to  be  done,  no  alleged 
right  founded  upon  it  can  be  enforced  in  a  court  of  justice. 

Before  considering  the  contract  here  in  question,  it  may  be  well, 
by  way  of  illustration,  to  advert  to  some  of  the  cases  presenting  the 
subject  in  other  phases,  in  which  the  principle  has  been  adversely 
applied. 

Within  the  condemned  category  are: 

An  agreement — to  pay  for  supporting  for  election  a  candidate  for 
sheriff,  Swayze  v.  Hull,  3  Halsted,  54;  to  pay  for  resigning  a  public 
position  to  make  room  for  another,  Eddy  v.  Capron,  4  Rhode  Island, 
395;  Parsons  v.  Thompson,  1  H.  Blackstone,  322;  to  pay  for  not 


692  FORMATION   OF   CONTRACT. 

bidding  at  a  sheriff's  sale  of  real  property,  Jones  v.  Caswell,  3  John- 
son's Cases,  29 ;  to  pay  for  not  bidding  for  articles  to  be  sold  by  the 
government  at  auction,  Doolin  v.  Ward,  6  Johnson,  194;  to  pay  for 
not  bidding  for  a  contract  to  carry  the  mail  on  a  specified  route, 
Gulick  v.  Bailey,  5  Halsted,  87;  to  pay  a  person  for  his  aid  and 
influence  in  procuring  an  office,  and  for  not  being  a  candidate  him- 
self, Gray  v.  Hook,  4  Comstock,  449 ;  to  pay  for  procuring  a  contract 
from  the  government,  Tool  Company  v.  Norris,  2  Wallace,  45;  to 
pay  for  procuring  signatures  to  a  petition  to  the  governor  for  a  par- 
don, Hatzfield  v.  Gulden,  7  Watts,  152;  to  sell  land  to  a  particular 
person  when  the  surrogate's  order  to  sell  should  have  been  obtained, 
Overseers  of  Bridgewater  v.  Overseers  of  Brookfield,  3  Cowen,  299; 
to  pay  for  suppressing  evidence  and  compounding  a  felony,  Collins 
v.  Blantern,  2  Wilson,  347;  to  convey  and  assign  a  part  of  what 
should  come  from  an  ancestor  by  descent,  devise,  or  distribution, 
Boynton  v.  Hubbard,  7  Massachusetts,  112;  to  pay  for  promoting  a 
marriage,  Scribblehill  v.  Brett,  4  Brown's  Parliamentary  Cases,  144; 
Arundel  v.  Trevillian,  1  Chancery  Eeports,  87;  to  influence  the  dis- 
position of  property  by  will  in  a  particular  way,  Debenham  v.  Ox,  1 
Vesey,  Sr.  276 ;  see  also  Addison  on  Contracts,  91 ;  1  Story's  Equity, 
ch.  7;  Collins  v.  Blantern,  1  Smith's  Leading  Cases,  676,  American 
note. 

The  question  now  before  us  has  been  decided  in  four  American  cases. 
They  were  all  ably  considered,  and  in  all  of  them  the  contract  was 
held  to  be  against  public  policy,  and  void.  Clippinger  v.  Hepbaugh, 
5  Watts  &  Sergeant,  315;  Harris  v.  Eoof's  Executor,  10  Barbour's 
Supreme  Court,  489;  Eose  &  Hawley  v.  Truax,  21  Id.  361;  Marshall 
v.  Baltimore  and  Ohio  Eailroad  Company,  16  Howard,  314.  We 
entertain  no  doubt  that  in  such  cases,  as  under  all  other  circumstances, 
an  agreement  express  or  implied  for  purely  professional  services  is 
valid.  Within  this  category  are  included,  drafting  the  petition  to 
set  forth  the  claim,  attending  to  the  taking  of  testimony,  collecting 
facts,  preparing  arguments,  and  submitting  them,  orally  or  in  writ- 
ing, to  a  committee  or  other  proper  authority,  and  other  services  of 
like  character.  All  these  things  are  intended  to  reach  only  the  reason 
of  those  sought  to  be  influenced.  They  rest  on  the  same  principle 
of  ethics  as  professional  services  rendered  in  a  court  of  justice,  and 
are  no  more  exceptionable.  But  such  services  are  separated  by  a 
broad  line  of  demarcation  from  personal  solicitation,  and  the  other 
means  and  appliances  which  the  correspondence  shows  were  resorted  to 
in  this  case.  There  is  no  reason  to  believe  that  they  involved  any- 
thing corrupt  or  different  from  what  is  usually  practiced  by  all  paid 
lobbyists  in  the  prosecution  of  their  business. 

The  foundation  of  a  republic  is  the  virtue  of  its  citizens.  They 
are  at  once  sovereigns  and  subjects.  As  the  foundation  is  under- 


LEGALITY    OF    OBJECT.  393 

mined,  the  structure  is  weakened.  When  it  is  destroyed,  the  fabric 
must  fall.  Such  is  the  voice  of  universal  history.  1  Montesquieu, 
Spirit  of  Laws,  17.  The  theory  of  our  government  is,  that  all  public 
stations  are  trusts,  and  that  those  clothed  with  them  are  to  be  ani- 
mated in  the  discharge  of  their  duties  solely  by  considerations  of  right, 
justice,  and  the  public  good.  They  are  never  to  descend  to  a  lower 
plane.  But  there  is  a  correlative  duty  resting  upon  the  citizen.  In 
his  intercourse  with  those  in  authority,  whether  executive  or  legis- 
lative, touching  the  performance  of  their  functions,  he  is  bound  to 
exhibit  truth,  frankness,  and  integrity.  Any  departure  from  the  line 
of  rectitude  in  such  cases  is  not  only  bad  in  morals,  but  involves  a 
public  wrong.  No  people  can  have  any  higher  public  interest,  except 
the  preservation  of  their  liberties,  than  integrity  in  the  administra- 
tion of  their  government  in  all  its  departments. 

The  agreement  in  the  present  case  was  for  the  sale  of  the  influence 
and  exertions  of  the  lobby  agent  to  bring  about  the  passage  of  a  law 
for  the  payment  of  a  private  claim,  without  reference  to  its  merits, 
by  means  which,  if  not  corrupt,  were  illegitimate,  and  considered  in 
connection  with  the  pecuniary  interest  of  the  agent  at  stake,  contrary 
to  the  plainest  principles  of  public  policy.  No  one  has  a  right,  in 
such  circumstances,  to  put  himself  in  a  position  of  temptation  to  do 
what  is  regarded  as  so  pernicious  in  its  character.  The  law  forbids 
the  inchoate  step,  and  puts  the  seal  of  its  reprobation  upon  the  under- 
taking. 

If  any  of  the  great  corporations  of  the  country  were  to  hire  ad- 
venturers who  make  market  of  themselves  in  this  way,  to  procure 
the  passage  of  a  general  law  with  a  view  to  the  promotion  of  their 
private  interests,  the  moral  sense  of  every  right-minded  man  would 
instinctively  denounce  the  employer  and  employed  as  steeped  in  cor- 
ruption, and  the  employment  as  infamous. 

If  the  instances  were  numerous,  open,  and  tolerated,  they  would 
be  regarded  as  measuring  the  decay  of  the  public  morals  and  the 
degeneracy  of  the  times.  No  prophetic  spirit  would  be  needed  to 
foretell  the  consequences  near  at  hand.  The  same  thing  in  lesser 
legislation,  if  not  so  prolific  of  alarming  evils,  is  not  less  vicious  in 
itself,  nor  less  to  be  condemned.  The  vital  principle  of  both  is  the 
same.  The  evils  of  the  latter  are  of  sufficient  magnitude  to  invite 
the  most  serious  consideration.  The  prohibition  of  the  law  rests  upon 
a  solid  foundation.  A  private  bill  is  apt  to  attract  little  attention. 
It  involves  no  great  public  interest,  and  usually  fails  to  excite  much 
discussion.  Not  unfrequently  the  facts  are  whispered  to  those  whose 
duty  it  is  to  investigate,  vouched  for  by  them,  and  the  passage  of 
the  measure  is  thus  secured.  If  the  agent  is  truthful,  and  conceals 
nothing,  all  is  well.  If  he  uses  nefarious  means  with  success,  the 
spring-head  and  the  stream  of  legislation  are  polluted.  To  legalize 


394  FORMATION  OF  CONTRACT. 

the  traffic  of  such  service,  would  open  a  door  at  which  fraud  and  false- 
hood would  not  fail  to  enter  and  make  themselves  felt  at  every  acces- 
sible point.  It  would  invite  their  presence  and  offer  them  a  premium. 
If  the  tempted  agent  be  corrupt  himself,  and  disposed  to  corrupt 
others,  the  transition  requires  but  a  single  step.  He  has  the  means 
in  his  hands,  with  every  facility  and  a  strong  incentive  to  use  them. 
The  widespread  suspicion  which  prevails,  and  charges  openly  made 
and  hardly  denied,  lead  to  the  conclusion  that  such  events  are  not  of 
rare  occurrence.  Where  the  avarice  of  the  agent  is  inflamed  by  the 
hope  of  a  reward  contingent  upon  success,  and  to  be  graduated  by  a 
percentage  upon  the  amount  appropriated,  the  danger  of  tampering 
in  its  worst  form  is  greatly  increased. 

It  is  by  reason  of  these  things  that  the  law  is  as  it  is  upon  the 
subject.  It  will  not  allow  either  party  to  be  led  into  temptation 
where  the  thing  to  be  guarded  against  is  so  deleterious  to  private 
morals  and  so  injurious  to  the  public  welfare.  In  expressing  these 
views,  we  follow  the  lead  of  reason  and  authority. 

We  are  aware  of  no  case  in  English  or  American  jurisprudence  like 
the  one  here  under  consideration,  where  the  agreement  has  not  been 
adjudged  to  be  illegal  and  void. 

We  have  said  that  for  professional  services  in  this  connection  a 
just  compensation  may  be  recovered.  But  where  they  are  blended 
and  confused  with  those  which  are  forbidden,  the  whole  is  a  unit 
and  indivisible.  That  which  is  bad  destroys  that  which  is  good,  and 
they  perish  together.  Services  of  the  latter  character,  gratuitously 
rendered,  are  not  unlawful.  The  absence  of  motive  to  wrong  is  the 
foundation  of  the  sanction.  The  tendency  to  mischief,  if  not  want- 
ing., is  greatly  lessened.  The  taint  lies  in  the  stipulation  for  pay. 
Where  that  exists,  it  affects  fatally,  in  all  its  parts,  the  entire  body 
of  the  contract.  In  all  such  cases,  potior  conditio  defendentis.  Where 
there  is  turpitude,  the  law  will  help  neither  party. 

The  elder  agent  in  this  case  is  represented  to  have  been  a  lawyer 
of  ability  and  high  character.  The  appellee  is  said  to  be  equally 
worthy.  This  can  make  no  difference  as  to  the  legal  principles  we 
have  considered,  nor  in  their  application  to  the  case  in  hand.  The 
law  is  no  respecter  of  persons. 

Decree  reversed,  and  the  case  remanded,  with  directions  to 

Dismiss  the  bill.1 

9  Cyc.  486-489  (56-63)  ;  30  L.  R.  A.  737;  W.  P.  435   (93)  ;  436  (i). 

i  "There  is  no  real  difference  in  principle  between  agreements  to  procure 
favors  from  legislative  bodies  and  agreements  to  procure  favors  in 
the  shape  of  contracts  from  the  heads  of  departments.  The  intro- 
duction of  improper  elements  to  control  the  action  of  both,  is  the  direct  and 
inevitable  result  of  all  such  arrangements." — Mr.  Justice  Field,  in  Tool  Co.  v. 
Norria,  2  Wall.  (U.  S.)  45,  55.  Followed  in  Meguire  v.  Corwine,  101  U.  S. 


LEGALITY   OF  OBJECT.  395 

SOUTHARD  v.  BOYD. 
51  NEW  YORK,  177.— 1872. 

Action  to  recover  commissions  earned  by  plaintiffs  as  ship  brokers 
in  chartering  defendant's  vessel  to  the  government.  Judgment  for 
plaintiffs  reversed  at  General  Term.  Plaintiffs  appeal. 

EARL,  C.  .  .  .  The  further  claim  is  made  that  the  contract  with 
the  plaintiffs  was  for  an  illegal  service,  in  that  they  charged  a  com- 
mission for  claiming  to  have  influence  with  a  government  agent  to 
accept  a  vessel  already  offered,  but  not  yet  accepted. 

It  is  true  that  one  of  the  plaintiffs  was  a  son,  and  that  another 
was  a  son-in-law  of  one  of  the  government  agents,  whose  business  it 
was  to  select  the  vessels  for  the  government,  and  the  plaintiffs  prob- 
ably had  facilities  for  chartering  vessels  which  others  did  not  have. 
But  the  plaintiffs  did  not  contract  to  do  an  illegal  service.  They 
did  not  agree  to  use  any  corrupt  means  to  procure  the  charter.  The 
fact  that  the  plaintiffs  had  intimate  relations  with  the  government 
agents,  and  could  probably  therefore  influence  their  action  much 
more  readily  than  others,  did  not  forbid  their  employment.  Lyon  v. 
Mitchell,  36  N.  Y.  235. 

I  am  unable  to  see,  therefore,  upon  what  ground  the  contract  of 
the  defendant  with  the  plaintiffs  can  be  considered  as  illegal. 

The  order  of  the  General  Term  should  be  reversed  and  judgment 
upon  the  verdict  affirmed,  with  costs.  All  concur. 

Order  reversed  and  judgment  accordingly.1 

9  Cyc.  490   (68-69);  W.  P.  435    (93). 

108  (contract  for  appointment  to  public  office)  ;  Oscanyan  v.  Arms  Co.,  103 
U.  S.  261  (contract  of  resident  consul  to  influence  purchasing  agent  of  home 
government ) .  See  criticism  on  the  case  in  Lyon  v.  Mitchell,  36  N.  Y.  235. 
As  to  agreements  for  influencing  corporate  or  other  fiduciary  action,  see  Wood- 
stock Iron  Co.  v.  Richmond  &c.  Co.,  129  U.  S.  643.  As  to  the  assignment  of 
unearned  salaries  of  public  officers,  see  Bowery  Nat.  Bank  v.  Wilson,  122  N.  Y. 
478. 

i  As  to  whether  in  New  York,  the  test  of  illegality  in  lobbying  contracts 
is  that  improper  acts  were  contemplated,  or  on  the  other  hand,  that  the 
contract  merely  tends  to  improper  acts,  see  Dunham  v.  Co.,  118  Appellate 
Division,  127  (affirmed,  without  opinion,  189  N.  Y.  500). 


396  FORMATION    OF   CONTRACT. 

Agreements  which  tend  to  pervert  the  course  of  justice. 
(1.)  Stifling  criminal  proceedings. 

PAETEIDGE  v.  HOOD. 
120  MASSACHUSETTS,  403.— 1876. 

Contract.  The  answer  averred  that  the  consideration  of  the  con- 
tract was  an  agreement  on  the  part  of  the  plaintiff  to  stop  a  criminal 
prosecution  against  Edward  K.  Hood,  the  defendant's  son.  The  court 
ruled  that  the  agreement  was  illegal  and  directed  judgment  for  de- 
fendant. Plaintiff  alleged  exceptions. 

GRAY,  C.  J.  The  reason  that  a  private  agreement,  made  in  con- 
sideration of  the  suppression  of  a  prosecution  for  crime,  is  illegal, 
is  that  it  tends  to  benefit  an  individual  at  the  expense  of  defeating 
the  course  of  public  justice.  The  doctrine  has  never  been  doubted  as 
applied  to  felonies,  and  the  English  authorities  before  our  Eevolution 
extended  it  to  all  crimes.  2  West  Symb.  Compromise  &  Arbitra- 
ment, §  33 ;  Horton  v.  Benson,  1  Freem.  204 ;  Bac.  Ab.  Arbitrament 
&  Award,  A;  Johnson  v.  Ogilby,  3  P.  Wms.  277,  and  especially  the 
register's  book  cited  by  Mr.  Cox  in  a  note  to  page  279;  Collins  v. 
Blantern,  2  Wils.  341 ;  4  Bl.  Com.  363,  364.  An  appeal  of  mayhem 
could  be  barred  by  arbitrament,  or  accord  and  satisfaction,  or  release 
of  all  personal  actions,  because  it  was  the  suit  of  the  appellant  and 
not  of  the  Crown,  and  subjected  the  appellee  to  damages  only,  like 
an  action  of  trespass.  Blake's  Case,  6  Eep.  43  b,  44  c;  2  Hawk.  c. 
23,  §§  24,  25. 

Some  confusion  was  introduced  into  the  English  law  upon  this 
subject  by  the  rulings  of  Lord  Kenyon:  Kyd  on  Awards  (Am.  ed.), 
64-68 ;  Drage  v.  Ibberson,  2  Esp.  643 ;  Fallowes  v.  Taylor,  Peake  Ad. 
Cas.  155;  S.  C.  7  T.  E.  475;  and  by  Mr.  Justice  Le  Blanc's  suggestion 
of  a  distinction  between  a  prosecution  for  public  misdemeanor  and 
one  for  a  private  injury  to  the  prosecutor.  Edgcombe  v.  Eodd,  5 
East,  294,  303;  S.  C.  1  Smith,  515,  520.  This  confusion  was  not 
wholly  removed  by  the  opinions  of  Lord  Ellenborough  in  Edgcombe 
v.  Eodd,  5  East,  294,  302;  in  Wallace  v.  Hardacre,  1  Camp.  45,  46; 
in  Pool  v.  Bousfield,  1  Camp.  55,  and  in  Beeley  v.  Wingfield,  11  East, 
46,  48 ;  of  Chief  Justice  Gibbs  in  Baker  v.  Townshend,  1  Moore,  120, 
124 ;  S.  C.  7  Taunt.  422,  426 ;  or  of  Lord  Denman  in  Keir  v.  Leeman, 
6  Q.  B.  308,  321. 

But  in  the  very  able  judgment  of  the  Exchequer  Chamber  in  Keir 
v.  Leeman  (9  Q.  B.  371,  395),  Chief  Justice  Tindal,  after  reviewing 
the  previous  cases,  summed  up  the  matter  thus : 

"Indeed  it  is  very  remarkable  what  very  little  authority  there  is  to 
be  found,  rather  consisting  of  dicta  than  decisions,  for  the  principle  that 


LEGALITY    OF   OBJECT.  397 

any  compromise  of  a  misdemeanor,  or  indeed  of  any  public  offense,  can 
be  otherwise  than  illegal,  and  any  promise  founded  on  such  a  considera- 
tion otherwise  than  void.  If  the  matter  were  res  Integra,  we  should  have 
no  doubt  on  this  point.  We  have  no  doubt  that,  in  all  offenses  which 
involve  damages  to  an  injured  party  for  which  he  may  maintain  an 
action,  it  is  competent  for  him,  notwithstanding  they  are  also  of  a  public 
nature,  to  compromise  or  settle  his  private  damage  in  any  way  he  may 
think  fit.  It  is  said,  indeed,  that  in  the  case  of  an  assault  he  may  also 
undertake  not  to  prosecute  on  behalf  of  the  public.  It  may  be  so,  but 
we  are  not  disposed  to  extend  this  any  further." 

In  Fisher  v.  Apollinaris  Co.  (L.  R.  10  Ch.  297)  the  plaintiff,  pur- 
suant to  an  agreement  of  the  defendants  to  abandon  a  prosecution 
against  him  under  St.  25  &  26  Viet.  c.  88,  for  a  violation  of  their 
trade-mark,  gave  them  a  letter  of  apology,  with  authority  to  make 
use  of  it  as  they  might  think  necessary,  and,  after  they  had  published 
it  by  advertisement  for  two  months,  filed  a  bill  in  equity  to  restrain 
them  from  continuing  the  publication,  which  was  dismissed  by  the 
lords  justices.  The  principal  grounds  of  the  decision  appear  to  have 
been  that  the  defendants  had  done  nothing  that  the  plaintiff  had  not 
authorized  them  to  do;  and  that,  even  if  the  publication  affected  the 
plaintiff's  reputation,  a  court  of  chancery  had  no  jurisdiction  to  re- 
strain it.  See  Prudential  Assurance  Co.  v.  Knott,  L.  E.  10  Ch.  142; 
Boston  Diatite  Co.  v.  Florence  Manufacturing  Co.,  114  Mass.  69.  It 
was  indeed  observed  that  "it  was  no  more  a  violation  of  the  law  to 
accept  an  apology  in  such  a  case  than  it  would  be  to  compromise  an 
indictment  for  a  nuisance  or  for  not  repairing  a  highway  on  the  terms 
of  the  defendants  agreeing  to  remove  the  nuisance  or  repair  the  high- 
way." L.  B.  10  Ch.  302.  But  this  observation  was  not  necessary  to 
the  decision;  and  in  the  Queen  v.  Blakemore  (14  Q.  B.  544)  an  agree- 
ment for  the  compromise  of  an  indictment  for  not  repairing  a  high- 
way was  held  illegal  and  void.  All  the  other  recent  English 
authorities  support  the  judgment  of  Chief  Justice  Tindal,  above 
quoted.  The  Queen  v.  Hardey,  14  Q.  B.  529,  541 ;  Clubb  v.  Hutson, 
18  C.  B.  (N.  S.)  414;  Williams  v.  Bayley,  L.  R.  1  H.  L.  200,  213,  320. 

In  Jones  v.  Eice  (18  Pick.  440,  442),  Mr.  Justice  Putnam  deliver- 
ing the  opinion  of  this  court,  after  alluding  to  the  English  cases  in 
the  time  of  Lord  Kenyon,  relied  on  to  "sustain  the  distinction  be- 
tween considerations  arising  from  the  compounding  of  felonies,  which 
is  admitted  to  be  illegal,  and  the  compounding  of  misdemeanors, 
which  is  alleged  to  be  lawful,"  said : 

"We  do  not  think  that  such  a  power  is  vested  in  individuals.  It  would 
enable  them  to  use  the  claim  of  the  government  for  their  own  emolument, 
and  greatly  to  the  oppression  of  the  people.  It  has  a  direct  tendency  to 
obstruct  the  course  of  the  administration  of  justice;  and  the  mischief  ex- 
tends, we  think,  as  well  to  misdemeanors  as  to  felonies.  The  power  to 
stop  prosecutions  is  vested  in  the  law  officers  of  the  Commonwealth,  who 
use  it  with  prudence  and  discretion.  If  it  were  given  to  the  party  in- 


398  FORMATION    OF   CONTRACT. 

jured,  who  might  be  the  only  witness  who  could  prove  the  offense,  he 
might  extort  for  his  own  use  money  which  properly  should  be  levied  as  a 
fine  upon  the  criminal  party  for  the  use  of  the  Commonwealth." 

It  is  true  that  the  prosecution  in  Jones  v.  Rice  was  for  a  riot  as 
well  as  for  an  assault.  But  the  language  and  the  reasoning  of  the 
opinion  extend  to  the  compounding  of  any  offense  whatever.  Any 
act  which  is  made  punishable  by  law  as  a  crime  is  an  offense  against 
the  public,  and,  especially  in  this  country,  where  all  prosecutions  are 
subject  to  the  control  of  official  prosecutors,  and  not  of  the  individuals 
immediately  injured,  cannot  lawfully  be  made  the  subject  of  private 
compromise,  except  so  far  as  expressly  authorized  by  statute.  And 
this  view  is  supported  by  the  great  weight  of  American  authority. 
Hinds  v.  Chamberlin,  6  N.  H.  225;  Shaw  v.  Spooner,  9  X.  H.  197; 
Shaw  v.  Eeed,  30  Maine,  105 ;  Bowen  v.  Buck,  28  Vt.  308 ;  People  v. 
Bishop,  5  Wend.  Ill ;  Noble  v.  Peebles,  13  S.  &  R.  319,  322 ;  Maurer 
v.  Mitchell,  9  W.  &  S.  69,  71 ;  Cameron  v.  M'Farland,  2  Car.  Law 
Rep.  415;  Corley  v.  Williams,  1  Bailey,  588;  Vincent  v.  Groom,  1 
Yerger,  430;  Met.  Con.  226,  227;  1  Story  Eq.  Jur.  §  294. 

The  legislature  of  the  commonwealth  has  defined  the  cases  and 
circumstances  in  which  the  compromise  of  a  prosecution  shall  be 
allowed.  By  a  provision  first  introduced  in  the  Revised  Statutes, 
when  a  person  is  committed  or  indicted  for  an  assault  and  battery 
or  other  misdemeanor  for  which  the  party  injured  may  have  a  remedy 
by  civil  action  (except  when  committed  by  or  upon  an  officer  of  justice, 
or  riotously,  or  with  intent  to  commit  a  felony),  if  the  party  injured 
appears  before  the  magistrate  or  court  and  acknowledges  satisfaction 
for  the  injury  sustained,  a  stay  of  proceedings  may  be  ordered.  Rev. 
Sts.  c.  135,  §  25;  c.  136,  §  27;  Gen  Sts.  c.  170,  §  33;  c.  171,  §  28. 
Such  an  acknowledgment  of  satisfaction  does  not  entitle  the  defend- 
ant to  be  discharged,  but  leaves  it  to  the  discretion  of  the  magistrate 
or  court  whether  a  stay  of  proceedings  is  consistent  with  the  interests 
of  public  justice.  Commonwealth  v.  Dowdican's  Bail,  115  Mass.  133. 
See  also  State  v.  Hunter,  14  La.  Ann.  71. 

In  the  case  at  bar,  it  being  found  as  a  fact  that  the  agreement  sued 
on  was  entered  into  by  the  defendant  for  the  purpose  of  compounding 
a  complaint  against  her  son  for  a  misdemeanor,  and  it  not  appearing 
that  satisfaction  has  ever  been  acknowledged  in  or  approved  by  the 
court  in  which  the  prosecution  was  pending,  judgment  was  rightly 
ordered  for  the  defendant. 

Exceptions  overruled.1 

9   Cyc.  505    (37);   508-510    (51-67);   W.  P.   442    (2). 

i  In  Nickelson  v.  Wilson,  60  N.  Y.  362,  the  court  said :  "An  agreement 
to  cripple,  stifle,  or  embarrass  a  prosecution  for  a  criminal  offence,  by  de- 
stroying or  withholding  evidence,  suppressing  facts,  or  other  acts  of  that 


LEGALITY    OF   OBJECT.  399 

(2.)  Agreements  to  arbitrate. 
HAMILTON  v.  LIVERPOOL  &c.  INS.  CO. 

136  UNITED  STATES,  242.— 1889. 
Action  on  an  insurance  policy  containing  this  stipulation : 

"It  is  furthermore  hereby  expressly  provided  and  mutually  agreed  that 
no  suit  or  action  against  this  company  for  the  recovery  of  any  claim  by 
virtue  of  this  policy  shall  be  sustainable  in  any  court  of  law  or  chancery, 
until  after  an  award  shall  have  been  obtained  fixing  the  amount  of  such 
claim  in  the  manner  above  provided." 

The  manner  provided  for  fixing  the  amount  of  loss  in  case  of  dis- 
pute was  by  reference  to  arbitrators  selected  by  the  parties.  The 
court  directed  a  verdict  for  the  defendant.  Plaintiff  brings  error. 

MR.  JUSTICE  GRAY.  The  conditions  of  the  policy  in  suit  clearly 
and  unequivocally  manifest  the  intention  and  agreement  of  the  parties 
to  the  contract  of  insurance  that  any  difference  arising  between  them 
as  to  the  amount  of  loss  or  damage  of  the  property  insured  shall  be 
submitted,  at  the  request  in  writing  of  either  party,  to  the  appraisal 
of  competent  and  impartial  persons,  to  be  chosen  as  therein  provided, 
whose  award  shall  be  conclusive  as  to  the  amount  of  such  loss  or  dam- 
age only,  and  shall  not  determine  the  question  of  the  liability  of  the 
company;  that  the  company  shall  have  the  right  to  take  the  whole 
or  any  part  of  the  property  at  its  appraised  value  so  ascertained ;  and 
that  until  such  appraisal  shall  have  been  permitted,  and  such  an 
award  obtained,  the  loss  shall  not  be  payable,  and  no  action  shall  lie 
against  the  company.  The  appraisal,  when  requested  in  writing  by 
either  party,  is  distinctly  made  a  condition  precedent  to  the  payment 
of  any  loss,  and  to  the  maintenance  of  any  action. 

Such  a  stipulation,  not  ousting  the  jurisdiction  of  the  courts,  but 
leaving  the  general  question  of  liability  to  be  judicially  determined, 
and  simply  providing  a  reasonable  method  of  estimating  and  ascer- 
taining the  amount  of  the  loss,  is  unquestionably  valid,  according  to 
the  uniform  current  of  authority  in  England  and  in  this  country. 
Scott  v.  Avery,  5  H.  L.  Cas.  811 ;  Viney  v.  Bignold,  20  Q.  B.  D.  172; 
Delaware  &  Hudson  Canal  v.  Pennsylvania  Coal  Co.,  50  N.  Y.  250; 
Reed  v.  Washington  Ins.  Co.,  138  Mass.  572,  576 ;  Wolff  v.  Liverpool 

character,  is  against  public  policy  and  void.  In  such  cases  the  parties 
take  the  responsibility  of  interfering  with,  and  by  secret  or  indirect  means, 
frustrating  the  administration  of  justice.  But  an  agreement  to  lay  the 
whole  facts  before  the  court,  and  to  leave  it  to  the  free  exercise  of  the 
discretionary  powers  vested  in  it  by  law,  is  not  in  itself  wrong,  and  it  ia 
not  rendered  illegal  even  by  a  stipulation  on  the  part  of  a  prosecutor  to 
exert  such  legitimate  influence  as  his  position  gives  him  in  favor  of  the 
extension  of  mercy  to  a  guilty  party." 


400  FORMATION   OF   CONTRACT. 

&  London  &  Globe  Ins.  Co.,  21  Vroom,  453 ;  Hall  v.  Norwalk  Fire  Ins. 
Co.,  57  Conn.  105,  114.  The  case  comes  within  the  general  rule  long 
ago  laid  down  by  this  court:  "Where  the  parties,  in  their  contract, 
fix  on  a  certain  mode -by  which  the  amount  to  be  paid  shall  be  ascer- 
tained, as  in  the  present  case,  the  party  that  seeks  an  enforcement  of 
the  agreement  must  show  that  he  has  done  everything  on  his  part 
which  could  be  done  to  carry  it  into  effect.  He  cannot  compel  the 
payment  of  the  amount  claimed,  unless  he  shall  procure  the  kind  of 
evidence  required  by  the  contract,  or  show  that  by  time  or  accident 
he  is  unable  to  do  so."  United  States  v.  Eobeson,  9  Pet.  319,  327. 
See  also  Martinsburg  &  Potomac  Eailroad  v.  March,  114  TL  S.  549. 

Upon  the  evidence  in  this  case,  the  question  whether  the  defend- 
ant had  duly  requested,  and  the  plaintiff  had  unreasonably  refused, 
to  submit  to  such  an  appraisal  and  award  as  the  policy  called  for, 
did  not  depend  in  any  degree  (as  in  Uhrig  r.  Williamsburg  Ins.  Co., 
101  N".  Y.  362,  cited  for  the  plaintiff)  on  oral  testimony  or  extrinsic 
facts,  but  wholly  upon  the  construction  of  the  correspondence  in  writ- 
ing between  the  parties,  presenting  a  pure  question  of  law,  to  be 
decided  by  the  court.  Turner  v.  Yates,  16  How.  14,  23;  Bliven  v. 
New  England  Screw  Co.,  23  How.  420,  433;  Smith  v.  Faulkner,  12 
Gray,  251. 

That  correspondence  clearly  shows  that  the  defendant  explicitly 
and  repeatedly  in  writing  requested  that  the  amount  of  the  loss  or 
damage  should  be  submitted  to  appraisers  in  accordance  with  the 
terms  of  the  policy;  and  that  the  plaintiff  as  often  peremptorily  re- 
fused to  do  this,  unless  the  defendant  would  consent,  in  advance,  to 
define  the  legal  powers  and  duties  of  the  appraisers  (which  the  de- 
fendant was  under  no  obligation  to  do),  and  that  the  plaintiff 
throughout,  against  the  constant  protest  of  the  defendant,  asserted, 
and  at  last  exercised,  a  right  to  sell  the  property  before  the  comple- 
tion of  an  award  according  to  the  policy,  thereby  depriving  the  de- 
fendant of  the  right,  reserved  to  it  by  the  policy,  of  taking  the 
property  at  its  appraised  value,  when  ascertained  in  accordance  with 
the  conditions  of  the  policy. 

The  court  therefore  rightly  instructed  the  jury  that  the  defendant 
had  requested  in  writing,  and  the  plaintiff  had  declined,  the  appraisal 
provided  for  in  the  policy,  and  that  the  plaintiff,  therefore,  could  not 
maintain  this  action. 

If  the  plaintiff  had  joined  in  the  appointment  of  appraisers,  and 
they  had  acted  unlawfully,  or  had  not  acted  at  all,  a  different  question 
would  have  been  presented.  Judgment  affirmed.1 

9  Cyc.  512-514  (77-82);  W.  P.  448  (44);  Burnham,  Arbitration  as  a 
condition  precedent,  11  H.  L.  R.  234. 

iln  Hamilton  v.  Home  Ins.  Co.  (137  U.  S.  370),  the  provisions  were 
(1)  for  an  appraisal  by  disinterested  parties,  and  (2)  in  case  of  differences 


LEGALITY   OF   OBJECT.  401 


ALLEN,  J.,  IN  DELAWAKE  &  HUDSON  CANAL  CO.,  v.  PENN- 
SYLVANIA COAL  CO. 

50  NEW   YORK,   250.— 1872. 

It  appears  to  be  well  settled  by  authority  that  an  agreement  to 
refer  all  matters  of  difference  or  dispute  that  may  arise  to  arbitration, 
will  not  oust  a  court  of  law  or  equity  of  jurisdiction.  The  reason  of 
the  rule  is  by  some  traced  to  the  jealousy  of  the  courts,  and  a  desire 
to  repress  all  attempts  to  encroach  on  the  exclusiveness  of  their  juris- 
diction; and  by  others  to  an  aversion  of  the  courts,  from  reasons  of 
public  policy,  to  sanction  contracts  by  which  the  protection  which 
the  law  affords  the  individual  citizens  is  renounced.  An  agreement 
of  this  character  induced  by  fraud,  or  overreaching,  or  entered  into 

as  to  loss  after  proof,  the  submission  of  the  dispute  to  arbitrators  "whose 
award  in  writing  shall  be  binding  on  the  parties  as  to  the  amount  of  such 
loss  or  damage,  but  shall  not  decide  the  liability  of  the  company  under  this 
policy."  In  the  opinion  by  Mr.  Justice  Gray,  it  is  said:  "A  provision  in  a 
contract  for  the  payment  of  money  upon  a  contingency,  that  the  amount 
to  be  paid  shall  be  submitted  to  arbitrators,  whose  award  shall  be  final  as 
to  that  amount,  but  shall  not  determine  the  general  question  of  liability,  is 
undoubtedly  valid.  If  the  contract  further  provides  that  no  action  upon 
it  shall  be  maintained  until  after  such  award,  then,  as  adjudged  in  Hamil- 
ton v.  Liverpool,  London  &  Globe  Ins.  Co.,  above  cited,  and  in  many  cases 
therein  referred  to,  the  award  is  a  condition  precedent  to  the  right  of  action. 
But  when  no  such  condition  is  expressed  in  the  contract,  or  necessarily  to  be 
implied  from  its  terms,  it  is  equally  well  settled  that  the  agreement  for  sub- 
mitting the  amount  to  arbitration  is  collateral  and  independent,  and  that 
a  breach  of  this  agreement,  while  it  will  support  a  separate  action,  cannot 
be  pleaded  in  bar  to  an  action  on  the  principal  contract.  Roper  v.  Lendon, 
1  El.  &  El.  825;  Collins  v.  Locke,  4  App.  Cas.  674;  Dawson  v.  Fitzgerald,  1 
Ex.  D.  257;  Reed  v.  Washington  Ins.  Co.,  138  Mass.  572;  Seward  v.  Roches- 
ter, 109  N.  Y.  164;  Birmingham  Ins.  Co.  v.  Pulver,  126  111.  329,  338;  Cross- 
ley  v.  Connecticut  Ins.  Co.,  27  Fed.  Rep.  30.  The  rule  of  law  upon  the  sub- 
ject was  well  stated  in  Dawson  v.  Fitzgerald  by  Sir  George  Jessel,  Master 
of  the  Rolls,  who  said:  'There  are  two  cases  where  such  a  plea  as  the 
present  is  successful :  first,  where  the  action  can  only  be  brought  for  the 
sum  named  by  the  arbitrators;  secondly,  where  it  is  agreed  that  no  action 
shall  be  brought  till  there  has  been  an  arbitration,  or  that  arbitration  shall 
be  a  condition  precedent  to  the  right  of  action.  In  all  other  vcases  where 
there  is,  first,  a  covenant  to  pay,  and  secondly,  a  covenant  to  refer,  the 
covenants  are  distinct  and  collateral,  and  the  plaintiff  may  sue  on  the 
first,  leaving  the  defendant'  'to  bring  an  action  for  not  referring,'  or  (under 
a  modern  English  statute)  'to  stay  the  action  till  there  has  been  an  arbi- 
tration.' 1  Ex.  D.  260." 

Mutual  benefit  insurance. — It  has  been  held  that  an  arbitration  pro- 
vision, covering  all  matters  in  dispute,  in  a  mutual  benefit  society  policy  is 
binding  and  enforceable.  Rood  v.  Railway  &c.  Ass'n,  31  Fed.  R.  62;  Van 
Poucke  v.  Society,  63  Mich.  378;  Robinson  v.  Templar  Lodge,  117  Cal.  370. 
And  this  doctrine  was  extended  to  mutual  fire  insurance  companies  in  Ray- 
mond v.  Farmers'  Mut.  Fire  Ins.  Co.,  114  Mich.  386. 


402  FORMATION   OF   CONTRACT. 

unadvisedly  through  ignorance,  folly  or  undue  pressure,  might  well 
be  refused  a  specific  performance,  or  disregarded  when  set  up  as  a 
defence  to  an  action. 

But  when  the  parties  stand  upon  an  equal  footing,  and  intelligently 
and  deliberately,  in  making  their  executory  contracts,  provide  for  an 
amicable  adjustment  of  any  difference  that  may  arise,  either  by  arbi- 
tration or  otherwise,  it  is  not  easy  to  assign  at  this  day  any  good 
reason  why  the  contract  should  not  stand,  and  the  parties  made  to 
abide  by  it,  and  the  judgment  of  the  tribunal  of  their  choice.  Were 
the  question  res  nova,  I  apprehend  that  a  party  would  not  now  be 
permitted,  in  the  absence  of  fraud  or  some  peculiar  circumstances  en- 
titling him  to  relief,  to  repudiate  his  agreement  to  submit  to  arbitra- 
tion, and  seek  a  remedy  at  law,  when  his  adversary  had  not  refused 
to  arbitrate,  or  in  any  way  obstructed  or  hindered  the  arbitration 
agreed  upon.  But  the  rule  that  a  general  covenant  to  submit  any 
differences  that  may  arise  in  the  performance  of  a  contract,  or  under 
an  executory  agreement,  is  a  nullity,  is  too  well  established  to  be  now 
questioned;  and  the  decision  of  the  appeal  of  the  present  defendant 
does  not  make  it  necessary  to  inquire  into  the  reasons  of  the  rule,  or 
question  its  existence.  The  better  way,  doubtless,  is  to  give  effect 
to  contracts,  when  lawful  in  themselves,  according  to  their  terms  and 
the  intent  of  the  parties;  and  any  departure  from  this  principle  is 
an  anomaly  in  the  law,  not  to  be  extended  or  applied  to  new  cases 
unless  they  come  within  the  letter  and  spirit  of  the  decisions  already 
made.  The  tendency  of  the  more  recent  decisions  is  to  narrow  rather 
than  enlarge  the  operation  and  effect  of  prior  decisions,  limiting  the 
power  of  contracting  parties  to  provide  a  tribunal  for  the  adjustment 
of  possible  differences,  without  a  resort  to  courts  of  law ;  and  the  rule 
is  essentially  modified  and  qualified.  .  .  .  The  distinction  between  the 
two  classes  of  cases  is  marked  and  well  defined.  In  one  class  the 
parties  undertake  by  an  independent  covenant  or  agreement  to  pro- 
vide for  an  adjustment  and  settlement  of  all  disputes  and  differences 
by  arbitration,  to  the  exclusion  of  the  courts,  and  in  the  other  they 
merely,  by  the  same  agreement  which  creates  the  liability  and  gives 
the  right,  qualify  the  right  by  providing  that  before  a  right  of  action 
shall  accrue  certain  facts  shall  be  determined  or  amounts  and  values 
ascertained,  and  this  is  made  a  condition  precedent  either  in  terms 
or  by  necessary  implication. 

This  case  is  within  the  latter  class,  and  the  condition  being  lawful, 
the  courts  have  never  hesitated  to  give  full  effect  to  it.1 
9  Cyc.  512   (77)  ;  513    (78,  81)  ;  W.  P.  448   (15). 

i  Into  which  of  the  two  classes  a  doubtful  clause  fell,  was  the  subject  of 
discussion  in  National  Contracting  Co.  v.  Hudson  River  Co.,  170  N.  Y.  439. 


LEGALITY    OF   OBJECT.  403 

MILES  v.  SCHMIDT. 
168   MASSACHUSETTS,    339.— 1897. 

Bill  in  equity,  to  enforce  the  specific  performance  of  a  written 
contract. 

The  defendant  demurred  to  the  bill,  assigning  as  ground  therefor 
the  following  arbitration  clause  contained  in  the  contract: 

"It  is  further  mutually  agreed  that  in  case  of  any  alleged  violation 
of  the  promises  and  agreements  herein  made  by  said  Schmidt  or  by 
said  firm,  if  such  alleged  violation  is  continued  after  thirty  days' 
notice  in  writing  from  the  other  to  the  party  charged  as  guilty  of  such 
violation,  requiring  such  party  to  cease  such  violation,  then  the  party 
so  guilty  shall  be  liable  to  the  other  for  all  damages  caused  by  such 
violation,  to  be  determined  by  a  board  of  referees  in  manner  as  fol- 
lows: 

"After  the  expiration  of  the  thirty  days'  notice  provided  for  in  the 
above  clause,  said  Schmidt  and  said  firm  shall  each  forthwith  appoint 
a  referee,  and  the  two  so  appointed  shall  appoint  the  third.  If  either 
party  fails  to  appoint  a  referee  for  ten  days,  after  written  notice  of 
such  appointment  by  the«  other  party,  then  the  referee  so  appointed 
shall  appoint  a  second,  and  the  two  so  appointed  shall  appoint  a  third. 

"The  referees  shall  proceed  forthwith  to  hear  the  parties  and  to 
determine  whether  or  not  there  has  been  any  violation  of  the  agree- 
ments herein  contained,  and  whether  the  same  has  continued  for  more 
than  thirty  days  after  notice  to  discontinue  such  violation  above  pro- 
vided for,  and  what  damage  either  party  has  sustained  by  reason  of 
such  violation. 

"The  decision  of  a  majority  of  said  referees  shall  be  final  and  bind- 
ing on  said  parties,  and  they  hereby  agree  to  abide  by,  submit  to,  and 
forthwith  to  comply  with  any  decision,  or  award,  of  a  majority  of 
said  referees.  The  expense  of  any  such  reference  shall  be  borne  by 
any  or  all  of  the  parties  in  such  proportion  as  said  referees  may  de- 
termine." 

The  Superior  Court  sustained  the  demurrer  and  dismissed  the  bill, 
and  the  plaintiff  appealed  to  this  court. 

MORTON,  J.  Perhaps,  if  the  question  were  a  new  one,  no  objection 
would  be  found  to  permitting  parties  to  select  their  own  tribunals  for 
the  settlement  of  civil  controversies,  even  though  the  result  might  be 
to  oust  the  courts  of  jurisdiction  in  such  cases.  But  the  law  is  settled 
otherwise  in  this  State.  Eowe  v.  Williams,  97  Mass.  163;  Wood  v. 
Humphrey,  114  Mass.  185;  Pearl  v.  Harris,  121  Mass.  390;  Vass  v. 
Wales,  129  Mass.  38;  White  v.  Middlesex  Railroad,  135  Mass.  216. 

When  the  question  is  a  preliminary  one,  or  in  aid  of  an  action  at 
law  or  suit  in  equity,  such,  for  instance,  as  the  ascertainment  of  dam- 


404  FORMATION   OF   CONTRACT. 

ages,  an  agreement  for  arbitration  will  be  upheld.  Wood  v.  Hum- 
phrey, 114  Mass.  185;  Eeed  v.  Washington  Ins.  Co.,  138  Mass.  572, 
575;  Hutchinson  v.  Liverpool  &  London  &  Globe  Ins.  Co.,  153  Mass. 
143.  The  defendant  contends  that  the  agreement  for  arbitration  in 
this  case  goes  no  further  than  the  assessment  of  damages.  But  it  is 
expressly  provided,  amongst  other  things,  that  the  referees  shall  "hear 
the  parties  and  determine  whether  or  not  there  has  been  any  violation 
of  the  agreements  herein  contained,  .  .  .  and  what  damage  either 
party  has  sustained"  thereby,  and  that  "the  decision  of  a  majority  of 
said  referees  shall  be  final  and  binding  on  said  parties."  The  evident 
intent  is  to  submit  all  the  disputes  relating  to  the  performance  of  the 
agreement  if>  the  final  decision  of  a  tribunal  constituted  by  the  parties 
are  to  determine  whether  there  have  been  any  violations  of  the  agree- 
themselves.  The  referees  are  not  only  to  assess  the  damages,  but  also 
ment,  and  their  decision  in  all  matters  is  to  be  final.  The  agreement 
to  submit  to  arbitration  was  therefore  in  violation  of  law,  and  the 
demurrer  should  have  been  overruled. 

Demurrer  overruled,  and  decree  dismissing  bill  set  aside. 
9  Cyc.  512    (77);   W.  P.  448    (15). 


(3.)  Agreements  determining  jurisdiction. 
KNOWLTON,  C.  J.,  IN  MITTENTHAL  v.  MASCAGNI. 

183  MASSACHUSETTS,   19.— 1903. 

This  case  comes  before  us  on  a  report  from  the  superior  court  sub- 
mitting the  question  whether  there  was  an  error  of  the  presiding 
justice  in  overruling  the  motion  to  dismiss,  the  answer  in  abatement, 
and  demurrer  filed  by  the  defendant,  and  in  ruling  that  the  fifteenth 
paragraph  of  the  contract  between  the  plaintiffs  and  defendant,  upon 
certain  facts  agreed,  was  not  a  bar  to  the  prosecution  of  the  action  in 
this  commonwealth.  The  contract  referred  to  was  made  in 
Florence,  Italy,  where  the  defendant,  a  subject  of  the  King  of  Italy, 
had  his  home,  and  where  the  plaintiffs,  citizens  of  the  State  of  New 
York,  elected  a  domicile  by  a  provision  of  the  contract.  By  it  the 
defendant  undertook  to  direct  certain  concerts,  and  direct  and 
present  certain  operas,  all  composed  by  him,  in  the  course  of  a 
tour  through  such  parts  of  the  United  States  and  Canada  as 
the  plaintiffs  should  designate,  covering  a  period  of  15  weeks, 
for  the  sum  of  $4000  per  week,  with  sundry  provisions  for  ex- 
penses, and  the  like,  and  other  stipulations  prescribing  the  rights 
of  the  parties  in  various  particulars,  which  it  is  unnecessary  to  state. 
The  contract  was  in  the  Italian  language,  and,  according  to  the  trans- 
lated copy  annexed  to  the  plaintiffs'  writ,  it  contains  the  following 


LEGALITY    OF   OBJECT.  405 

provisions :  "The  present  contract  in  its  form  and  substance  is  regu- 
lated by  the  Italian  laws  by  will  of  the  parties  concerned,  and  accord- 
ing to  article  nine  of  the  Italian  Civil  Code.  Whatever  difference 
or  question  there  might  arise  between  the  parties,  including  the  agent, 
will  be  acted  upon  by  the  civil  authorities  of  Florence,  Italy.  Maestro 
Mascagni  reserves  the  right  of  direct  action  in  New  York  for  the 
payment  of  his  recompense,  and  therefore  he  alone  has  the  faculty 
to  derogate  the  competence  of  the  established  contract/'  The  defend- 
ant moved  to  dismiss  this  suit,  and  answered  in  abatement,  and  de- 
murred on  the  ground  that,  under  this  provision,  our  courts  have  no 
jurisdiction. 

The  determining  question  seems  to  be  whether  such  a  contract  as 
this  is  so  improvident  and  unreasonable — such  an  abnegation  of  legal 
rights — that  the  government,  for  the  protection  of  mankind,  will  re- 
fuse to  recognize  it,  even  when  made  in  a  foreign  country  by  subjects 
or  citizens  of  that  country.  We  can  fancy  the  parties  to  this  contract 
at  the  time  of  making  it  saying  something  like  this :  "As  the  perform- 
ance of  this  contract  will  not  only  involve  travel  through  one  or  more 
foreign  countries  in  going  to  America  and  returning,  but  will  in- 
volve journeying  long  distances  through  a  great  many  independent 
States,  each  of  which  has  its  own  courts  and  system  of  laws,  under 
some  of  which  a  person  sued  in  a  civil  action,  when  about  to  leave 
the  State,  may  be  arrested  and  held  to  bail  or  in  imprisonment,  if 
suits  may  be  brought  in  any  one  of  these  numerous  jurisdictions  there 
is  a  liability  to  great  trouble  and  expense  on  the  part  of  the  defendant 
in  meeting  the  litigation.  The  contract  contemplates  a  service  of 
fifteen  weeks,  after  which  Maestro  Mascagni  intends  to  return  to  his 
permanent  home,  in  Florence.  It  will  be  better  and  more  reasonable 
for  both  of  us  to  provide  that  our  controversies,  if  any  arise,  shall 
be  settled  by  the  courts  of  Florence,  than  to  leave  both  parties  subject 
to  suits  in  forty  or  fifty  different  jurisdictions,  at  great  distances  from 
the  home  of  either."  If,  moved  by  such  considerations,  the  parties 
made  the  agreement  in  question,  shall  the  court  say  that  they  were 
non  compotes  mentis,  and  that  their  agreement  was  so  improvident 
and  unreasonable  that  it  cannot  be  permitted  to  stand?  The  case  is 
quite  unlike  Nute  v.  Hamilton  Insurance  Company,  6  Gray,  174,  al- 
though it  has  some  features  in  common  with  that.  In  that  case  the 
provision  was  contained  in  a  by-law  of  a  mutual  insurance  company, 
and  it  undertook  to  limit  claimants  to  one  county  in  a  small  State 
for  the  venue  of  actions.  The  principles  laid  down  in  Daley  v.  Peo- 
ple's Building  Association,  178  Mass.  13,  59  N.  E.  452,  are  applicable, 
although  the  cases  are  different  in  some  particulars.  Similar  doc- 
trines are  stated  in  re  New  York,  Lackawanna  &  Western  Railroad 
Company,  98  N".  Y.  447,  452,  and  Greve  v.  ^Etna  Insurance  Company, 
81  Hun,  28,  30  N.  Y.  Supp.  668. 


406  FORMATION   OF   CONTRACT. 

There  is  no  attempt  here  to  deprive  either  party  of  the  right  of 
appeal  to  the  courts,  as  in  Rowe  v.  Williams,  97  Mass.  163,  but  only 
an  attempt  to  narrow  the  area  within  which  suits  may  be  brought. 
This  is  analogous  to  the  limitation  of  the  subjects  of  which  the  courts 
shall  have  exclusive  jurisdiction,  by  a  provision  for  the  arbitration  of 
incidental  and  subsidiary  questions  out  of  court,  which  is  approved 
in  the  cases  above  cited.  It  is  also  analogous  to  the  limitation  by 
contract  of  the  time  within  which  suits  may  be  brought.  Eliot  Na- 
tional Bank  v.  Beal,  141  Mass.  566,  6  N.  E.  742.  We  are  of  opinion 
that  this  part  of  the  contract  is  valid.1 

9  Cyc.  511    (70)  ;   W.  P.  446    (11)  ;   16  H.  L.  R.  599. 


Agreements  which  tend  to  abuse  of  legal  process:  champerty  and 
maintenance. 

ACKERT  v.  BARKER. 
131    MASSACHUSETTS,    436.— 1881. 

Action  against  an  attorney  for  money  had  and  received,  being  the 
sums  obtained  by  him  on  suits  against  two  insurance  companies.  The 
answer  set  up  "that  the  plaintiff  agreed,  in  consideration  of  the  de- 
fendant acting  for  him  in  the  premises,  that  said  defendant  should, 
out  of  any  and  all  moneys  received  by  him  from  said  insurance  com- 
panies, retain  one-half  of  the  amount  received  after  payment  of  proper 
costs  and  charges/'  The  trial  court  charged  that  if  the  jury  found 
that  there  was  an  agreement  by  which  defendant  was  to  retain  one-half 

i  In  Gitler  v.  Russian  Co.,  124  N.  Y.  Appellate  Div.  273,  one  defense  was 
that  "in  or  about  the  month  of  November,  1902,  and  subsequent  to  the  entry 
of  the  judgment  referred  to  in  the  complaint  herein,  the  plaintiffs  for  a 
valuable  consideration  agreed  with  this  defendant  herein  that  they,  the 
said  plaintiffs,  would  not  bring  any  action  in  the  State  of  New  York 
against  this  defendant  upon  or  in  respect  to  the  judgment  referred  to  in 
the  complaint  herein,  but  that  any  such  action  should  be  brought,  if  at  all, 
in  Russia,  and  thereafter  such  an  action  was  brought  in  Russia  by  an 
assignee  of  plaintiffs."  The  court  said,  "that  a  valid  contract  may  be 
made  to  refrain  from  pursuing  a  particular  remedy  to  enforce  an  existing 
claim,  since  public  policy  is  in  no  way  concerned  with  the  option  which 
every  man  has  to  sue  or  forbear  to  sue.  (Ferryman  v.  Allen,  50  Ala.  573.) 
The  agreement  in  the  present  case  goes  no  further  than  this.  The  cause 
of  action  to  enforce  the  judgment  was  the  plaintiffs'.  They  could  do  with 
it  as  they  saw  fit  to  the  extent  of  releasing  it  wholly  on  the  one  hand,  or 
of  prosecuting  every  legal  method  for  its  collection  on  the  other.  What- 
ever course  they  saw  fit  to  adopt  was  no  matter  of  public  concern,  and 
affects  no  question  of  public  policy,  and  if  they  saw  fit  to  make  an  agree- 
ment, otherwise  valid,  that  they  would  forbear  to  pursue  their  remedy  by 
action  in  the  courts  of  this  State,  there  is  no  public  policy  which  renders 
that  agreement  invalid."  See  8  C.  L.  R.  409. 


LEGALITY    OF   OBJECT.  407 

the  sum  collected  as  compensation  for  his  services,  such  agreement 
was  unlawful.  Verdict  for  plaintiff.  Defendant  alleged  exceptions. 

GRAY,  C.  J.  The  defendant's  answer  and  bill  of  exceptions,  fairly 
construed,  show  that  the  agreement  set  up  by  the  defendant  was  an 
agreement  by  which,  in  consideration  that  an  attorney  should  prose- 
cute suits  in  behalf  of  his  client  for  certain  sums  of  money,  in  which 
he  had  himself  no  previous  interest,  it  was  agreed  that  he  should  keep 
one-half  of  the  amount  recovered  in  case  of  success,  and  should  re- 
ceive nothing  for  his  services  in  case  of  failure. 

By  the  law  of  England  from  ancient  times  to  the  present  day,  such 
an  agreement  is  unlawful  and  void,  for  champerty  and  maintenance, 
as  contrary  to  public  justice  and  professional  duty,  and  tending  to 
speculation  and  fraud,  and  cannot  be  upheld,  either  at  common  law 
or  in  equity.  2  Eol.  Ab.  114;  Lord  Coke,  2  Inst.  208,  564.  Hobart, 
C.  J.,  Box  v.  Barnaby,  Hob.  117  a;  Lord  Nottingham,  Skapholme  v. 
Hart,  Finch,  477 ;  S.  C.  1  Eq.  Cas.  Ab.  86,  pi.  1 ;  Sir  William  Grant, 
M.  R.,  Stevens  v.  Bagwell,  15  Ves.  139;  Tindal,  C.  J.,  Stanley  v. 
Jones,  7  Bing.  369,  377;  S.  C.  5  Moore  &  Payne,  193,  206;  Coleridge, 
J.,  In  re  Masters,  1  Har.  &  Wol.  348;  Shadwell,  V.  C.,  Strange  v. 
Brennan,  15  Sim.  346;  Lord  Cottenham,  S.  C.  on  appeal,  2  Coop. 
Temp.  Cottenham,  1;  Erie,  C.  J.,  Grell  v.  Levy,  16  C.  B.  (N.  S.)  73; 
Sir  George  Jessel,  M.  R.,  In  re  Attorneys  &  Solicitors  Act,  1  Ch.  D. 
573. 

It  is  equally  illegal  by  the  settled  law  of  this  Commonwealth. 
Thurston  v.  Percival,  1  Pick.  415;  Lathrop  v.  Amherst  Bank,  9  Met. 
489;  Swett  v.  Poor,  11  Mass.  549;  Allen  v.  Hawks,  13  Pick.  79,  83; 
Call  v.  Calef,  13  Met.  362;  Rindge  v.  Coleraine,  11  Gray,  157,  162;  1 
Dane  Ab.  296 ;  6  Dane  Ab.  740,  741.  In  Lathrop  v.  Amherst  Bank, 
the  fact  that  the  agreement  did  not  require  the  attorney  to  carry  on 
the  suit  at  his  own  expense  was  adjudged  to  be  immaterial.  9  Met. 
492.  In  Scott  v.  Harmon  (109  Mass.  237)  and  in  Tapley  v.  Coffin 
(12  Gray,  420),  cited  for  the  defendant,  the  attorney  had  not  agreed 
to  look  for  his  compensation  to  that  alone  which  might  be  recovered, 
and  thus  to  make  his  pay  depend  upon  his  success. 

The  law  of  Massachusetts  being  clear,  there  would  be  no  propriety 
in  referring  to  the  conflicting  decisions  in  other  parts  of  the  country. 
If  it  is  thought  desirable  to  subordinate  the  rules  of  professional  con- 
duct to  mercantile  usages,  a  change  of  our  law  in  this  regard  must  be 
sought  from  the  legislature  and  not  from  the  courts. 

The  defendant,  by  virtue  of  his  employment  by  the  plaintiff,  and 
of  his  professional  duty,  was  bound  to  prosecute  the  claims  intrusted  to 
him  for  collection,  and  holds  the  amount  recovered  as  money  had  and 
received  to  the  plaintiff's  use.  The  agreement  set  up  by  the  defend- 
ant, that  he  should  keep  one-half  of  that  amount,  being  illegal  and 
void,  he  is  accountable  to  the  plaintiff  for  the  whole  amount,  deduct- 


408  FORMATION   OF   CONTRACT. 

ing  what  the  jury  have  allowed  him  for  his  costs.     In  re  Masters,  and 
Grell  v.  Levy,  above  cited;  Pince  v.  Beattie,  32  L.  J.  (N.  S.)  Ch.  734. 

Of  Best  v.  Strong  (2  Wend.  319),  on  which  the  defendant  relies 
as  showing  that,  assuming  this  agreement  to  be  illegal,  the  plaintiff 
cannot  maintain  this  action,  it  is  enough  to  say  that  there  the  money 
was  voluntarily  paid  to  the  defendant,  with  the  plaintiff's  assent,  after 
the  settlement  of  the  suit  by  which  it  was  recovered ;  and  it  is  unnec- 
essary to  consider  whether,  upon  the  facts  before  the  court,  the  case  was 
well  decided. 

Exceptions  overruled.1 

6  Cyc.  858-860  (37-42)  ;  12  L.  R.  A.  (N.  s.)  606;  W.  P.  451   (17). 

i  "The  grounds  upon  which  contracts  were  held  voidable  for  champerty 
or  maintenance,  as  against  the  policy  of  the  law,  were  that  there  might  be 
combinations  of  powerful  individuals  to  oppress  others  which  might  even 
influence  or  overawe  the  court,  and  that  they  tended  to  the  promotion  and 
enforcement  of  unfounded  claims,  to  disturb  the  public  repose,  to  promote 
litigation,  and  to  breed  strife  and  quarrels  among  neighbors.  With  the 
progress  of  society  these  reasons  have  everywhere  lost  much  of  their  force, 
and  the  whole  doctrine  on  this  subject  has  been  rejected  in  several  States 
of  the  Union  as  antiquated  and  incongruous  in  the  existing  state  of  society, 
notably  in  New  Jersey,  Texas,  California,  and  Mississippi.  Without  desir- 
ing to  modify  or  in  any  way  recede  from  the  doctrine  on  this  subject,  as  it 
has  heretofore  been  held  in  Massachusetts,  we  see  no  reason  for  its  further 
extension.  Neither  the  definition  of  champerty  nor  the  reasons  why  it  was 
held  to  be  an  offense  have  any  proper  application  to  a  proceeding  such  as 
that  by  which  the  defendant,  under  his  contract  with  the  plaintiff,  sought 
to  enforce  his  claim  against  the  government  of  the  United  States.  There 
was  no  suit  to  be  brought,  nor  any  defendant  in  the  proposed  proceeding, 
in  the  same  sense  that  there  is  in  a  contested  cause  at  law  or  in  equity." 
— Devens,  J.,  in  Manning  v.  Sprague,  148  Mass.  18,  20. 

Other  tests. — Some  jurisdictions  adopt  the  test  used  in  Phillips  v.  Com- 
missioners, 119  Ills.  626,  where  the  court  said:  "The  contract  provided 
that  the  litigation  should  be  carried  on,  and  Beckwith,  Ayer,  and  Kales 
were  to  render  the  professional  services  and  were  to  receive  one-fourth  of 
what  should  be  lealized  for  such  services.  If  an  agreement  of  this  char- 
acter, entered  into  between  attorney  a^pd  client,  is  champertous,  then  the 
point  is  well  taken;  but  as  we  understand  the  law,  the  contract  lacked  one 
essential  element  to  render  it  champertous,  and  that  is,  that  the  attorneys 
should  prosecute  the  litigation  at  their  own  costs  and  expense.  Had  the 
contract  provided  that  the  attorneys  should  carry  on  the  litigation  for  a 
share  of  what  they  might  recover,  at  their  own  cost  and  expense,  then  the 
contract  might  have  been  champertous  and  void.  Thompson  v.  Reynolds, 
73  111.  11;  Park  Commissioners  v.  Coleman,  108  Id.  601.  Such,  however, 
is  not  the  case.  The  written  contract,  which  alone  fixes  and  determines  the 
rights  and  duties  of  the  parties,  contains  no  provision  whatever  requiring 
the  attornevs  or  the  park  commissioners  to  pay  the  costs  or  expenses  of  the 
litigation."  See  6  Cyc.  858-860  (38-42). 

In  New  York,  "It  does  not  affect  the  validity  of  the  contract  between  the 
attorney  and  his  client,  that  measured  by  the  old  rules  relating  to  champerty 
and  maintenance,  it  would  have  fallen  under  their  condemnation;  for  neither 
doctrine  now  prevails  except  so  far  as  preserved  by  our  statutes.  .  .  .  They 


LEGALITY    OF   OBJECT.  409 

W.  ALLEN,  J.,  IN  BLAISDELL  v.  AHERN. 

144  MASSACHUSETTS,  393.— 1887. 

Ackert  v.  Barker,  131  Mass.  436,  and  Belding  v.  Smythe,  138  Mass. 
530,  are  cases  of  champerty,  where  a  part  of  the  amount  recovered  was 
to  be  received  in  compensation  for  services,  and  there  was  to  be  no 
personal  liability.  Where  the  right  to  compensation  is  not  confined  to 
an  interest  in  the  thing  recovered,  but  gives  a  right  of  action  against 
the  party,  though  pledging  the  avails  of  the  suit,  or  a  part  of  them,  as 
security  for  payment,  the  agreement  is  not  champertous.  Tapley  v. 
Coffin,  12  Gray,  420;  Scott  v.  Harmon,  109  Mass.  237;  McPherson 
v.  Cox,  96  U.  S.  404 ;  Christie  v.  Sawyer,  44  N.  H.  298 ;  Anderson  v. 
Radcliffe,  E.,  B.  &  E.  806,  817.  We  do  not  see  anything  in  the  agree- 
ment which  renders  it  void  for  maintenance.  In  a  sense  a  lawyer 
may  be  said  to  maintain  another  in  a  suit  when  he  gives  his  advice 
or  services,  as  formerly  it  would  have  been  maintenance  for  a  lay- 
man to  do  so;  but  such  acts  have  long  since  ceased  to  be  unlawful, 

forbid,  first,  the  purchase  of  obligations  named,  by  an  attorney,  for  the  pur- 
pose and  with  the  intent  of  bringing  a  suit  thereon ;  and,  second,  any  loan  or 
advance,  'as  an  inducement  to  the  placing,  or  in  consideration  of  having  placed 
in  the  hands  of  such  attorney,'  any  demand  for  collection." — Fowler  v.  Callan, 
102  N.  Y.,  395.  Now  §  274  of  the  Penal  Law. 

Extent  of  the  effect.— In  Small  v.  C.  R.  I.  &  P.  R.  Co.,  55  Iowa,  583,  the  de- 
fendant pleaded  as  a  defence  that  before  the  commencement  of  the  suit  it 
was  agreed,  between  the  plaintiff  and  plaintiff's  attorneys,  that  said  attorneys 
should  carry  on  the  suit  at  their  own  costs  and  expense,  and  that  they  should 
receive  for  their  said  services  and  said  costs  and  expenses  about  one-sixth  of 
the  amount  of  the  recovery,  if  the  litigation  should  be  successful,  and  if  they 
should  fail  in  the  action  they  should  receive  nothing.  It  was  averred  that 
said  agreement  and  contract  was  against  public  policy,  champertous  and  void. 
The  court  said :  "It  seems  to  us  that  there  is  no  sound  reason  nor  just  principle 
in  a  rule  which  would  allow  a  party  to  defeat  a  just  cause  of  action  because 
the  opposite  party  has  made  a  contract  with  his  attorney  which  is  utterly 
void  and,  which,  therefore  cannot  be  enforced  by  either  of  the  contracting 
parties.  As  to  the  defendant  in  this  action  who  seeks  to  avail  itself  of  the 
illegal  contract,  the  rights  of  the  parties  are  the  same  as  if  it  had  never  been 
made.  The  plaintiff  is  still  the  real  party  in  interest.  The  illegal  and  clia;.;- 
pertous  contract,  being  void,  divests  him  of  no  right.  That  by  reason  thereof 
he  should  be  disabled  from  asserting  his  rights,  we  do  not  believe.  It  is  enough 
that  the  parties  to  such  contracts  be  authorized  to  repudiate  them,  without 
allowing  others  to  exonerate  themselves  from  just  obligations  by  reason  thereof. 
As  is  said  by  Day,  J.,  in  Allison  v.  C.  &  N.  W.  R.  Co.,  42  Iowa,  274,  'If  he 
(the  defendant  in  the  action)  could  do  so,  an  unheard  of  effect  would  be  given 
to  a  void  agreement.  Suppose  a  suit  upon  a  promissory  note  is  prosecuted 
under  a  champertous  agreement  between  the  plaintiff  and  his  attorneys;  does 
this  avail  the  defendant  to  defeat  an  otherwise  just  liability?  Will  not  the 
law  rather  compel  the  defendant  to  perform  his  undertakings  and  leave  the 
question  of  champerty  to  be  determined  between  the  plaintiff  and  his  attor- 
ney?'" See  6  Cyc.  880  (49). 


410  FORMATION    OF    CONTRACT. 

and  it  would  now  nowhere  be  held  to  be  in  itself  unlawful  for  a  lawyer 
to  give  his  services  to  prosecute  a  suit,  with  the  understanding  that 
his  services  are  to  be  free  unless  success  shall  give  to  his  client  the 
ability  to  pay  him,  and  that  in  that  case  he  will  expect  liberal  fees. 
There  may  be  circumstances  in  which  such  a  contract  would  be  mer- 
itorious; and  there  may  be  circumstances  in  which  it  would  partake 
of  the  worst  evils  of  maintenance.  Under  what  circumstances  a  con- 
tract of  that  nature  might  be  held  void  as  against  public  policy,  we 
need  not  consider.  The  contract  under  consideration  was  nothing 
more  than  an  agreement  by  the  plaintiff  to  give  his  services  without 
charge  if  the  suit  should  not  be  successful,  and  an  agreement  by  the 
defendants  to  pay  large  and  liberal  fees  if  successful ;  and  we  know  no 
authority  and  no  reason  in  public  policy  why,  under  the  relations  and 
circumstances  of  the  parties,  it  was  not  a  lawful  contract,  which  they 
had  a  right  to  enter  into.1 

6  Cyc.  858-860  (37-46)  ;  16  H.  L.  R.  594. 


Agreements  which  are  contrary  to  good  morals. 
BOIGNERES  v.  BOULOtf. 
54  CALIFORNIA,  146.— 1880. 

Appeal  from  judgment  of  nonsuit,  and  order  denying  new  trial. 

Department  No.  1,  by  the  COURT  (from  the  Bench)  : 

The  only  evidence  in  respect  to  the  alleged  promise  of  marriage  is 
the  testimony  of  the  plaintiff  herself.  She  declares — such  is  the  ef- 
fect of  her  language — that  the  only  consideration  for  the  promise  was 
that  she  should  continue  the  immoral  and  illegal  relation  toward  de- 
fendant as  his  mistress,  which  she  had  held  previous  to  the  promise. 
This  is  only  saying  that  he  promised  to  marry  her  at  some  date  not 
mentioned,  if  she  would  continue  to  surrender  her  person  to  him  as  she 
had  done  in  the  past. 

It  has  been  held,  and  we  think  correctly,  that  such  promise  or  sur- 
render on  the  part  of  the  woman  is  not  sufficient  consideration  for  a 

i  "The  first  objection  of  the  plaintiffs  in  error  is  that  the  contract  set  up 
in  declaration  is  one  for  a  contingent  compensation.  Such  a  defense  in  some 
jurisdictions  would  be  a  good  one;  but  a  settled  rule  of  this  court  is  the  other 
way.  Reported  cases  to  that  effect  show  that  the  proposition  is  one  beyond 
legitimate  controversy.  Wylie  v.  Coxe,  15  How.  415;  Wright  v.  Tebbitts,  91 
U.  S.  252." — Stanton  v.  Embrey,  93  U.  S.  548.  "This,  however,  does  not  re- 
move the  suspicion  which  naturally  attaches  to  such  contracts,  and  where  it 
can  be  shown  that  they  are  obtained  from  the  suitor  by  any  undue  influence 
of  the  attorney  over  the  client,  or  by  any  fraud  or  imposition,  or  that  the 
compensation  is  clearly  excessive,  so  as  to  amount  to  extortion,  the  court  will 
in  a  proper  case  protect  the  party  aggrieved." — Taylor  v.  Berniss,  110  U.  S. 
42. 


LEGALITY    OF    OBJECT.  411 

promise  of  marriage,  because   immoral,  illegal,  and  against  public 
policy.     On  the  authority  of  Hanks  v.  Naglee,  November  Term,  1879, 
the  judgment  must  be  affirmed.      So  ordered. 
9  Cyc.  516-517   (99,  1-4);  W.  P.  411    (65). 


KURTZ  v.  FRANK. 
76  INDIANA,  594. — 1881. 

Action  by  the  appellee  against  the  appellant  for  a  breach  of  prom- 
ise of  marriage.  Verdict  for  plaintiff.  Defendant  appeals  from  an 
order  denying  motion  for  new  trial. 

WOODS,  J.  .  .  .  The  plaintiff  testified  that  the  defendant  prom- 
ised to  marry  her  in  September  or  October  (1878) ;  that  he  said  he 
would  marry  her  in  the  fall  if  they  could  agree  and  get  along,  and  be 
true  to  each  other ;  but,  if  she  became  pregnant  from  their  intercourse, 
he  would  marry  her  immediately.  She  did  become  pregnant,  about 
the  middle  of  July,  1878,  and  informed  the  defendant  of  the  fact  as 
soon  as  aware  of  it.  Upon  this  evidence,  it  is  insisted  that  the  agree- 
ment to  marry  immediately  in  case  of  the  plaintiff's  pregnancy,  is 
void,  because  immoral,  and  that,  aside  from  this  part  of  the  agree- 
ment, the  defendant  had  until  the  first  of  December  within  which  to 
fulfill  his  engagement;  and,  consequently,  that  the  suit,  begun  as  it 
was  before  that  date,  was  prematurely  brought. 

It  does  not  appear  that  the  illicit  intercourse  entered  into  the 
consideration  of  the  marriage  contract,  but  the  appellant,  having 
agreed  to  marry  the  appellee  at  a  time  then  in  the  future,  obtained  the 
intercourse  upon  an  assurance  that,  if  pregnancy  resulted,  the  con- 
tract already  made  should  be  performed  at  once.  This  did  not  super- 
sede the  original  agreement,  but  fixed  the  time  for  its  performance. 
Clark  v.  Pendleton,  20  Conn.  495. 

We  are  not  prepared  to  lend  judicial  sanction  and  protection  to 
the  seducer  by  declaring  that  he  may  escape  the  obligation  of  his 
contract,  so  made,  on  the  plea  that  it  is  immoral.  But  if  this  were 
otherwise,  and  if,  by  its  terms,  the  contract  was  not  to  have  been  per- 
formed until  the  time  subsequent  to  the  commencement  of  the  suit, 
yet  if,  before  the  suit  was  brought,  the  appellant  had  renounced  the 
contract,  and' declared  his  purpose  not  to  keep  it,  that  constituted  a 
breach,  for  which  the  appellee  had  an  immediate  right  of  action. 
Burtis  v.  Thompson,  42  N.  Y.  246;  Holloway  v.  Griffith,  32  Iowa, 
409;  S.  C.  7  Am.  Rep.  208,  n;  Frost  v.  Knight,  L.  R.  7  Exch.  Ill; 
S.  C.  1  Moak's  Eng.  Rep.  218. 

We  cannot  say  that  the  award  of  damages  was  excessive. 

Judgment  affirmed,  with  costs. 

9  Cyc.  516   (99);  W.  P.  361    (13);  365   (31);  411    (65). 


412  FORMATION   OF   CONTRACT. 

Agreements  which  affect  the  freedom  or  security  of  marriage. 

STERLING  v.  SINKECKSON. 
2  SOUTHARD   (NEW  JERSEY),  756.— 1820. 
Declaration  in  debt  -on  a  sealed  bill,  which  was  as  follows : 

"I,  Seneca  Sinnickson,  am  hereby  bound  to  Benjamin  Sterling,  for  the  sum 
of  one  thousand  dollars,  provided  he  is  not  lawfully  married  in  the  course 
of  six  months  from  the  date  hereof.  Witness  my  hand  and  seal.  Burlington, 
May  16,  1816. 

"SENECA  SIN  NICKSON  (Seal). 

"Witness,  JAMES  S.  BTJDD." 

Defendant  demurred  generally,  and  plaintiff  joined  in  demurrer. 

KIRKPATRICK,  C.  J.  .  .  .  The  contract  was  not  only  useless  and 
nugatory,  but  it  was  contrary  to  the  public  policy. 

Marriage  lies  at  the  foundation,  not  only  of  individual  happiness, 
but  also  of  the  prosperity,  if  not  the  very  existence,  of  the  social 
state;  and  the  law,  therefore,  frowns  upon,  and  removes  out  of  the 
way,  every  rash  and  unreasonable  restraint  upon  it,  whether  by  way 
of  penalty  or  inducement. 

If  these  parties  had  entered  into  mutual  obligations,  the  plaintiff 
not  to  marry  within  six  months,  and  the  defendant  to  pay  him  there- 
for this  sum  of  $1000,  there  can  be  no  doubt,  I  think,  but  that  both 
the  obligations  would  have  been  void.  In  the  case  of  Key  v.  Brad- 
shaw  (2  Yern.  102),  there  was  a  bond  in  the  usual  form,  but  proved  to 
be  upon  an  agreement  to  marry  such  a  man,  or  to  pay  the  money 
mentioned  in  the  bond;  but  the  bond  was  ordered  to  be  canceled  it 
being  contrary  to  the  nature  and  design  of  marriage  which  ought  to 
proceed  from  free  choice,  and  not  from  any  restraint  or  compulsion. 
In  the  case  of  Baker  v.  White  (2  Vern.  215),  A  gave  her  bond  to  B 
for  £100  if  she  should  marry  again,  and  B  gave  her  his  bond  for  the 
same  sum,  to  go  towards  the  advancement  of  her  daughter's  portion, 
in  case  she  should  not  marry.  It  was,  as  Lord  Mansfield  says  in 
Lowe  v.  Peers  (Bur.  2231),  a  mere  wager,  and  nothing  unfair  in  it; 
and  yet  A  was  relieved  against  her  bond,  because  it  was  in  restraint  of 
marriage,  which  ought  to  be  free.  A  bond,  therefore,  to  marry,  if 
there  be  no  obligation  on  the  other  side,  no  mutual  promise,  or  a  bond 
not  to  marry,  are  equally  against  law.  They  are  both  restraints  upon 
the  freedom  of  choice  and  of  action,  in  a  case  where  the  law  wills  that 
all  shall  be  free.  If  the  consideration  for  which  this  money  was  to  be 
paid,  then,  was  the  undertaking  of  the  plaintiff  not  to  marry,  that 
consideration  was  unlawful.  He  would  have  been  relieved  against  it, 
either  at  law  or  in  equity;  and  if  so,  the  corresponding  obligation  to 
pay,  according  to  the  principle  above  stated,  is  void. 


LEGALITY   OF  OBJECT.  413 

It  has  been  spoken  of  by  the  plaintiff,  as  if  it  were  an  obligation 
to  pay  money  upon  a  future  contingency,  which  any  man  has  a  right 
to  make,  either  with  or  without  consideration,  and  as  if  the  not  marry- 
ing of  the  plaintiff  were  not  the  consideration  of  the  obligation,  but 
the  contingent  event  only,  upon  which  it  became  payable.  But  I 
think  this  is  not  the  correct  view  of  the  case.  Where  the  event  upon 
which  the  obligation  becomes  payable  is  in  the  power  of  the  obligee, 
and  is  to  be  brought  about  by  his  doing  or  not  doing  a  certain  thing, 
it  cannot  be  so  properly  called  a  contingency;  it  is  rather  the  condi- 
tion meritorious,  upon  which  the  obligation  is  entered  into,  the  mov- 
ing consideration  for  which  the  money  is  to  be  paid.  It  is  not,  there- 
fore, to  be  considered  as  a  mere  contingency,  but  as  a  consideration, 
and  it  must  be  such  consideration  as  the  law  regards. 

Nor  does  it  at  all  vary  the  case  that  the  restraint  was  for  six  months 
only.  It  was  still  a  restraint,  and  the  law  has  made  no  limitation 
as  to  the  time.  Neither  can  the  plaintiff's  performance,  on  his  part, 
help  him.  It  imposed  no  obligation  upon  the  defendant;  it  was 
wholly  useless  to  him;  the  contract  itself  was  void  from  the  begin- 
ning. Therefore,  in  my  opinion,  let  there  be  judgment  for  the  de- 
fendant. 

Judgment  for  defendant.1 
9  Cyc.  518-519  (5-10)  ;  W.  P.  465  (31)  ;  17  H.  L.  R.  423. 


CROSS  v.  CROSS. 
58  NEW  HAMPSHIRE,  373.— 1878. 

Writ  of  entry  on  a  mortgage  given  by  defendant  to  M.  for  plain- 
tiff, in  consideration  that  she  should  re-convey  to  him  certain  lands, 
and  should  then  file  a  bill  for  divorce  which  he  agreed  not  to  defend. 
This  agreement  was  executed,  the  divorce  was  granted,  and  M.  as- 
signed the  notes  and  mortgage  to  plaintiff. 

CLARK,  J.  When  the  notes  and  mortgage  were  given,  the  plaintiff 
was  the  wife  of  the  defendant ;  and  the  principal  object  of  the  agree- 

i  "The  substance  of  the  contract  is,  if  the  applicant  will  pay  the  associa- 
tion a  certain  sum  of  money  down,  and  agree  to  pay  such  dues  and  assess- 
ments as  it  may  demand  upon  expressed  terms  from  time  to  time,  it  will  pay 
the  applicant  at  the  end  of  two  years  the  sum  of  $3960,  upon  condition  that 
the  applicant  should  not  get  married  within  that  time,  but  if  he  should 
marry  within  that  time,  then  the  association  was  to  pay  him  $5.50  for  each 
day  that  he  remained  single,  after  the  execution  of  the  contract.  The  amount 
to  be  paid  by  the  association  is  dependent  upon  the  time  the  member  refrains 
from  marriage.  We  think  this  contract  is  contrary  to  public  policy  and 
void.  ...  A  promise  to  pay  money  in  consideration  of  not  marrying  cannot 
be  enforced.  2  Parsons  Con.  73,  note  (h)." — Franklin,  C.,  in  Chalfant  v. 
Payton,  91  Ind.  202,  206,  207. 


414  FORMATION    OF   CONTRACT. 

ment,  in  pursuance  of  which  the  notes  and  mortgage  were  executed, 
was  to  obtain  a  collusive  divorce.  Such  an  agreement  is  contrary  to 
sound  public  policy,  and  consequently  illegal  and  void.  The  mar- 
riage contract  is  not  to  be  dissolved  or  determined  at  the  will  or  caprice 
of  the  parties.  If  annulled,  it  must  be  in  accordance  with  the  re- 
quirements of  the  law,  and  in  due  course  of  legal  proceedings.  The 
whole  agreement  and  proceedings  of  the  parties  in  this  case  were  a 
fraud  upon  the  law,  and  if  the  facts  had  come  to  the  knowledge  of 
the  court,  a  divorce  would  not  have  been  granted.  The  law  will  not 
aid  either  party  in  enforcing  their  illegal  contract.  The  considera- 
tion of  the  notes  secured  by  the  mortgage  being  illegal  and  void,  the 
action  cannot  be  maintained.  The  principles  of  law  governing  this 
case  were  considered  and  settled  in  Sayles  v.  Sayles,  21  N.  H.  312, 
and  Weeks  v.  Hill,  38  N.  H.  199. 

Judgment  for  the  defendant. 
9  Cyc.  519   (11) ;  522   (22-24) ;  W.  P.  444   (7). 


POLSON  v.  STEWART. 
167  MASSACHUSETTS,  211.— 1897. 

A  husband,  in  order  to  induce  his  wife  to  forbear  from  bringing  a 
suit  for  divorce,  to  which  she  was  entitled,  covenanted  to  surrender  to 
her  all  his  rights  in  lands  owned  by  her. 

HOLMES,  J.  [After  deciding  that  this  contract,  made  in  North 
Carolina,  under  whose  laws  the  husband  and  wife  were  competent  to 
contract  with  each  other,  could  be  enforced  as  to  lands  situated  in 
Massachusetts.]  Objection  is  urged  against  the  consideration.  The 
instrument  is  alleged  to  have  been  a  covenant.  It  is  set  forth,  and 
mentions  one  dollar  as  the  consideration.  But  the  bill  alleges  others, 
to  which  we  have  referred.  It  is  argued  that  one  of  them,  forbear- 
ance to  bring  a  well-founded  suit  for  divorce,  was  illegal.  The  judg- 
ment of  the  majority  in  Merrill  v.  Peaslee  (146  Mass.  460)  expressly 
guarded  it?elf  against  sanctioning  such  a  notion,  and  decisions  of  the 
greatest  weight  referred  to  in  that  case  show  that  such  a  consideration 
is  both  sufficient  and  legal.  Newsome  v.  Newsome,  L.  R.  2  P.  &  D. 
306,  312 ;  Wilson  v.  Wilson,  1  H.  L.  Gas.  538,  574 ;  Besant  v.  Wood, 
12  Ch.  D.  605,  622;  Hart  v.  Hart,  18  Ch.  D.  670,  685;  Adams  v. 
Adams,  91  K  Y.  381 ;  Sterling  v.  Sterling,  12  Ga.  20. 

Demurrer  overruled.1 

9  Cyc.  522   (23-24);  W.  P.  444   (7). 

i  In  Merrill  v.  Peaelee  (146  Mass.  460)  referred  to  above,  the  court  (three 
judges  dissenting)  held  that  where  a  wife  had  left  her  husband  on  account  of 
extreme  cruelty,  and  was  about  to  bring  a  suit  for  divorce,  a  promise  by  the 


LEGALITY    OF    OBJECT.  415 

Agreements  in  restraint  of  trade. 

DIAMOND  MATCH  CO.  v.  ROBBER. 

106  NEW  YORK,  473.— 1887. 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court 
in  the  first  judicial  department,  made  March  20,  1885,  which  modified 
as  to  an  additional  allowance  of  costs  and  affirmed,  as  modified,  a 
judgment  in  favor  of  plaintiff,  entered  upon  a  decision  of  the  court 
on  trial  at  Special  Term. 

This  action  was  brought  to  restrain  the  defendant  from  engaging 
in  the  manufacture  or  sale  of  friction  matches  in  violation  of  a  cove- 
nant in  a  bill  of  sale  executed  by  defendant,  which  is  set  forth  in  the 
opinion,  wherein  also  the  material  facts  are  stated. 

ANDREWS,  J.  Two  questions  are  presented:  First.  Whether  the 
covenant  of  the  defendant  contained  in  the  bill  of  sale  executed  by 
him  to  the  Swift  &  Courtney  &  Beecher  Company  on  the  27th  day 
of  August,  1880,  "that  he  shall  and  will  not,  at  any  time  or  times 
within  ninety-nine  years,  directly  or  indirectly,  engage  in  the  manu- 
facture or  sale  of  friction  matches  (excepting  in  the  capacity  of  agent 
or  employe  of  said  The  Swift  &  Courtney  &  Beecher  Company), 
within  any  of  the  several  States  of  the  United  States  of  America,  or 
in  the  Territories  thereof,  or  within  the  District  of  Columbia,  except- 
ing and  reserving,  however,  the  right  to  manufacture  and  sell  friction 
matches  in  the  State  of  Nevada  and  in  the  Territory  of  Montana," 
is  void  as  being  a  covenant  in  restraint  of  trade ;  and,  second,  as  to  the 

husband  to  pay  her  $5000  on  consideration  that  she  would  forego  the  suit 
for  divorce  and  would  return  to  him  and  live  with  him  as  his  wife,  was 
founded  upon  an  illegal  consideration  so  far  as  it  consisted  of  the  resumption 
of  the  marital  relations.  "It  is  as  much  against  public  policy  to  restore 
interrupted  conjugal  relations  for  money,  as  it  is  to  continue  them  without 
interruption  for  the  same  consideration."  In  Adams  v.  Adams  (91  N.  Y.  381) 
the  wife  withdrew  a  divorce  suit,  condoned  the  offense,  and  returned  to  live 
with  the  husband  on  his  promise  to  pay  her  $1000,  and  it  was  held  that  this 
was  a  valid  and  enforceable  promise,  and  in  no  way  against  public  policy. 

In  Noice  v.  Brown,  38  N.  J.  L.  228,  the  defendant,  being  a  married  man, 
and  living  apart  from  his  wife,  and  in  expectation  of  a  divorce  from  her  by 
force  of  a  bill  then  pending,  promised  the  plaintiff  to  marry  her  in  a  reason- 
able time  after  such  divorce  should  have  been  obtained.  The  court  said:  "I 
cannot  see  the  faintest  semblence  of  legality  in  the  promise  here  laid.  It  is 
wholly  fallacious  to  suppose  that  a  contract  is  not  illegitimate  if  the  act 
agreed  to  be  done  would  not  be  illegal  at  the  time  of  the  contemplated  per- 
formance. Such  is  not  the  law.  A  contract  is  totally  void,  if  when  it  is  made, 
it  is  opposed  to  morality  or  public  policy.  The  institution  of  marriage  is  the 
first  act  of  civilization,  and  the  protection  of  the  married  state  against  all 
molestation  or  disturbance  is  a  part  of  the  policy  of  every  people  possessed  of 
morals  and  laws." 


416  FORMATION    OF    CONTRACT. 

right  of  the  plaintiff,  under  the  special  circumstances,  to  the  equitable 
remedy  by  injunction  to  enforce  the  performance  of  the  covenant. 

There  is  no  real  controversy  as  to  the  essential  facts.  The  consid- 
eration of  the  covenant  was  the  purchase  by  the  Swift  &  Courtney  & 
Beecher  Company,  a  Connecticut  corporation,  of  the  manufactory  No. 
528  West  Fiftieth  Street,  in  the  city  of  New  York,  belonging  to  the 
defendant,  in  which  he  had,  for  several  years  prior  to  entering  into 
the  covenant,  carried  on  the  business  of  manufacturing  friction 
matches,  and  of  the  stock  and  materials  on  hand,  together  with  the 
trade,  trade-marks,  and  good  will  of  the  business,  for  the  aggregate 
sum  (excluding  a  mortgage  of  $5000  on  the  property,  assumed  by 
the  company)  of  $46,724.05,  of  which  $13,000  was  the  price  of  the 
real  estate.  By  the  preliminary  agreement  of  July  27,  1880,  $28,000 
of  the  purchase  price  was  to  be  paid  in  the  stock  of  the  Swift  &  Court- 
ney &  Beecher  Company.  This  was  modified  when  the  property  was 
transferred  August  27,  1880,  by  giving  to  the  defendant  the  option 
to  receive  the  $28,000  in  the  notes  of  the  company  or  in  its  stock,  the 
option  to  be  exercised  on  or  before  January  1,  1881.  The  remainder 
of  the  purchase  price,  $18,724.05,  was  paid  down  in  cash,  and  subse- 
quently, March  1,  1881,  the  defendant  accepted  from  the  plaintiff, 
the  Diamond  Match  Company,  in  full  payment  of  the  $28,000,  the 
sum  of  $8000  in  cash  and  notes,  and  $20,000  in  the  stock  of  the  plain- 
tiff, the  plaintiff  company  having,  prior  to  said  payment,  purchased 
the  property  of  the  Swift  &  Courtney  &  Beecher  Company  and  be- 
come the  assignee  of  the  defendant's  covenant.  It  is  admitted  by  the 
pleadings  that  in  August,  1880  (when  the  covenant  in  question  was 
made),  the  Swift  &  Courtney  &  Beecher  Company  carried  on  the 
business  of  manufacturing  friction  matches  in  the  States  of  Con- 
necticut, Delaware,  and  Illinois,  and  of  selling  the  same  "in  the  sev- 
eral States  and  Territories  of  the  United  States  and  in  the  District  of 
Columbia";  and  the  complaint  alleges,  and  the  defendant  in  his  an- 
swer admits,  that  he  was  at  the  same  time  also  engaged  in  the  manu- 
facture of  friction  matches  in  the  city  of  New  York,  and  in  selling 
them  in  the  same  territory.  The  proof  tends  to  support  the  admis- 
sion in  the  pleadings.  It  was  shown  that  the  defendant  employed 
traveling  salesmen,  and  that  his  matches  were  found  in  the  hands 
of  dealers  in  ten  States.  The  Swift  &  Courtney  &  Beecher  Company 
also  sent  their  matches  throughout  the  country  wherever  they  could 
find  a  market.  .  When  the  bargain  was  consummated,  on  the  27th 
of  August,  1880,  the  defendant  entered  into  the  employment  of  the 
Swift  &  Courtney  &  Beecher  Company,  and  remained  in  its  employ- 
ment until  January,  1881,  at  a  salary  of  $1500  a  year.  He  then  en- 
tered into  the  employment  of  the  plaintiff  and  remained  with  it  dur- 
ing the  year  1881,  at  a  salary  jof  $2500  a  year,  and  from  January  1, 
1882,  at  a  salary  of  $3600  a  year,  when  a  disagreement  arising  as  to 


LEGALITY    OF   OBJECT.  417 

the  salary  he  should  thereafter  receive,  the  plaintiff  declining  to  pay 
a  salary  of  more  than  $2500  a  year,  the  defendant  voluntarily  left 
its  service.  Subsequently  he  became  superintendent  of  a  rival  match 
manufacturing  company  in  New  Jersey,  at  a  salary  of  $5000,  and  he 
also  opened  a  store  in  New  York  for  the  sale  of  matches  other  than 
those  manufactured  by  the  plaintiff.  The  contention  by  the  defend- 
ant that  the  plaintiff  has  no  equitable  remedy  to  enforce  the  cove- 
nant, rests  mainly  on  the  fact  that  contemporaneously  with  the 
execution  of  the  covenant  of  August  27,  1880,  the  defendant  also  ex- 
ecuted to  the  Swift  &  Courtney  &  Beecher  Company  a  bond  in  the 
penalty  of  $15,000,  conditioned  to  pay  that  sum  to  the  company  as 
liquidated  damages  in  case  of  a  breach  of  his  covenant. 

The  defendant  for  his  main  defense  relies  upon  the  ancient  doc- 
trine of  the  common  law  first  definitely  declared,  so  far  as  I  can  dis- 
cover, by  Chief  Justice  Parker  (Lord  Macclesfield)  in  the  leading 
case  of  Mitchel  v.  Reynolds  (IP.  Williams,  181),  and  which  has 
been  repeated  many  times  by  judges  in  England  and  America,  that  a 
bond  in  general  restraint  of  trade  is  void.  There  are  several  decisions 
in  the  English  courts  of  an  earlier  date  in  which  the  question  of  the 
validity  of  contracts  restraining  the  obligor  from  pursuing  his  occu- 
pation within  a  particular  locality  was  considered.  The  cases  are 
chronologically  arranged  and  stated  by  Mr.  Parsons  in  his  work  on 
Contracts,  Vol.  2,  p.  748,  note.  The  earliest  reported  case,  decided  in 
the  time  of  Henry  V.,  was  a  suit  on  a  bond  given  by  the  defendant, 
a  dyer,  not  to  use  his  craft  within  a  certain  city  for  the  space  of  half 
a  year.  The  judge  before  whom  the  case  came  indignantly  denounced 
the  plaintiff  for  procuring  such  a  contract,  and  turned  him  out  of 
court.  This  was  followed  by  cases  arising  on  contracts  of  a  similar 
character,  restraining  the  obligors  from  pursuing  their  trade  within 
a  certain  place  for  a  certain  time,  which  apparently  presented  the 
same  question  which  had  been  decided  in  the  dyer's  case,  but  the 
courts  sustained  the  contracts  and  gave  judgment  for  the  plaintiffs ; 
and,  before  the  case  of  Mitchel  v.  Reynolds,  it  had  become  settled 
that  an  obligation  of  this  character,  limited  as  to  time  and  space,  if 
reasonable  under  the  circumstances  and  supported  by  a  good  con- 
sideration, was  valid.  The  case  in  the  Year  Books  went  against  all 
contracts  in  restraint  of  trade,  whether  limited  or  general.  The  other 
cases,  prior  to  Mitchel  v.  Reynolds,  sustained  contracts  for  a  particular 
restraint,  upon  special  grounds,  and  by  inference  decided  against  the 
validity  of  general  restraints.  The  case  of  Mitchel  v.  Reynolds  was  a 
case  of  partial  restraint  and  the  contract  was  sustained.  It  is  worthy 
of  notice  that  most,  if  not  all,  the  English  cases  which  assert  the 
doctrine  that  all  contracts  in  general  restraint  of  trade  are  void,  were 
cases  where  the  contract  before  the  court  was  limited  or  partial.  The 
same  is  generally  true  of  the  American  cases.  The  principal  cases  in 


418  FORMATION   OF   CONTRACT. 

this  State  are  of  that  character,  and  in  all  of  them  the  particular 
contract  before  the  court  was  sustained  (Nobles  v.  Bates,  7  Cow. 
307;  Chappel  v.  Brockway,  21  Wend.  157;  Dunlop  v.  Gregory,  10 
N.  Y.  241).  In  Alger  v.  Thacher  (19  Pick.  51),  the  case  was  one  of 
general  restraint,  and  the  court,  construing  the  rule  as  inflexible  that 
all  contracts  in  general  restraint  of  trade  are  void,  gave  judgment  for 
the  defendant.  In  Mitchel  v.  Reynolds,  the  court,  in  assigning  the 
reasons  for  the  distinction  between  a  contract  in  general  restraint  of 
trade,  and  one  limited  to  a  particular  place,  says,  "for  the  former 
of  these  must  be  void,  being  of  no  benefit  to  either  party  and  only 
oppressive";  and  later  on,  "because  in  a  great  many  instances  they  can 
be  of  no  use  to  the  obligee,  which  holds  in  all  cases  of  general  restraint 
throughout  England,  for  what  does  it  signify  to  a  tradesman  in  Lon- 
don what  another  does  in  Newcastle,  and  surely  it  would  be  unrea- 
sonable to  fix  a  certain  loss  on  one  side  without  any  benefit  to  the 
other."  He  refers  to  other  reasons,  viz. :  The  mischief  which  may 
arise  ( 1 )  to  the  party  by  the  loss,  by  the  obligor,  of  his  livelihood  and 
the  subsistence  of  his  family;  and  (2)  to  the  public,  by  depriving  it  of 
a  useful  member  and  by  enabling  corporations  to  gain  control  of  the 
trade  of  the  kingdom.  • 

It  is  quite  obvious  that  some  of  these  reasons  are  much  less  forcible 
now  than  when  Mitchel  v.  Reynolds  was  decided.  Steam  and  elec- 
tricity have,  for  the  purpose  of  trade  and  commerce,  almost  annihi- 
lated distance,  and  the  whole  world  is  now  a  mart  for  the  distribu- 
tion of  the  products  of  industry.  The  great  diffusion  of  wealth  and 
the  restless  activity  of  mankind  striving  to  better  their  condition,  has 
greatly  enlarged  the  field  of  human  enterprise  and  created  a  vast 
number  of  new  industries,  which  give  scope  to  ingenuity,  and  employ- 
ment for  capital  and  labor.  The  laws  no  longer  favor  the  granting 
of  exclusive  privileges,  and,  to  a  great  extent,  business  corporations 
are  practically  partnerships,  and  may  be  organized  by  any  persons 
who  desire  to  unite  their  capital  or  skill  in  business,  leaving  a  free 
field  to  all  others  who  desire  for  the  same  or  similar  purpose  to  clothe 
themselves  with  a  corporate  character. 

The  tendency  of  recent  adjudications  is  marked  in  the  direction  of 
relaxing  the  rigor  of  the  doctrine  that  all  contracts  in  general  re- 
straint of  trade  are  void  irrespective  of  special  circumstances.  In- 
deed, it  has  of  late  been  denied  that  a  hard  and  fast  rule  of  that  kind 
has  ever  been  the  law  of  England  (Rousillon  v.  Rousillon,  L.  R. 
14  Ch.  Div.  351).  The  law  has,  for  centuries,  permitted  contracts  in 
partial  restraint  of  trade,  when  reasonable ;  and  in  Homer  v.  Graves 
(7  Bing.  735),  Chief  Justice  Tindal  considered  a  true  test  to  be 
"whether  the  restraint  is  such  only  as  to  afford  a  fair  protection  to  the 
interests  of  the  party  in  favor  of  whom  it  is  given,  and  not  so  large 
as  to  interfere  with  the  interests  of  the  public."  When  the  restraint 


LEGALITY   OF   OBJECT.  419 

is  general,  but  at  the  same  time  is  coextensive  only  with  the  interest  to 
be  protected,  and  with  the  benefit  meant  to  be  conferred,  there  seems 
to  be  no  good  reason  why,  as  between  the  parties,  the  contract  is  not 
as  reasonable  as  when  the  interest  is  partial  and  there  is  a  correspond- 
ing partial  restraint.  And  is  there  any  real  public  interest  which 
necessarily  condemns  the  one  and  not  the  other?  It  is  an  encourage- 
ment to  industry  and  to  enterprise  in  building  up  a  trade,  that  a  man 
shall  be  allowed  to  sell  the  good  will  of  the  business  and  the  fruits  of 
his  industry  upon  the  best  terms  he  can  obtain.  If  his  business  ex- 
tends over  a  continent,  does  public  policy  forbid  his  accompanying  the 
sale  with  a  stipulation  for  restraint  coextensive  with  the  business 
which  he  sells?  If  such  a  contract  is  permitted,  is  the  seller  any 
more  likely  to  become  a  burden  on  the  public  than  a  man  who,  having 
built  up  a  local  trade  only,  sells  it,  binding  himself  not  to  carry  it 
on  in  the  locality  ?  Are  the  opportunities  for  employment  and  for  the 
exercise  of  useful  talents  so  shut  up  and  hemmed  in  that  the  public 
is  likely  to  lose  a  useful  member  of  society  in  the  one  case  and  not 
in  the  other?  Indeed,  what  public  policy  requires  is  often  a  vague 
and  difficult  inquiry.  It  is  clear  that  public  policy  and  the  interests 
of  society  favor  the  utmost  freedom  of  contract,  within  the  law,  and 
require  that  business  transactions  should  not  be  trammeled  by  un- 
necessary restrictions.  "If,"  said  Sir  George  Jessel,  in  Printing 
Company  v.  Sampson,  L.  E.  19  Eq.  Cas.  462,  "there  is  one  thing  more 
than  any  other  which  public  policy  requires,  it  is  that  men  of  full  age 
and  competent  understanding  shall  have  the  utmost  liberty  of  con- 
tracting, and  that  contracts  when  entered  into  freely  and  voluntarily, 
shall  be  held  good,  and  shall  be  enforced  by  courts  of  justice." 

It  has  sometimes  been  suggested  that  the  doctrine  that  contracts 
in  general  restraint  of  trade  are  void,  is  founded  in  part  upon  the 
policy  of  preventing  monopolies,  which  are  opposed  to  the  liberty  of 
the  subject,  and  the  granting  of  which  by  the  king  under  claim  of 
royal  prerogative  led  to  conflicts  memorable  in  English  history.  But 
covenants  of  the  character  of  the  one  now  in  question  operate  simply 
to  prevent  the  covenantor  from  engaging  in  the  business  which  he 
sells,  so  as  to  protect  the  purchaser  in  the  enjoyment  of  what  he  lias 
purchased.  To  the  extent  that  the  contract  prevents  the  vendor  from 
carrying  on  the  particular  trade,  it  deprives  the  community  of  any 
benefit  it  might  derive  from  his  entering  into  competition.  But  the 
business  is  open  to  all  others,  and  there  is  little  danger  that  the  pub- 
lic will  suffer  harm  from  lack  of  persons  to  engage  in  a  profitable  in- 
dustry. Such  contracts  do  not  create  monopolies.  They  confer  no 
special  or  exclusive  privilege.  If  contracts  in  general  restraint  of 
trade,  where  the  trade  is  general,  are  void  as  tending  to  monopolies, 
contracts  in  partial  restraint,  where  the  trade  is  local,  are  siibject  to 
the  same  objection,  because  they  deprive  the  local  community  of  the 


420  FORMATION   OF   CONTRACT. 

services  of  the  covenantor  in  the  particular  trade  or  calling,  and  pre- 
vent his  becoming  a  competitor  with  the  covenantee.  We  are  not 
aware  of  any  rule  of  law  which  makes  the  motive  of  the  covenantee 
the  test  of  the  validity  of  such  a  contract.  On  the  contrary,  we  sup- 
pose a  party  may  legally  purchase  the  trade  and  business  of  another 
for  the  very  purpose  of  preventing  competition,  and  the  validity  of  the 
contract,  if  supported  by  a  consideration,  will  depend  upon  its  reason- 
ableness as  between  the  parties.  Combinations  between  producers  to 
limit  production  and  to  enhance  prices,  are  or  may  be  unlawful,  but 
they  stand  on  a  different  footing.  We  cite  some  of  the  cases  showing 
the  tendency  of  recent  judicial  opinion  on  the  general  subject.  Whit- 
taker  v.  Howe,  3  Beav.  383 ;  Jones  v.  Lees,  1  Hurl.  &  N.  189 ;  Eous- 
sillon  v.  Eoussillon,  supra;  Leather  Co.  v.  Lorsont,  L.  E.  9  Eq.  Gas. 
345;  Collins  v.  Locke,  L.  E.  4  App.  Cas.  674;  Oregon  Steam  Co.  v. 
Winsor,  20  Wall.  64;  Morse  v.  Morse,  103  Mass.  73.  In  Whittaker 
v.  Howe,  a  contract  made  by  a  solicitor  not  to  practice  as  a  solicitor 
"in  any  part  of  Great  Britain,"  was  held  valid.  In  Eoussillon  v. 
Eoussillon,  a  general  contract  not  to  engage  in  the  sale  of  champagne, 
without  limit  as  to  space,  was  enforced  as  being  under  the  circum- 
stances a  reasonable  contract.  In  Jones  v.  Lees,  a  covenant  by  the 
defendant,  a  licensee  under  a  patent  that  he  would  not  during  the 
license  make  or  sell  any  slubbing  machines  without  the  invention 
of  the  plaintiff  applied  to  them,  was  held  valid.  Bramwell,  J.,  said : 
"It  is  objected  that  the  restraint  extends  to  all  England,  but  so  does 
the  privilege."  In  Oregon  Steam  Co.  v.  Winsor,  the  court  enforced 
a  covenant  by  the  defendant,  made  on  the  purchase  of  a  steamship, 
that  it  should  not  be  run  or  employed  in  the  freight  or  passenger 
business  upon  any  waters  in  the  State  of  California  for  the  period  of 
ten  years. 

In  the  present  state  of  the  authorities  we  think  it  cannot  be  said 
that  the  early  doctrine  that  contracts  in  general  restraint  of  trade  are 
void,  without  regard  to  circumstances,  has  been  abrogated.  But  it  is 
manifest  that  it  has  been  much  weakened,  and  that  the  foundation 
upon  which  it  was  originally  placed  has,  to  a  considerable  extent  at 
least,  by  the  change  of  circumstances,  been  removed.1 

The  covenant  in  the  present  case  is  partial  and  not  general.  It  is 
practically  unlimited  as  to  time,  but  this,  under  the  authorities,  is  not 
an  objection,  if  the  contract  is  otherwise  good.  Ward  v.  Byrne,  5 
M.  &  W.  548;  Mumford  v.  Gething,  7  C.  B.  (N.  S.)  305,  317.  It 
is  limited  as  to  space  since  it  excepts  the  State  of  Nevada  and  the 

i  "Recent  cases  make  it  very  clear  that  such  an  agreement  is  not  opposed 
to  public  policy  even  if  the  restriction  was  unlimited  as  to  both  time  and  ter- 
ritory. Diamond  Match  Co.  v.  Roeber,  106  N.  Y.  473;  Hodge  v.  Sloan,  107  Id. 
244;  Leslie  v.  Lorillard,  110  Id.  519,  534,  Watertown  Thermometer  Co.  v.  Pool, 
51  Hun,  157."— Tod*  v.  Gross,  127  N.  Y.  480. 


LEGALITY    OF   OBJECT.  421 

Territory  of  Montana  from  its  operation,  and  therefore  is  a  partial 
and  not  a  general  restraint,  unless,  as  claimed  by  the  defendant,  the 
fact  that  the  covenant  applies  to  the  whole  of  the  State  of  New  York 
constitutes  a  general  restraint  within  the  authorities.  In  Chappel 
v.  Brockway,  supra,  Bronson,  J.,  in  stating  the  general  doctrine  as  to 
contracts  in  restraint  of  trade,  remarked  that  "contracts  which  go 
to  the  total  restraint  of  trade;  as  that  a  man  will  not  pursue  his  occu- 
pation anywhere  in  the  State,  are  void."  The  contract  under  con- 
sideration in  that  case  was  one  by  which  the  defendant  agreed  not  to 
run  or  be  interested  in  a  line  of  packet  boats  on  the  canal  between 
Rochester  and  Buffalo.  The  attention  of  the  court  was  not  called  to 
the  point  whether  a  contract  was  partial,  which  related  to  a  business 
extending  over  the  whole  country,  and  which  restrained  the  carrying 
on  of  business  in  the  State  of  New  York,  but  excepted  other  States 
from  its  operation.  The  remark  relied  upon  was  obiter,  and  in  reason 
cannot  be  considered  a  decision  upon  the  point  suggested.  We  are  of 
the  opinion  that  the  contention  of  the  defendant  is  not  sound  in 
principle,  and  should  not  be  sustained.  The  boundaries  of  the  States 
are  not  those  of  tra'de  and  commerce,  and  business  is  restrained  within 
no  such  limit.  The  country,  as  a  whole,  is  that  of  which  we  are  citi- 
zens, and  our  duty  and  allegiance  are  due  both  to  the  State  and  na- 
tion. Nor  is  it  true,  as  a  general  rule,  that  a  business  established  here 
cannot  extend  beyond  the  State,  or  that  it  may  not  be  successfully 
established  outside  of  the  State.  There  are  trades  and  employments 
which,  from  their  nature,  are  localized ;  but  this  is  not  true  of  man- 
ufacturing industries  in  general.  We  are  unwilling  to  say  that  the 
doctrine  as  to  what  is  a  general  restraint  of  trade  depends  upon  State 
lines,  and  we  cannot  say  that  the  exception  of  Nevada  and  Montana 
was  colorable  merely.  The  rule  itself  is  arbitrary,  and  we  are  not 
disposed  to  put  such  a  construction  upon  this  contract  as  will  make 
it  a  contract  in  general  restraint  of  trade,  when  upon  its  face  it  is 
only  partial.  The  case  of  Oregon  Steam  Co.  v.  Winsor  (supra)  sup- 
ports the  view  that  a  restraint  is  not  necessarily  general  which  em- 
braces an  entire  State.  The  defendant  entered  into  the  covenant  as  a 
consideration  in  part  of  the  purchase  of  his  property  by  the  Swift  & 
Courtney  &  Beecher  Company,  presumably  because  he  considered  it 
for  his  advantage  to  make  the  sale.  He  realized  a  large  sum  in 
money,  and  on  the  completion  of  the  transaction  became  interested  as 
a  stockholder  in  the  very  business  which  he  had  sold.  We  are  of 
opinion  that  the  covenant,  being  supported  by  a  good  consideration, 
and  constituting  a  partial  and  not  a  general  restraint,  and  being,  in 
view  of  the  circumstances  disclosed,  reasonable,  is  valid  and  not  void. 
In  respect  to  the  second  general  question  raised,  we  are  of  opinion 
that  the  equitable  jurisdiction  of  the  court  to  enforce  the  covenant  by 
injunction,  was  not  excluded  by  the  fact  that  the  defendant,  in  con- 


422  FORMATION   OF   CONTRACT. 

nection  with  the  covenant,  executed  a  bond  for  its  performance,  with 
a  stipulation  for  liquidated  damages.  It  is,  of  course,  competent  for 
parties  to  a  covenant  to  agree  that  a  fixed  sum  shall  be  paid  in  case  of 
a  breach  by  the  party  in  default,  and  that  this  should  be  the  exclusive 
remedy.  The  intention  in  that  case  would  be  manifest  that  the  pay- 
ment of  the  penalty  should  be  the  price  of  non-performance,  and  to 
be  accepted  by  the  covenantee  in  lieu  of  performance.  Phoenix  Ins. 
Co.  v.  Continental  Ins.  Co.,  87  N.  Y.  400,  405.  But  the  taking  of  a 
bond  in  connection  with  a  covenant  does  not  exclude  the  jurisdic- 
tion of  equity  in  a  case  otherwise  cognizable  therein,  and  the  fact  that 
the  damages  in  the  bond  are  liquidated,  does  not  change  the  rule. 
It  is  a  question  of  intention,  to  be  deduced  from  the  whole  instrument 
and  the  circumstances;  and  if  it  appear  that  the  performance  of  the 
covenant  was  intended,  and  not  merely  the  payment  of  damages  in 
case  of  a  breach,  the  covenant  will  be  enforced.  It  was  said  in  Long 
v.  Bowring  (33  Beav.  585),  which  was  an  action  in  equity  for  the 
specific  performance  of  a  covenant,  there  being  also  a  clause  for  liqui- 
dated damages,  "all  that  is  settled  by  this  clause  is  that  if  they  bring 
an  action  for  damages  the  amount  to  be  recovered  is  £1000,  neither 
more  nor  less."  There  can  be  no  doubt  upon  the  circumstances  in 
this  case  that  the  parties  intended  that  the  covenant  should  be  per- 
formed, and  not  that  the  defendant  might  at  his  option  repurchase 
his  right  to  manufacture  and  sell  matches  on  payment  of  the  liqui- 
dated damages.  The  right  to  relief  by  injunction  in  similar  con- 
tracts is  established  by  numerous  cases.  Phoenix  Ins.  Co.  v.  Con- 
tinental Ins.  Co.,  supra;  Long  v.  Bowring,  supra;  Howard  v. 
Woodward,  10  Jur.  N.  S.  1123;  Coles  v.  Sims,  5  De  G.,  McN.  &  G. 
1;  A  very  v.  Langford,  Kay's  Ch.  663;  Whittaker  v.  Howe,  supra,; 
Hubbard  v.  Miller,  27  Mich.  15. 

There  are  some  subordinate  questions  which  will  be  briefly  noticed. 

First.  The  plaintiff,  as  successor  of  the  Swift  &  Courtney  & 
Beech er  Company,  and  as  assignee  of  the  covenant,  can  maintain  the 
action.  The  obligation  runs  to  the  Swift  &  Courtney  &  Beecher 
Company,  "its  successors  and  assigns."  The  covenant  was  in  the 
nature  of  a  property-right  and  was  assignable,  at  least  it  was  assign- 
able in  connection  with  a  sale  of  the  property  and  business  of  the 
assignors.  Hedge  v.  Lowe,  47  Iowa,  137,  and  cases  cited.  Second. 
The  defendant  is  not  in  a  position  which  entitles  him  to  raise  the 
question  that  the  contract  with  the  Swift  &  Courtney  &  Beecher 
Company  was  ultra  vires  the  powers  of  that  corporation.  He  lias 
retained  the  benefit  of  the  contract  and  must  abide  by  its  terms. 
Whitney  Arms  Co.  v.  Barlow,  68  X.  Y.  34.  Third.  The  fact  that 
the  plaintiff  is  a  foreign  corporation  is  no  objection  to  its  maintain- 
ing the  action.  It  would  be  repugnant  to  tbe  policy  of  our  legis- 
lation, and  a  violation  of  the  rules  of  comity,  to  grant  or  withhold 


LEGALITY    OF   OBJECT.  423 

relief  in  our  courts  upon  such  a  discrimination.  Merrick  v.  Van 
Santvoord,  34  N.  Y.  208;  Hibernia  Nat.  Bank  v.  Lacombe,  84  Id. 
367;  Code  Civ.  Pro.  §  1779.  Fourth.  The  consent  of  the  Swift  & 
Courtney  &  Beecher  Company  to  the  purchase  by  the  defendant  of 
the  business  of  Brueggemann  did  not  relieve  the  defendant  from  his 
covenant.  That  transaction  was  in  no  way  inconsistent  therewith. 
Brueggemann  was  selling  matches  manufactured  by  the  company, 
under  an  agreement  to  deal  in  them  exclusively. 

There  are  some  questions  on  exceptions  to  the  admission  and  ex- 
clusion of  evidence.  None  of  them  present  any  question  requiring 
a  reversal  of  the  judgment. 

There  is  no  error  disclosed  by  the  record  and  the  judgment  should, 
therefore,  be  affirmed. 

All  concur,  except  Peckham,  J.,  dissenting. 

Judgment  affirmed.1 

9  Cyc.  523  (27)  ;  529  (70)  ;  22  L.  R.  A  .673;  7  C.  L.  R.  50;  Raymond,  Fed- 
eral Anti-trust  Act,  23  H.  L.  R.  353;  Raymond,  The  Standard  oil  and  tobacco 
cases,  25  H.  L.  R.  3 1 ;  Knowlton,  The  new  doctrine  concerning  contracts  in  re- 
straint of  trade,  8  Mich.  L.  R.  298. 

i  In  Gibbs  v.  Baltimore  Gas  Co.,  130  U.  S.  396,  the  court  said:  "The  decision 
in  Mitchell  v.  Reynolds,  1  P.  Wms.  181;  S.  C.  Smith's  Leading  Cases,  407. 
7th  Eng.  Ed. ;  8th  Am.  Ed.  756,  is  the  foundation  of  the  rule  in  relation  to  the 
invalidity  of  contracts  in  restraint  of  trade;  but  as  it  was  made  under  a  con- 
dition of  things,  and  a  state  of  society,  different  from  those  which  now  pre- 
vail, the  rule  laid  down  is  not  regarded  as  inflexible,  and  has  been  consid- 
erably modified.  Public  welfar^  is  first  considered,  and  if  it  be  not  involved, 
and  the  restraint  upon  one  party  is  not  greater  than  protection  to  the  other 
party  requires,  the  contract  may  be  sustained.  The  question  is,  whether,  under 
the  particular  circumstances  of  the  case  and  the  nature  of  the  particular  con- 
tract involved  in  it,  the  contract  is,  or  is  not  unreasonable.  Rousillon  v. 
Rousillon,  14  Ch.  D.  351;  Leather  Cloth  Co.  v.  Lorsont,  L.  R.  9  Eq.  345." 

But  in  Lufkin  Rule  Co.  v.  Fringeli,  57  Ohio  St.  596,  the  court  adheres  to  the 
view  that  a  contract  to  keep  out  of  business  within  the  State  is  invalid,  and 
criticises  Diamond  Match  Co.  v.  Roeber.  The  same  view  is  held  in  Union 
Strawboard  Co.  v.  Bonfield,  193  Ills.  420. 

In  Cummings  v.  Union  Blue  Stone  Co.,  164  N.  Y.  401,  there  was  an  agree- 
ment between  the  producers  of  at  least  90  per  cent,  of  the  Hudson  river  blue 
stone,  and  a  selling  company  which  engaged  ( 1 )  to  sell  all  the  stone  produced 
by  them,  for  six  years,  at  prices  fixed  by  an  association  of  such  producers,  and 
v2)  to  apportion  the  sales  in  specified  proportions  between  them,  no  sales  to 
be  made  except  through  the  selling  company.  The  agreement  was  held  il- 
legal, the  court  saying:  "It  may  be  conceded  that  one  of  its  purposes  was  to 
enable  the  parties  to  obtain  reasonable  prices,  but  it  gave  them  the  power  to 
fix  arbitrary  and  unreasonable  prices.  The  scope  of  the  contract,  and  not  the 
possible  self-restraint  of  the  parties  to  it,  is  the  test  of  its  validity.  They 
could  raise  prices  to  what  they  supposed  the  market  would  bear,  and  as  they 
expected  to  supply  nearly  the  entire  demand  of  the  market,  the  temptation  to 
extortion  was  unusually  great."  The  court  further  said  that  the  case  was, 
"one  of  such  a  combination  among  many  dealers  as  threatened  a  monopoly, 
with  which  the  individual  would  be  practically  powerless  to  compete,  and  the 
many  consumers  who  would  be  severally  exposed  and  coerced  would  be  either 


424  FORMATION   OF   CONTRACT. 

Effect  of  illegality  upon  contracts  in  which  it  exists. 

(i.)     Divisibility. 

ERIE  RAILWAY  CO.  v.  UNION  LOCOMOTIVE  AND 
EXPRESS  CO. 

35  NEW  JERSEY  LAW,  240.— 1871. 

This  suit  was  in  case  on  promises.  Defendants  demurred  gen- 
erally to  the  whole  declaration,  and  there  was  a  joinder. 

BEASLEY,  C.  J.  Upon  the  argument  before  this  court,  the  counsel 
for  the  defendants  relied  chiefly,  in  support  of  the  demurrer,  upon 
the  proposition  that  the  stipulation  contained  in  the  article  of  agree- 
ment, which  gave  to  the  plaintiffs  the  exclusive  right  to  carry  locomo- 
tives and  tenders  on  trucks  over  the  Erie  road,  was  illegal.  The 
principle  that,  as  common  carriers,  the  defendants  were  bound  to 
exercise  their  office  with  perfect  impartiality,  in  behalf  of  all  persons 
who  apply  to  them,  and  that,  practicing  this  public  employment,  they 
cannot  discharge  themselves,  by  contract,  from  the  obligation,  was 
appealed  to  in  support  of  this  position. 

The  agreement  between  these  parties  was,  in  short,  this:  The  firm 
of  Kasson  &  Company,  who  were  the  assignors  of  the  plaintiffs,  the 

compelled  to  submit  to  its  exactions,  or  to  forego  the  purchase  of  the  com- 
modity of  customary  use  needful  to  them,  an^  but  for  this  monopoly  obtain- 
able in  the  market  at  a  reasonable  price." 

Price  restriction. — In  Dr.  Miles  Medical  Co.  v.  Park  &  Sons  Co.,  220  U.  S. 
373,  the  court  said:  "The  complainant,  a  manufacturer  of  proprietary  medi- 
cines which  are  prepared  in  accordance  with  secret  formulas,  presents  by  its 
bill  a  system,  carefully  devised,  by  which  it  seeks  to  maintain  certain  prices 
fixed  by  it  for  all  the  sales  of  its  products  both  at  wholesale  and  retail.  Its 
purpose  is  to  establish  minimum  prices  at  which  sales  shall  be  made  by  its  vend- 
ees and  by  all  subsequent  purchasers  who  traffic  in  its  remedies.  .  .  .  The 
defendant  is  a  wholesale  drug  concern  which  has  refused  to  enter  into  the 
required  contract,  and  is  charged  with  procuring  medicines  for  sale  at  'cut 
prices'  by  inducing  those  who  have  made  the  contracts  to  violate  the  restric- 
tions. .  .  .  The  present  case  is  not  analogous  to  that  of  a  sale  of  good  will,  or 
of  an  interest  in  a  business,  or  of  the  grant  of  a  right  to  use  a  process  of 
manufacture.  The  complainant  has  not  parted  with  any  interest  in  its  busi- 
ness or  instrumentalities  of  production.  It  has  conferred  no  right  by  virtue 
of  which  purchasers  of  its  product  may  compete  with  it.  It  retains  complete 
control  over  the  business  in  which  it  is  engaged,  manufacturing  what  it  pleases 
and  fixing  such  prices  for  its  own  sales  as  it  may  desire.  Nor  are  we  dealing 
with  a  single  transaction,  conceivably  unrelated  to  the  public  interest.  The 
agreements  are  designed  to  maintain  prices,  after  the  complainant  has  parted 
with  the  title  to  the  articles,  and  to  prevent  competition  among  those  who  trade 
in  them.  .  .  .  The  complainant  having  sold  its  product  at  prices  satisfactory 
to  itself,  the  public  is  entitled  to  whatever  advantage  may  be  derived  from 
competition  in  the  subsequent  traffic."  Contra,  Garst  v.  Harris,  177  Mass. 
72.  As  to  price  restriction  on  the  re-sale  of  patented  articles,  see  Bauer  & 
Cie.  v.  O'Donnell,  33  Sup.  Ct.  Reporter,  616,  and  cases  cited  therein. 


LEGALITY    OF   OBJECT.  425 

Union  Locomotive  and  Express  Company,  agreed  to  provide  "cars 
and  trucks  sufficient  in  size,  strength,  weight,  and  capacity  whereon 
to  carry  all  locomotive  engines  and  tenders,"  and  that  they  would 
be  at  the  expense  of  loading  and  unloading  the  same;  and  for  the 
motive  power,  which  was  to  be  supplied  by  the  Erie  Eailway  Com- 
pany, the  defendants,  and  for  the  unusual  wear  and  strain  of  their 
railway,  a  certain  compensation,  which  was  stated  in  said  articles 
of  agreement,  was  promised  to  be  paid.  On  their  side,  the  Erie 
Railway  Company  agreed,  in  addition  to  the  stipulations  for  provid- 
ing motive  power  and  giving  the  use  of  the  road,  that  the  cars  of 
the  assignors  of  plaintiffs  should  be  the  only  cars  employed  in  the 
transportation  of  locomotive  engines  and  tenders.  It  is  this  last 
provision  which  gives  rise  to  the  objection  already  stated.  It  is 
insisted  this  stipulation  gives  the  plaintiffs  the  exclusive  control,  on 
their  own  terms,  of  this  branch  of  business;  that  it  precludes  all 
competition,  and  being  the  grant  of  a  monopoly,  is  inconsistent  with 
the  purpose  and  objects  of  the  charter  of  the  defendants,  and  with 
their  character  as  common  carriers.  The  question  thus  presented  is 
one  of  much  importance,  and  it  should  not,  consequently,  be  decided 
except  when  it  shall  be  an  element  essential  to  the  judgment  of  the 
court  in  the  particular  case.  That  it  is  not  such  an  element,  on  the 
present  occasion,  is  obvious,  for,  let  it  be  granted  that  the  provision 
in  question  is  illegal,  and  therefore  void,  still  such  concession  cannot, 
in  the  least  degree,  impair  the  plaintiffs'  right  of  action.  The  suit 
is  not  for  a  breach  of  this  promise  of  the  defendants,  that  no  other 
cars  but  those  of  the  plaintiffs  shall  be  employed  in  this  branch  of 
the  carrying  business,  but  it  is  for  the  refusal  of  the  defendants  to 
permit  the  plaintiffs  to  transport  locomotives  and  tenders,  according  to 
their  contract,  over  the  railway  of  the  Erie  Company.  This  latter 
stipulation,  the  violation  of  which  forms  the  ground  of  action,  is 
distinct  and  entirely  separable  from  the  former  one,  in  which  it  is 
alleged  the  illegality  before  mentioned  exists. 

Admitting,  then,  for  the  purpose  of  the  argument,  the  illegality 
insisted  on,  the  legal  problem  plainly  is  this:  whether,  when  a  de- 
fendant has  agreed  to  do  two  things,  which  are  entirely  distinct,  and 
one  of  them  is  prohibited  by  law,  and  the  other  is  legal  and  unob- 
jectionable, such  illegality  of  the  one  stipulation  can  be  set  up  as  a 
bar  to  a  suit  for  a  breach  of  the  latter  and  valid  one.  This  point 
was  but  slightly  noticed  on  the  argument;  nevertheless,  an  examina- 
tion of  the  authorities  will  show  that  the  rule  of  law  upon  the  sub- 
ject has,  from  the  earliest  times,  been  at  rest.  It  was  unanimously 
agreed,  in  a  case  reported  in  the  Year  Books,  14  Henry  VIII.  25,  26, 
that  if  some  of  the  covenants  of  an  indenture,  or  of  the  conditions 
indorsed  upon  a  bond,  are  against  law,  and  some  good  and  lawful, 
that  in  such  case,  the  covenants  or  conditions  which  are  against  law 


426  FORMATION   OF   CONTRACT. 

are  void  ab  initio,  and  the  others  stand  good.  And  from  that  day 
to  this,  I  do  not  know  that  this  doctrine,  to  the  extent  of  its  applica- 
bility to  this  case,  has  anywhere  been  disallowed.  It  was  the  ground 
of  the  judgment  in  Chesman  v.  Nainby  (2  Lord  Eaymond,  1456), 
that  being  a  suit  on  an  apprentice's  bond.  The  stipulation  alleged 
to  have  been  broken  was,  that  the  apprentice  would  not  carry  on  the 
business  in  which  she  was  to  be  instructed,  within  "the  space  of  half 
a  mile"  of  the  then  dwelling-house  of  the  plaintiff.  There  was  also 
a  further  stipulation  that  she  should  not  carry  on  this  business  within 
half  a  mile  of  any  house  into  which  the  plaintiff  might  remove. 
The  suit  was  for  a  breach  of  the  former  stipulation,  and  it  was  ad- 
mitted that  the  latter  one  was  void,  as  imposing  an  unreasonable 
restraint  on  trade,  and  it  was  urged  that,  by  force  of  this  illegal 
feature,  the  whole  contract  was  void.  But  the  court  were  unani- 
mously of  opinion  that  as  the  breach  was  assigned  upon  that  part 
of  the  condition  which  was  good  in  law,  therefore  if  the  other  part, 
to  which  exception  was  taken,  was  against  law,  yet  that  would  not 
hinder  the  recovery  upon  part  of  the  condition  which  was  legal.  The 
judgment  was  afterwards  affirmed  by  the  twelve  judges,  on  an  appeal 
to  Parliament.  3  Bro.  Parl.  c.  349. 

This  rule  of  law  was  treated  as  settled,  and  was  similarly  applied 
in  the  modern  cases  of  Mallan  v.  May,  11  M.  &  W.  653,  and  Price 
v.  Green,  16  M.  &  W.  346.  This  same  legal  principle  will  be  found 
to  be  discussed  and  illustrated  by  different  applications  in  the  fol- 
lowing decisions:  Gaskell  v.  King,  11  East,  165;  15  Ib.  440;  Nicholls 
v.  Stretton,  10  Adol.  &  El.  N.  S.  346;  Chester  v.  Freeland,  Ley  E.  79; 
Sheerman  v.  Thompson,  11  Adol.  &  El.  1027. 

These  and  other  authorities  which  might  be  referred  to,  settle  the 
rule,  that  the  fact  that  one  promise  is  illegal  will  not  render  another 
disconnected  promise  void.  The  doctrine  will  not  embrace  cases 
where  the  objectionable  stipulation  is  for  the  performance  of  an  im- 
moral or  criminal  act,  for  such  an  ingredient  will  taint  the  entire 
contract,  and  render  it  unenforceable  in  all  its  parts,  by  reason  of 
the  maxim  ex  turpi  causa  non  oritur  actio.  Nor  will  it,  in  general, 
apply  where  any  part  of  the  consideration  is  illegal,  so  that  in  the 
present  case,  if,  upon  the  trial,  it  should  appear  that  the  plaintiffs 
have  agreed  to  pay  to  the  defendants  more  than  the  charter  of  the 
latter  allows,  it  may  become  a  question  whether  this  suit  will  lie. 
There  are  many  decisions  to  the  effect  that  where  there  are  a  number 
of  considerations,  and  any  one  6f  them  is  illegal,  the  whole  agreement 
is  avoided,  this  doctrine  being  put  upon  the  ground  of  the  impos- 
sibility of  saying  how  much  or  how  little  weight  the  void  portion  may 
have  had  as  an  inducement  to  the  contract.  But,  at  the  present  stage 
of  the  cause,  the  entire  consideration  of  the  promise  sued  on  must 


LEGALITY   OF   OBJECT.  427 

be  regarded  by  the  court  as  unobjectionable,  as  there  is  nothing  on 
the  record  to  show  any  overcharge. 

On  the  ground,  then,  that  both  the  consideration  and  the  promise, 
which  is  the  foundation  of  the  action,  appear  to  be  valid,  the  plain- 
tiffs must  have  judgment  on  this  demurrer. 

It  is  proper  to  remark  that  as  the  demurrer  ib  a  general  one  to 
the  whole  declaration,  I  have  considered  only  the  cause  of  action  set 
out  in  the  first  count. 

Judgment  for  plaintiffs. 

9  Cyc.  565   (23-24)  ;  W.  P.  482  (39). 


SANTA  CLAEA  VALLEY  MILL  AND  LUMBEE  CO.  v. 
HAYES  et  al 

76  CALIFORNIA,  387.— 1888. 

Action  for  damages  for  breach  of  contract.  Judgment  for  defend- 
ants. Plaintiff  appeals. 

Defendants  agreed  to  make  and  deliver  to  plaintiff  during  the  year 
1881  two  million  feet  of  lumber  at  eleven  dollars  per  thousand,  and 
not  to  manufacture  any  lumber  to  be  sold  during  that  period  in  the 
counties  of  Monterey,  San  Benito,  Santa  Cruz,  or  Santa  Clara,  ex- 
cept under  the  contract,  and  to  pay  plaintiff  twenty  dollars  per  thou- 
sand feet  for  any  lumber  so  sold  to  others  than  plaintiff.  This  con- 
tract was  a  part  of  a  scheme  by  which  plaintiff  got  possession  by 
ownership  or  lease  of  all  the  saw-mills  in  the  vicinity  of  Felton,  and 
shut  down  several  of  them  to  limit  the  supply  of  lumber,  and  to  give 
plaintiff  the  control  of  that  business. 

SEARLES,  C.  J.  .  .  .  The  contract  was  void  as  being  against  pub- 
lic policy,  and  the  defendants,  as  they  had  a  right  to  do,  repudiated 
the  contract.  Plaintiff,  who  has  parted  with  nothing  of  value,  now 
seeks  to  recover  damages  for  non-delivery  of  lumber  under  this  con- 
tract. Plaintiff  had  an  undoubted  right  to  purchase  any  or  all  the 
lumber  it  chose,  and  to  sell  at  such  prices  and  places  as  it  saw  fit, 
but  when  as  a  condition  of  purchase  it  bound  its  vendor  not  to  sell 
to  others  under  a  penalty,  it  transcended  a  rule  the  adoption  of  which 
has  been  dictated  by  the  experience  and  wisdom  of  ages  as  essential 
to  the  best  interests  of  the  community,  and  as  necessary  to  the  pro- 
tection alike  of  individuals  and  legitimate  trade. 

With  results  naturally  flowing  from  the  laws  of  demand  and  sup- 
ply, the  courts  have  nothing  to  do,  but  when  agreements  are  resorted 
to  for  the  purpose  of  taking  trade  out  of  the  realm  of  competition, 
and  thereby  enhancing  or  depressing  prices  of  commodities,  the  courts 


428  FORMATION   OF   CONTRACT. 

cannot  be  successfully  invoked,  and  their  execution  will  be  left  to 
the  volition  of  the  parties  thereto. 

It  is  claimed  by  appellant  that  the  contract  is  divisible,  and  the 
first  part  can  stand  though  the  latter  be  illegal. 

If  the  whole  vice  of  the  contract  was  embodied  in  the  promise  of 
the  defendants  not  to  sell  lumber  to  other  persons,  the  illegality 
would  lie  in  the  promise  alone,  and  it  might  be  contended  with  great 
force  that  this  promise  was  divisible  from  the  agreement  to  sell. 
Under  the  findings  of  the  court,  however,  the  illegality  inheres  in 
the  consideration. 

The  very  essence  and  mainspring  of  the  agreement — the  illegal 
object — "was  to  form  a  combination  among  all  the  manufacturers  of 
lumber  at  or  near  Felton  for  the  sole  purpose  of  increasing  the  price 
of  lumber,  limiting  the  amount  thereof  to  be  manufactured,  and 
give  plaintiff  control  of  all  lumber  manufactured,"  etc. 

This  being  the  inducement  to  the  agreement,  and  the  sole  object 
in  view,  it  cannot  be  separated  and  leave  any  subject  matter  capable 
of  enforcement,  as  was  done  in  Granger  v.  Empire  Co.,  59  Cal. 
678;  Treadwell  v.  Davis,  34  Cal.  601;  and  Jackson  v.  Shawl,  29 
Cal.  267. 

The  case  falls  within  the  rule  of  Valentine  v.  Stewart,  15  Cal. 
404;  Prost  v.  More,  40  Cal.  348;  More  v.  Bonnet,  40  Cal.  251; 
Forbes  v.  McDonald,  54  Cal.  98;  Arnot  v.  Pittston  and  Elmira  Coal 
Co.,  68  N.  Y.  559. 

The  good  cannot  be  separated  from  the  bad,  or  rather  the  bad 
enters  into  and  permeates  the  whole  contract,  so  that  none  of  it  can 
be  said  to  be  good,  and  therefore  the  subject  of  an  action.  .  .  . 

The  judgment  of  the  court  below  is  affirmed. 
9  Cyc.  535   (4) ;  566   (25)  ;  W.  P.  468   (39)  ;  482   (39). 


BISHOP  v.  PALMEE  et  al 
146  MASSACHUSETTS,  469.— 1888. 

Contract.  Demurrer  sustained.  Plaintiff  appeals.  Defendants 
purchased  plaintiff's  business  for  $5000,  the  plaintiff  agreeing  to 
transfer  to  defendants  his  business  at  A  and  his  business  at  B,  and 
covenanting  not  to  engage  in  the  first  business  again  anywhere  for 
five  years,  or  in  the  second,  at  B  for  five  years,  or  to  purchase  any 
material  from  the  rival  concerns  at  B. 

C.  ALLEN,  J.  The  defendants'  promise  which  is  declared  on  was 
made  in  consideration  of  the  sale  and  delivery  of  the  business,  plant, 
property,  and  contracts  of  the  plaintiff,  and  of  his  faithful  perform- 
ance of  the  covenants  and  agreements  contained  in  the  written  instru- 


LEGALITY   OF   OBJECT.  429 

ment  signed  by  the  parties.  The  parties  made  no  apportionment  or 
separate  valuation  of  the  different  elements  of  the  consideration.  The 
business,  plant,  property,  contracts,  and  covenants  were  all  com- 
bined as  forming  one  entire  consideration.  There  is  no  way  of  ascer- 
taining what  valuation  was  put  by  the  parties  upon  either  portion 
of  it.  There  is  no  suggestion  that  there  was  any  such  separate  valu- 
ation, and  any  estimate  which  might  now  be  put  upon  any  item 
would  not  be  the  estimate  of  the  parties. 

It  is  contended  by  the  defendants  that  each  one  of  the  three  par- 
ticular covenants  and  agreements  into  which  the  plaintiff  entered 
is  illegal  and  void,  as  being  in  restraint  of  trade.  It  is  sufficient  for 
us  to  say  that  the  first  of  them  is  clearly  so ;  it  being  a  general  agree- 
ment, without  any  limitation  of  space,  that  for  and  during  the  period 
of  five  years  he  will  not,  either  directly  or  indirectly,  continue  in, 
carry  on,  or  engage  in  the  business  of  manufacturing  or  dealing  in 
bed-quilts  or  comfortables,  or  of  any  business  of  which  that  may 
form  any  part.  This  much  is  virtually  conceded  by  the  plaintiff, 
and  so  are  the  authorities.  Taylor  v.  Blanchard,  13  Allen,  370; 
Dean  v.  Emerson,  102  Mass.  480;  Morse  Twist  Drill  Co.  v.  Morse, 
103  Mass.  73 ;  Alger  v.  Thacher,  19  Pick.  51 ;  Oregon  Steam  Naviga- 
tion Co.  v.  Winsor,  20  Wall.  64;  Davies  v.  Davies,  36  Ch.  D.  359; 
2  Kent  Com.  466,  note  e;  Met.  Con.  232. 

Two  principal  grounds  on  which  such  contracts  are  held  to  be 
void  are,  that  they  tend  to  deprive  the  public  of  the  services  of  men 
in  the  employments  and  capacities  in  which  they  may  be  most  useful, 
and  that  they  expose  the  public  to  the  evils  of  monopoly.  Alger  v. 
Thacher,  ubi  supra. 

The  question  then  arises,  whether  an  action  can  be  supported  upon 
the  promise  of  the  defendants,  founded  upon  such  a  consideration 
as  that  which  has  been  described.  As  a  general  rule,  where  a  promise 
is  made  for  one  entire  consideration,  a  part  of  which  is  fraudulent, 
immoral,  or  unlawful,  and  there  has  been  no  apportionment  made  or 
means  of  apportionment  furnished  by  the  parties  themselves,  it  is 
well  settled  that  no  action  will  lie  upon  the  promise.  If  the  bad 
part  of  the  consideration  is  not  severable  from  the  good,  the  whole 
promise  fails.  Eobinson  v.  Green,  3  Met.  159,  161 ;  Rand  v.  Mather, 
11  Gush.  1;  Woodruff  v.  Wentworth,  133  Mass.  309,  314;  Bliss  v. 
Negus,  8  Mass.  46,  51;  Clark  v.  Ricker,  14  N.  H.  44;  Woodruff  v. 
Hinman,  11  Vt.  592;  Pickering  v.  Ilfracombe  Railway,  L.  R.  3  C. 
P.  235,  250;  Harrington  v.  Victoria  Graving  Dock  Co.,  3  Q.  B.  D. 
549;  2  Chit  Con.  (llth  Am.  ed.)  972;  Leake,  Con.  779,  780;  Pol- 
lock, Con.  321;  Met.  Con.  247. 

It  is  urged  that  this  rule  does  not  apply  to  a  stipulation  of  this 
character,  which  violates  no  penal  statute,  which  contains  nothing 
malum  in  se,  and  which  is  simply  a  promise  not  enforceable  at  law. 


430  FORMATION    OF   CONTRACT. 

But  a  contract  in  restraint  of  trade  is  held  to  be  void  because  it  tends 
to  the  prejudice  of  the  public.  It  is  therefore  deemed  by  the  law 
to  be  not  merely  an  insufficient  or  invalid  consideration,  but  a  vicious 
one.  Being  so,  it  rests  on  the  same  ground  as  if  such  contracts  were 
forbidden  by  positive  statute.  They  are  forbidden  by  the  common 
law,  and  are  held  to  be  illegal.  2  Kent  Com.  466;  Met.  Con.  221; 
2  Chit.  Con.  974;  White  v.  Buss,  3  Cush.  448,  450;  Hynds  v.  Hays, 
25  Ind.  31,  36. 

It  is  contended  that  the  defendants,  by  being  unable  to  enforce 
the  stipulation  in  question,  only  lose  what  they  knew  or  were  bound 
to  know  was  legally  null;  that  they  have  all  that  they  supposed  they 
were  getting,  namely,  a  promise  which  might  be  kept,  though  inca- 
pable of  legal  enforcement;  and  that  if  they  were  content  to  accept 
such  promise,  and  if  there  is  another  good  and  sufficient  considera- 
tion, they  may  be  held  upon  their  promise.  But  this  argument  can- 
not properly  extend  to  a  case  where  a  part  of  an  entire  and  inseparable 
consideration  is  positively  vicious,  however  it  might  be  where  it  was 
simply  invalid,  as  in  Parish  v.  Stone,  14  Pick.  198.  Th'e  law  visits 
a  contract  founded  on  such  a  consideration  with  a  positive  condem- 
nation, which  it  makes  effectual  by  refusing  to  support  it,  in  whole 
or  in  part,  where  the  consideration  cannot  be  severed. 

The  fact  that  the  plaintiff  had  not  failed  to  perform  his  part  of 
the  contract  does  not  enable  him  to  maintain  his  action.  An  illegal 
consideration  may  be  actual  and  substantial  and  valuable;  but  it  is 
not  in  law  sufficient. 

The  plaintiff  further  suggests  that,  if  the  defendants  were  to  sue 
him  on  this  contract,  they  could  clearly,  so  far  as  the  question  of 
legality  is  concerned,  maintain  an  action  upon  all  its  parts,  except 
possibly  the  single  covenant  in  question.  Mallan  v.  May,  11  M.  & 
W.  653 ;  Green  v.  Price,  13  M.  &  W.  695 ;  S.  C.  16  M.  &  W.  346. 
This  may  be  so.  If  they  pay  to  the  plaintiff  the  whole  sum  called 
for  by  the  terms  of  the  contract,  it  may  well  be  that  they  can  call 
on  him  to  perform  all  of  his  agreements  except  such  as  are  unlawful. 
In  such  case,  they  would  merely  waive  or  forego  a  part  of  what 
they  were  to  receive,  and  recover  or  enforce  the  rest.  It  does  not, 
however,  follow  from  this  that  they  can  be  compelled  to  pay  the  sum 
promised  by  them,  when  a  part  of  the  consideration  of  such  promise 
was  illegal.  They  are  at  liberty  to  repudiate  the  contract  on  this 
ground;  and,  having  done  so,  the  present  action  founded  on  the 
contract  cannot  be  maintained;  and  it  is  not  now  to  be  determined 
what  other  liability  the  defendants  may  be  under  to  the  plaintiff,  by 
reason  of  what  they  may  have  received  under  the  contract. 

Judgment  affirmed.1 

9  Cyc.  566  (29)  ;  W.  P.  483  (40)  ;  484  (41). 

iln   Bixby  v.  Moor,  51   N.  H.   402,  plaintiff  sued  to   recover  for  services. 


LEGALITY    OF    OBJECT.  431 

FISHELL  v.  GEAY. 

60  NEW  JERSEY  LAW,  5.— 1897. 

Action  by  Fishell  against  Gray,  as  receiver  of  the  United  States 
Credit  System  Company,  to  recover  the  purchase  price  of  a  business, 
good  will,  etc.  Verdict  for  plaintiff. 

BEASLEY,  C.  J.  A  sealed  agreement  is  the  basis  of  this  suit.  The 
parties  to  the  deed  were  the  plaintiff,  Fishell,  and  the  United  States 
Credit  System  Company,  a  corporation,  that  has  become  insolvent, 
and  is  now  represented  by  Gray,  as  receiver.  By  this  instrument 
the  plaintiff  assigned  to  the  company  just  designated  the  good  will 
of  a  large  and  valuable  business  for  the  insurance  of  merchants 
against  losses  which  he  had  carried  on  and  established,  together  with 
certain  personal  property,  and  in  addition  stipulated  as  follows,  viz. : 

"Fourth.  That  the  said  party  of  the  second  part,  for  the  consid- 
eration aforesaid,  hereby  agrees  not  to  interest  himself,  or  engage  in, 
or  have  others  interest  themselves  for  his  benefit  or  in  his  behalf  in 
any  manner,  in  any  company,  corporation,  or  firm  whose  business  is 
that  of  guarantying  merchants  or  others  against  loss  in  business; 
and,  should  the  said  party  of  the  second  part  violate  his  agreement 
in  this  paragraph  contained,  the  payments  agreed  to  be  made  to 
him  in  the  third  paragraph  of  this  contract  are  to  thereupon  cease, 
and  to  be  forfeited  forever  thereafter." 

The  action  is  brought  to  recover  the  moneys  agreed  to  be  paid  by 
the  company  in  return  for  the  transfer  above  mentioned,  and  the 
covenants  contained  in  the  agreement  on  the  part  of  the  plaintiff. 
The  jury,  under  the  instructions  of  the  court,  found  for  the  plain- 
tiff, and  motion  now  is  to  set  aside  that  verdict. 

The  principal  contention  against  a  recovery  on  the  deed  in  ques- 
tion argued  and  discussed  in  the  brief  of  the  counsel  of  the  defend- 
ant is  that  the  agreement  in  suit  is  illegal  and  void  by  reason  of 
the  stipulation  above  recited  to  the  effect  that  the  plaintiff  would 
not  in  any  wise  engage  in  the  insurance  business,  whose  good  will 
was  transferred  to  the  Credit  System  Company.  The  proposition 

The  defendants  kept  a  billiard  saloon  and  bar.  The  sale  of  liquor  was  illegal. 
The  plaintiff  was  employed  by  the  defendants  to  work  generally  in  and  about 
the  saloon,  but  there  was  no  special  agreement  that  he  should  or  should  not 
sell  liquors.  He  opened  the  saloon,  built  fires,  took  care  of  billiard  tables, 
waited  on  customers  at  the  bar,  and  in  the  absence  of  defendants  had  the 
whole  charge  of  the  business.  The  court  said:  "We  are  of  opinion  that, 
even  if  part  of  the  business  was  lawful,  still  the  plaintiff  cannot  recover.  If 
the  consideration  for  the  defendants'  promise  to  pay  the  plaintiff  a  reasonable 
compensation  was  the  plaintiff's  promise  to  perform  both  classes  of  services, 
the  illegal  as  well  as  tie  legal,  it  is  clear  that  the  defendants'  promise  could 
not  be  enforced.  A  contract  is  invalid  if  any  part  of  the  consideration  on  either 
side  is  unlawful." 


432  FORMATION   OF   CONTRACT. 

posited  is  that,  as  this  part  of  the  consideration  for  the  defendant's 
promise  is  illegal,  the  entire  contract  falls,  and  that  no  part  of  it 
can  be  enforced.  In  support  of  this  position  a  number  of  authorities 
are  cited,  some  of  which  sustain  it.  The  rule  is  generally  laid  down 
by  the  text-writers  in  treating  of  the  effect  of  an  illegal  element  in 
the  consideration  of  contracts  in  terms  so  general  that  it  embraces 
the  class  of  stipulations  which  provide  in  too  broad  a  form  against 
competition  in  a  given  business.  According  to  it,  a  contract  not  to 
compete  in  a  certain  business  within  reasonable  bounds  as  to  place  is 
permissible,  but,  if  it  possesses  too  wide  a  scope,  it  becomes  an  unnec- 
essary restraint  of  trade,  and  it  vitiates  all  promises  that  rest  upon  it, 
in  whole  or  in  part,  as  a  consideration.  As  a  consideration,  it  was,  in 
the  earlier  cases,  treated  as  devoid  of  legal  force,  but  it  was  deemed 
to  vitiate  all  other  considerations  with  which  it  was  blended.  On 
this  theory  an  agreement  to  abstain  generally  from  carrying  on  a 
certain  business,  as  in  the  present  case,  was  treated  as  though  it  were 
an  agreement  to  commit  a  crime,  and,  as  a  consequence,  it  illegalized 
everything  that  it  touched.  But  this  view,  it  has  since  been  perceived, 
is  unnecessarily  stringent,  and  is,  in  fact,  quite  unreasonable.  There 
is  nothing  immoral  or  criminal  in  a  stipulaton  not  to  engage  in  a 
certain  business.  A  man  may  bind  himself  to  such  an  abstention 
without  incurring  any  legal  penalty.  The  only  effect  is  that  such  an 
engagement  cannot  be  enforced,  either  at  law  or  in  equity.  And  this 
is  the  aspect  in  which  it  is  regarded  by  the  modern  authorities.  This 
modification  of  judicial  opinion  is  very  pointedly  stated  in  one  of 
the  cases  cited  in  the  brief  of  the  counsel  of  the  plaintiff.  The 
authority  thus  vouched  i's  that  of  Green  v.  Price  (13  Mees.  &  W.  695), 
and  in  it,  Pollock,  C.  B.,  referring  to  the  sort  of  agreement  now  in 
question,  said:  "It  is  not  like  a  contract  to  do  an  illegal  act.  It 
is  merely  a  covenant,  which  the  law  will  not  enforce,  but  the  party 
may  perform  it  if  he  chooses."  And  upon  the  citation  by  counsel 
of  cases  holding  a  contrary  doctrine  the  reply  of  the  chief  baron 
was :  "The  policy  of  the  law  has  been  altered  since  that  time.  It  has 
been  found  to  be  beneficial  to  commerce  that  there  should  be  a  re- 
straint of  trade  to  some  extent,  and  the  courts  thereupon  retrace 
their  steps." 

This  distinction  between  a  merely  unenforceable  promise  in  a  mat- 
ter of  this  kind  and  one  that  is  criminal  is  illustrated  in  the  decision 
of  the  case  of  Erie  Ry.  Co.  ads.  Union  Locomotive  &  Express  Co., 
[35  N".  J.  L.  240]  the  principle  being  maintained  that  a  stipulation 
that  was  not  immoral  would  not  vitiate  or  avoid  the  entire  agreement. 
And  if  we  regard  the  dictates  of  justice  alone,  no  other  doctrine  is  pos- 
sible. This  is  obvious  from  the  present  case.  If  it  be  true  that  by  rea- 
son of  the  promise  of  the  plaintiff  to  abstain  from  this  business  being 
blended  with  the  residue  of  the  consideration  that  consisted  of  valu- 


LEGALITY   OF   OBJECT.  433 

able  interests  transferred  to  the  company,  will  prevent  a  recovery  of 
the  price  agreed  to  be  paid  for  such  property,  and  will  enable  the 
company  to  retain  it  without  giving  the  equivalent  agreed  upon,  a 
result  certainly  obtains  that  would  be  both  wholly  unconscionable 
and  impolitic.  According  to  the  principle  forming  the  basis  of  the 
decision  in  the  Erie  Railway  case,  just  cited,  that  the  presence  in  a 
contract  of  one  of  these  inhibited  undertakings  does  not  in  any  degree 
whatever  either  add  to  or  deprive  it  of  its  legal  efficacy,  standing 
alone  it  will  not  constitute  a  legal  consideration,  nor  will  it,  to  any 
extent,  be  executed.  The  later  decisions  upon  the  subject  appear  to 
regard  this  as  the  true  principle.  Mallan  v.  May,  11  Mees.  &  W. 
653 ;  Wallis  v.  Day,  2  Mees.  &  W.  273. 

The  other  points  raised  in  the  brief  have  been  considered,  but  none 
of  them,  as  it  is  deemed,  are  possessed  of  sufficient  substance  to  re- 
quire judicial  exposition.  They  were  properly  disposed  of  by  the 
trial  judge. 

Let  the  rule  be  discharged.1 

9  Cyc.  565  (23)  ;  W.  P.  482  (39)  ;  484  (41)  ;  14  H.  L.  R.  614;  21  H.  L.  R. 
549;  1  C.  L.  R.  321. 

i  In  Pierce  v.  Pierce,  17  Ind.  App.  107,  it  was  held  that  where  A  sold  B  his 
stock  and  fixtures  "including  the  license  to  sell"  and  by  law  the  transfer  of 
the  license  was  illegal,  A  could  recover  the  purchase  price  since  B  was  bound  to 
know  that  no  benefit  could  accrue  to  him  under  the  transfer  of  the  license,  and 
that  therefore  the  license  constituted  no  part  of  the  consideration. 

In  King  v.  King,  executor,  63  Oh.  St.  363,  plaintiff's  action  was  to  recover 
for  personal  services  rendered  in  the  performance  of  a  contract.  The  contract, 
as  stated  in  the  petition,  was  that  "this  plaintiff  agreed  with  the  said  James 
Rowland  that  she  would  refrain  from  marriage  while  he  should  live,  and  that 
she  would  live  with  him  and  take  care  of  him  while  he  lived,  and  he  in  consider- 
ation thereof,  agreed  that  he  would  provide  for  her  amply  sufficient  to  make  her 
comfortable  and  well  off."  Howland  in  his  will  left  to  plaintiff  a  legacy  of  five 
hundred  dollars,  but  save  small  amounts  of  money  given  her  from  time  to  time, 
did  not  perform  the  contract.  A  recovery  was  had,  the  court  saying,  "that  con- 
tracts in  restraint  of  marriage  are  void,  as  being  contrary  to  the  public  policy  of 
the  law,  is  conceded.  But  the  question  here  is  whether  the  contract  to  render 
service,  fully  performed  by  the  one  party,  so  rests  upon  the  promise  not  to 
marry,  or  is  so  tainted  by  that  part  of  the  agreement,  as  to  be  incapable  of 
enforcement.  The  consideration  moving  to  the  agreement  on  the  part  of  How- 
land  to  make  ample  provision  for  his  niece  was,  on  its  face,  twofold:  one,  the 
promise  to  perform  the  service  agreed  upon;  the  other,  not  to  marry  during 
the  continuance  of  such  service.  The  first  was  a  valid  promise  and  of  itself 
sufficient  to  support  the  promise  of  the  other  party;  the  second  was  a  void 
promise  not  affording  any  consideration  whatever.  As  given  in  text-books 
and  numerous  decisions,  the  general  rule  is  that  if  one  of  two  considerations 
for  a  promise  be  merely  void,  the  other  will  support  the  promise,  although 
if  one  of  two  considerations  be  unlawful,  the  promise  of  the  other  party  is 
void;  and  yet  this  rule  has  many  exceptions  as  will  be  shown  later  on.  That 
is,  if  one  of  two  considerations  is  void  merely  for  insufficiency,  and  not  for 
illegality,  the  other  will  support  the  contract.  .  .  .  This  distinction  between 
a  contract  merely  void,  and  an  illegal  contract,  would  seem  to  be  an  important 


434  FORMATION    OF    CONTRACT. 

(it.)  The  intention  of  the  parties. 

TYLER  v.  CARLISLE. 

79  MAINE,  210.— 1887. 

Assumpsit.     Verdict  for  defendant. 

PETERS,  C.  J.  The  plaintiff  claims  to  recover  a  sum  of  money 
loaned  by  him  while  the  defendant  was  engaged  in  playing  at  cards. 
The  ruling,  at  the  trial,  was  that,  if  the  plaintiff  let  the  money  with 
an  express  understanding,  intention,  and  purpose  that  it  was  to  be 
used  to  gamble  with,  and  it  was  so  used,  the  debt  so  created  cannot 
be  recovered;  but  otherwise,  if  the  plaintiff  had  merely  knowledge 
that  the  money  was  to  be  so  used.  Upon  authority  and  principle 
the  ruling  was  correct. 

Any  different  doctrine  would,  in  most  instances,  be  impracticable 
and  unjust.  It  does  not  follow  that  a  lender  has  a  guilty  purpose 
merely  because  he  knows  or  believes  that  the  borrower  has.  There 
may  be  a  visible  line  between  the  motives  of  the  two.  If  it  were 
not  so,  men  would  have  great  responsibilities  for  the  motives  and  acts 
of  others.  A  person  may  loan  money  to  his  friend, — to  the  man, 
and  not  to  his  purpose.  He  may  at  the  same  time  disapprove  his 
purpose.  He  may  not  be  willing  to  deny  his  friend,  however  much 
disapproving  his  acts. 

In  order  to  find  the  lender  in  fault,  he  must  himself  have  an  in- 
tention that  the  money  shall  be  illegally  used.  There  must  be  a 
combination  of  intention  between  lender  and  borrower — a  union  of 
purposes.  The  lender  must  in  some  manner  be  a  confederate  or 
participator  in  the  borrower's  act,  be  himself  implicated  in  it.  He 
must  loan  his  money  for  the  express  purpose  of  promoting  the  illegal 
design  of  the  borrower;  not  intend  merely  to  serve  or  accommodate 
the  man.  In  support  of  this  view  many  cases  might  be  adduced. 
A  few  prominent  ones  will  suffice.  Green  v.  Collins,  3  Cliff.  494; 
Gaylord  v.  Soragen,  32  Vt.  110;  Hill  v.  Spear,  50  X.  H.  252;  Peck 

one.  ...  A  void  contract  is  one  which  has  no  legal  force,  and  which,  for  that 
reason,  cannot  be  enforced;  an  unlawful  contract  is  one 'to  do  an  act  which 
the  law  forbids,  or  to  omit  an  act  which  the  law  enjoins,  and  for  that  reason 
is  non-enforceable.  There  is  no  provision,  either  by  statute  or  at  common 
law.  which  enjoins  on  any  particular  person  the  duty  to  marry,  nor  can  any- 
one be  punished  for  not  marrying.  To  marry,  or  not  to  marry,  is  left  to  the 
free  choice  of  all  who  are  eligible  to  marriage.  Hence  to  omit  to  marry  is  not 
illegal,  though  the  promise  to  omit  is  one  which  the  law  will  not  enforce.  It 
would  appear  naturally  to  follow  that  the  only  result  of  making  such  a  prom- 
ise would  simply  be  that  no  legal  right  could  be  founded  on  the  promise  and 
no  remedy  afforded  for  its  breach.  It  is  difficult  to  see  any  good  reason  for 
denouncing  such  contract  as  illegal  in  the  sense  of  violating  any  law,  or  of 
placing  parties  who  may  have  entered  into  it  outside  of  the  pale  of  the  law." 


LEGALITY    OF   OBJECT.  435 

v.  Briggs,  3  Denio,  107;  M'Intyre  v.  Parks,  3  Met.  207;  Banchor  v. 
Mansel,  47  Maine,  58.     (See  68  Maine,  p.  47.) 

Nor  was  the  branch  of  the  ruling  wrong,  that  plaintiff,  even  though 
a  participator,  could  recover  his  money  back,  if  it  had  not  been 
actually  used  for  illegal  purposes.  In  the  minor  offenses,  the  locus 
pcenitentice  continues  until  the  money  has  been  actually  converted  to 
the  illegal  use.  The  law  encourages  a  repudiation  of  the  illegal  con- 
tract, even  by  a  guilty  participator,  as  long  as  it  remains  an  executory 
contract  or  the  illegal  purpose  has  not  been  put  in  operation.  The 
lender  can  cease  his  own  criminal  design  and  reclaim  his  money. 
"The  reason  is/'  says  Wharton,  "the  plaintiff's  claim  is  not  to  enforce, 
but  to  repudiate,  an  illegal  contract."  Whar.  Con.  §  354,  and  cases 
there  cited.  The  object  of  the  law  is  to  protect  the  public — not  the 
parties.  "It  best  comports  with  public  policy,  to  arrest  the  illegal 
transaction  before  it  is  consummated/'  says  the  court  in  Stacy  v. 
Foss,  19  Maine,  335.  See  White  v.  Bank,  22  Pick.  181. 

The  rule  allowing  a  recovery  back  does  not  apply  where  the  lender 
knows  that  some  infamous  crime  is  to  be  committed  with  the  means 
which  he  furnishes.  It  applies  only  where  the  minor  offenses  are 
involved. 

Exceptions  overruled. 
9  Cyc.  574-575  (72-74)  ;  W.  P.  485  (42)  ;  487  (43). 


GEAVES  et  al  v.  JOHNSON. 
156  MASSACHUSETTS,  211.— 1892. 

HOLMES,  J.  This  is  an  action  for  the  price  of  intoxicating  liquors. 
It  is  found  that  they  were  sold  and  delivered  in  Massachusetts  by 
the  plaintiffs  to  the  defendant,  a  Maine  hotel  keeper,  with  a  view 
to  their  being  resold  by  the  defendant  in  Maine,  against  the  laws  of 
that  State.  These  are  all  the  material  facts  reported;  and  these 
findings'  we  must  assume  to  have  been  warranted,  as  the  evidence 
is  not  reported,  so  that  no  question  of  the  power  of  Maine  to  prohibit 
the  sales  is  open.  The  only  question  is,  whether  the  facts  as  stated 
show  a  bar  to  this  action. 

The  question  is  to  be  decided  on  principles  which  we  presume 
would  prevail  generally  in  the  administration  of  the  common  law  in 
this  country.  Not  only  should  it  be  decided  in  the  same  way  in 
which  we  should  expect  a  Maine  court  to  decide  upon  a  Maine  con- 
tract presenting  a  similar  question,  but  it  should  be  decided  as  we 
think  that  a  Maine  court  ought  to  decide  this  very  case  if  the  action 
were  brought  there.  It  is  noticeable,  and  it  has  been  observed  by 
Sir  F.  Pollock,  that  some  of  the  English  cases  which  have  gone  far- 


436  FORMATION   OF   CONTRACT. 

thest  in  asserting  the  right  to  disregard  the  revenue  laws  of  a  country 
other  than  that  where  the  contract  is  made  and  is  to  be  performed, 
have  had  reference  to  the  English  revenue  laws.  Holman  v.  Johnson, 
1  Cowp.  341;  Pollock,  Con.  (5th  ed.)  308.  See  also  M'Intyre  v. 
Parks,  3  Met.  207. 

The  assertion  of  that  right,  however,  no  doubt  was  in  the  interest 
of  English  commerce  (Pellecat  v.  Angell,  2  Cr.,  M.  &  E.  311,  313), 
and  has  not  escaped  criticism  (Story,  Confl.  Laws  §§  257,  254,  note; 
3  Kent  Com.  265,  266;  and  Wharton,  Confl.  Laws,  §  484),  although 
there  may  be  a  question  how  far  the  actual  decisions  go  beyond  what 
would  have  been  held  in  the  case  of  an  English  contract  affecting  only 
English  laws.  See  Hodgson  v.  Temple,  5  Taunt.  181;  Brown  v. 
Duncan,  10  B.  &  C.  93,  98,  99 ;  Harris  v.  Eunnels,  12  How.  79,  83,  84. 

Of  course  it  would  be  possible  for  an  independent  State  to  enforce 
all  contracts  made  and  to  be  performed  within  its  territory,  without 
regard  to  how  much  they  might  contravene  the  policy  of  its  neighbor's 
laws.  But  in  fact  no  State  pursues  such  a  course  of  barbarous  isola- 
tion. As  a  general  proposition,  it  is  admitted  that  an  agreement  to 
break  the  laws  of  a  foreign  country  would  be  invalid.  Pollock,  Con. 
(5th  ed.)  308.  The  courts  are  agreed  on  the  invalidity  of  a  sale 
when  the  contract  contemplates  a  design  on  the  part  of  the  purchaser 
to  resell  contrary  to  the  laws  of  a  neighboring  State,  and  requires 
an  act  on  the  part  of  the'  seller  in  furtherance  of  the  scheme.  Way- 
mell  v.  Keed,  5  T.  R.  599;  Gaylord  v.  Soragen,  32  Vt.  110;  Fisher 
v.  Lord,  63  N.  H.  514;  Hull  v.  Euggles,  56  N.  Y.  424,  429. 

On  the  other  hand,  plainly,  it  would  not  be  enough  to  prevent  a 
recovery  of  the  price  that  the  seller  had  reason  to  believe  that  the 
buyer  intended  to  resell  the  goods  in  violation  of  law;  he  must  have 
known  the  intention  in  fact.  Finch  v.  Mansfield,  97  Mass.  89,  92; 
Adams  v.  Coulliard,  102  Mass.  167,  173.  As  in  the  case  of  torts,  a 
man  has  a  right  to  expect  lawful  conduct  from  others.  In  order  to 
charge  him  with  the  consequences  of  the  act  of  an  intervening  wrong- 
doer, you  must  show  that  he  actually  contemplated  the  act.  Hayes  v. 
Hyde  Park,  153  Mass.  514,  515,  516. 

Between  these  two  extremes  a  line  is  to  be  drawn.  But  as  the 
point  where  it  should  fall  is  to  be  determined  by  the  intimacy  of 
the  connection  between  the  bargain  and  the  breach  of  the  law  in  the 
particular  case,  the  bargain  having  no  general  and  necessary  tendency 
to  induce  such  a  breach,  it  is  not  surprising  that  courts  should  have 
drawn  the  line  in  slightly  different  places.  It  has  been  thought  not 
enough  to  invalidate  a  sale,  that  the  seller  merely  knows  that  the 
buyer  intends  to  resell,  in  violation  even  of  the  domestic  law.  Tracy 
v.  Talmage,  4  Kernan,  162 ;  Hodgson  v.  Temple,  5  Taunt.  181.  So 
of  the  law  of  another  State.  M'Intyre  v.  Parks,  3  Met.  207 ;  Sortwell 
T.  Hughes,  1  Curt.  C.  C.  244 ;  Green  v.  Collins,  3  Cliff.  494 ;  Hill  v. 


LEGALITY    OF   OBJECT.  437 

Spear,  50  N.  H.  253 ;  Dater  v.  Earl,  3  Gray,  482,  in  a  decision  on 
New  York  law. 

But  there  are  strong  intimations  in  the  later  Massachusetts  cases 
that  the  law  on  the  last  point  is  the  other  way.  Finch  v.  Mansfield, 
97  Mass.  89,  92;  Suit  v.  Woodhall,  113  Mass.  391,  395.  And  the 
English  decisions  have  gone  great  lengths  in  the  case  of  knowledge 
of  intent  to  break  the  domestic  law.  Pearce  v.  Brooks,  L.  E.  1  Ex. 
213 ;  Taylor  v.  Chester,  L.  K.  4  Q.  B.  309,  311. 

However  this  may  be,  it  is  decided  that  when  a  sale  of  intoxicating 
liquor  in  another  State  has  just  so  much  greater  proximity  to  a 
breach  of  the  Massachusetts  law  as  is  implied  in  the  statement  that 
it  was  made  with  a  view  to  such  a  breach,  it  is  void.  Webster  v. 
Munger,  8  Gray,  584;  Orcutt  v.  Nelson,  1  Gray,  536,  541;  Hubbell 
v.  Flint,  13  Gray,  277,  279;  Adams  v.  Coulliard,  102  Mass.  167, 
172,  173.  Even  in  Green  v.  Collins  and  Hill  v.  Spear,  the  decision 
in  Webster  v.  Munger  seems  to  be  approved.  See  also  Langton  v. 
Hughes,  1  M.  &  S.  593;  M'Kinnell  v.  Eobinson,  3  M.  &  W.  434, 
441 ;  White  v.  Buss,  3  Gush.  448.  If  the  sale  would  not  have  been 
made  but  for  the  seller's  desire  to  induce  an  unlawful  sale  in  Maine, 
it  would  be  an  unlawful  sale  on  the  principles  explained  in  Hayes 
v.  Hyde  Park,  153  Mass.  514,  and  Tasker  v.  Stanley,  153  Mass.  148. 
The  overt  act  of  selling  which  otherwise  would  be  too  remote  from 
the  apprehended  result,  an  unlawful  sale  by  some  one  else,  would  be 
connected  with  it,  and  taken  out  of  the  protection  of  the  law  by  the 
fact  that  the  result  was  actually  intended.  We  do  not  understand 
the  judge  to  have  gone  so  far  as  we  have  just  supposed.  We  assume 
that  the  sale  would  have  taken  place,  whatever  the  buyer  had  been 
expected  to  do  with  the  goods.  But  we  understand  the  judge  to 
have  found  that  the  seller  expected  and  desired  the  buyer  to  sell 
unlawfully  in  Maine,  and  intended  to  facilitate  his  doing  so,  and 
that  he  was  known  by  the  buyer  to  have  that  intent.  The  question 
is  whether  the  sale  is  saved  by  the  fact  that  the  intent  mentioned  was 
not  the  controlling  inducement  to  it.  As  the  connection  between 
the  act  in  question,  the  sale  here,  and  the  illegal  result,  the  sale  in 
Maine — the  tendency  of  the  act  to  produce  the  result — is  only  through 
the  later  action  of  another  man,  the  degree  of  connection  or 
tendency  may  vary  by  delicate  shades.  If  the  buyer  knows  that  the 
sale  is  made  only  for  the  purpose  of  facilitating  his  illegal  conduct, 
the  connection  is  at  the  strongest.  If  the  sale  is  made  with  the  de- 
sire to  help  him  to  his  end,  although  primarily  made  for  money, 
the  seller  cannot  complain  if  the  illegal  consequence  is  attributed 
to  him.  If  the  buyer  knows  that  the  seller,  while  aware  of  his  intent, 
is  indifferent  to  it,  or  disapproves  of  it,  it  may  be  doubtful  whether 
the  connection  is  sufficient.  Compare  Commonwealth  v.  Churchill, 
136  Mass.  148,  150.  It  appears  to  us  not  unreasonable  to  draw  the 


438  FORMATION   OF    CONTBACT. 

line  as  it  was  drawn  in  Webster  v.  Hunger,  and  to  say  that,  when 
the  illegal  intent  of  the  buyer  is  not  only  known  to  the  seller,  but 
encouraged  by  the  sale  as  just  explained,  the  sale  is  void.  The  ac- 
complice is  none  the  less  an  accomplice  because  he  is  paid  for  his 
act.  See  Commonwealth  v.  Harrington,  3  Pick.  26. 

The  ground  of  the  decision  in  Webster  v.  Hunger  is,  that  contracts 
like  the  present  are  void.  If  the  contract  had  been  valid,  it  would 
have  been  enforced.  Dater  v.  Earl,  3  Gray,  482 ;  H'Intyre  v.  Parks, 
3  Het.  207.  As  we  have  said  or  implied  already,  no  distinction  can 
be  admitted  based  on  the  fact  that  the  law  to  be  violated  in  that 
case  was  the  lex  fori.  For  if  such  a  distinction  is  ever  sound,  and 
again,  if  the  same  principles  are  not  always  to  be  applied,  whether 
the  law  to  be  violated  is  that  of  "the  State  of  the  contract  or  of  an- 
other State  (see  Tracy  v.  Talmage,  4  Kernan,  162,  213),  at  least  the 
right  to  contract  with  a  view  to  a  breach  of  the  laws  of  another 
State  of  this  Union  ought  not  to  be  recognized  as  against  a  statute 
passed  to  carry  out  fundamental  beliefs  about  right  and  wrong,  shared 
by  a  large  part  of  our  own  citizens.  Territt  v.  Bartlett,  21  Vt.  184, 
188,  189.  In  the  opinion  of  a  majority  of  the  court,  this  case  is 
governed  by  Webster  v.  Hunger,  and  we  believe  that  it  would  have 
been  decided  as  we  decide  it,  if  the  action  had  been  brought  in  Haine 
instead  of  here.  Banchor  v.  Hansel,  47  Haine,  58. 

Exceptions  sustained.1 

9  Cyc.  571-573  (50-62,  67)  ;  15  L.  R.  A.  834;  W.  P.  432  (90)  ;  485  (42)  ; 
14  H.  L.  R.  381 ;  40  Amer.  L.  Reg.  549. 

i  In  Hull  v.  Ruggles,  56  N.  Y.  424,  the  action  was  for  goods  sold  and  de- 
livered. The  defence  was  that  the  goods,  which  consisted  of  what  is  known 
as  prize  candy  packages  with  some  articles  of  silverware,  were  intended  to 
be  used  as  a  lottery,  of  which  plaintiff  had  notice,  and  that  he  prepared 
the  goods  for  that  purpose.  The  court  said:  "The  plaintiff  cites,  as  an  au- 
thority in  his  favor,  Tracy  v.  Talmadge,  14  N.  Y.  162.  That  case  does  hold 
that  mere  knowledge  by  the  vendor,  that  the  purchaser  intends  to  make  an 
unlawful  use  of  the  property,  is  not  a  defence  to  an  action  for  its  price.  That 
is  perhaps  all  that  was  necessary  to  decide  in  that  case  for  the  determination 
of  the  questions  there  involved.  But  it  is  also  said  there,  that  if  the  vendor, 
with  knowledge  of  the  intent  of  the  purchaser,  do  anything  beyond  making 
the  sale,  to  aid  or  further  the  unlawful  design,  he  cannot  recover  for  the 
property.  And  in  the  opinion  given  there  are  cited  the  not  unfamiliar  Eng- 
lish cases,  in  which  it  is  held,  that  if  goods  be  bought  with  the  purpose  of 
smuggling  them  into  England,  though  the  vendor  have  knowledge  of  the 
purpose,  he  may  recover  the  price  of  the  goods  if  he  do  nothing  to  aid  in 
carrying  out  the  design  (Holman  v.  Johnson,  Cowp.  341)  ;  but  if  he  has  so 
packed  the  goods  as  to  facilitate  the  smuggling,  he  is  regarded  as  particeps 
criminis  and  cannot  recover.  Biggs  v.  Lawrence,  3  T.  R.  454;  Clugas  v. 
Penaluna,  4  T.  R.  466;  Waymell  v.  Reed,  5  T.  R.  599.  The  acts  of  the 
plaintiff  bring  him  within  the  principle  established  by  those  authorities." 


LEGALITY    OF   OBJECT.  439 


ANHEUSER-BUSCH  BREWING  ASSOCIATION 
v.  MASON. 

44  MINNESOTA,  318.— 1890. 

COLLINS,  J.  This  action  was  brought  to  recover  a  balance  claimed 
to  be  due  plaintiff  (a  corporation)  for,  and  on  account  of,  bottled 
beer  sold  to  the  defendant.  The  answer  alleged  that  at  the  time 
of  the  sale  defendant,  as  plaintiff  well  knew,  was  the  keeper  of  a 
house  of  prostitution;  that  plaintiff  sold  the  beer  expressly  for  use 
and  dispensation  in  and  for  carrying  on  and  maintaining  said  house ; 
and  that  when  sold  and  delivered  it  was  agreed  between  plaintiff  and 
defendant  that  the  beer  was  to  be  paid  for  out  of  the  profits  accruing 
to  the  latter  from  her  unlawful  occupation.  On  the  trial,  defendant 
made  no  attempt  to  establish  the  defense  as  pleaded,  but  relied  wholly 
upon  admissions  made  by  plaintiff's  agent,  when  testifying,  that  he 
did  not  know  just  what  was  done  with  the  beer,  but  that,  when  selling 
it  to  defendant,  he  supposed  she  would  sell  or  use  it  in  her  brothel. 
On  this  admission,  as  we  understand  the  record,  the  case  was  dis- 
missed by  the  trial  court. 

While  it  would  seem  quite  unnecessary  so  to  do,  it  may  be  well 
to  call  attention  at  the  outset  to  the  fact  that  this  case  should  not 
be  confounded  with  one  wherein  the  vendor  in  selling  his  goods  has 
violated  a  statute  requiring  him  to  first  procure  a  license,  as  was 
that  of  Solomon  v.  Dreschler,  4  Minn.  197,  (278).  Nor  is  it  one 
in  which  the  vendor  has  sold  a  proper  article  of  merchandise  in  a 
legitimate  way,  but  with  the  knowledge  that  it  is  to  be  disposed  of 
by  the  vendee  in  direct  violation  of  the  law;  for  illustration,  a  sale 
of  spirituous  liquors  by  a  qualified  wholesale  dealer,  with  full  knowl- 
edge that  the  purchaser  intended  to  retail  the  same  in  defiance  of 
a  prohibitory  law,  or  without  first  obtaining  the  required  license  to 
sell,  or  a  sale  of  poison  by  a  druggist,  knowing  that  it  was  intended 
for  use  in  committing  murder.  The  illegality  of.  the  transaction  now 
under  discussion  occurs,  if  at  all,  in  a  matter  collateral  to  the  sale, 
incidentally  implicated  with  it,  and  out  of  considerations  of  public 
policy  solely. 

It  has  been  well  said  that  the  consideration  essential  to  a  valid 
contract  must  not  only  be  valuable,  but  it  must  be  lawful,  not  re- 
pugnant to  law  or  sound  policy  or  good  morals.  Ex  turpi  contractu 
actio  non  oritur.  The  reports,  both  English  and  American,  are  re- 
plete with  cases  in  which  contracts  of  all  descriptions  have  been 
held  invalid  on  account  of  an  illegality  of  consideration,  illustrations 
of  the  acknowledged  rule  that  contracts  are  unlawful  and  non-en- 
forceable when  founded  on  a  consideration  contra  bonos  mores,  or 
against  the  principles  of  sound  policy,  or  founded  in  fraud,  or  in 


440  FORMATION    OF   CONTRACT. 

contravention  of  positive  provisions  of  a  statute.  The  utmost  dif- 
ficulty has  been  experienced  by  the  courts  in  applying  the  general 
rule,  however,  and  an  examination  of  the  authorities  wherein  an 
application  has  been  necessary  will  convince  the  reader  that  the  con- 
clusions reached  and  announced  in  the  English  tribunals  are  beyond 
reasonable  reconciliation. 

This  want  of  harmony,  and  that  more  uniform  and  consistent  re- 
sults have  obtained  in  this  country,  is  thoroughly  demonstrated  in 
two  cases  with  us  (Tracy  v.  Talmage, — first  opinion  by  Judge  Selden, 
and  the  second,  on  motion  for  rehearing,  by  Judge  Comstock, —  (14  N". 
Y.  162,  and  Hill  v.  Spear,  50  N.  H.  253),  in  each  of  which  the 
principal  cases  in  both  countries  are  ably  and  carefully  reviewed,  and 
the  law  applicable  to  the  question  involved  in  this  action  stated  in 
accordance  with  the  great  weight  of  authority  in  the. United  States 
as  well  as  in  England.  These  cases,  now  regarded  as  leading  on  this 
side  of  the  Atlantic,  announce  the  rule  to  be  that  mere  knowledge 
by  a  vendor  of  the  unlawful  intent  of  a  vendee  will  not  bar  a  recov- 
ery upon  a  contract  of  sale,  yet,  if,  in  any  way,  the  former  aids  the 
latter  in  his  unlawful  design  to  violate  a  law,  such  participation  will 
prevent  him  from  maintaining  an  action  to  recover.  The  participa- 
tion must  be  active  to  some  extent.  The  vendor  must  do  something 
in  furtherance  of  the  purchaser's  design  to  transgress,  but  positive 
acts  in  aid  of  the  unlawful  purpose  are  sufficient,  though  slight. 
While  it  is  certain  that  a  contract  is  void  when  it  is  illegal  or  im- 
moral, it  is  equally  as  certain  that  it  is  not  void  simply  because  there 
is  something  immoral  or  illegal  in  its  surroundings  or  connections. 
It  cannot  be  declared  void  merely  because  it  tends  to  promote  illegal 
or  immoral  purposes.  The  American  text-writers  generally  admit 
this  to  be  the  prevailing  rule  of  law  in  the  States  upon  this  point. 
1  Whart.  Cont.  §  343;  Hill.  Sales,  490,  492;  1  Pars.  Cont.  456; 
Story,  Cont.  (5th  ed.)  §  671;  Story,  Confl.  Law,  §  253;  Greenh.  Pub. 
Pol.  589.  However,  it  has  been  suggested  that  this  statement  is 
subject  to  the  modification  that  the  unlawful  use,  of  which  the  vendor 
is  advised,  must  not  be  a  felony  or  crime  involving  great  moral  turpi- 
tude. See  Hanauer  v.  Doane,  12  Wall.  342;  Tatum  v.  Kelley,  25 
Ark.  209;  Milner  v.  Patton,  49  Ala.  423;  Lewis  v.  Latham,  74  N. 
C.  283 ;  Bickel  v.  Sheets,  24  Ind.  1 ;  Steele  v.  Curie,  4  Dana,  381. 

Without  expressly  indorsing  the  result  in  some  of  the  cases,  or  all 
that  has  been  said  by  the  courts  in  their  opinions  when  making  an 
application  to  the  facts  then  in  hand,  of  the  rule  so  exhaustively 
examined  and  approved  in  Tracy  v.  Talmage,  and  Hill  v.  Spear, 
supra,  we  cite,  in  support  of  the  propositions  therein  contended  for, 
and  upon  which  we  rest  a  reversal  of  the  order  of  dismissal  made 
by  the  court  below,  Armstrong  v.  Toler,  11  Wheat.  258;  Green  v. 
Collins,  3  Cliff.  494 ;  Dater  v.  Earl,  3  Gray,  482 ;  Armfield  v.  Tate, 


LEGALITY   OF  OBJECT.  441 

7  Ired.  258;  Read  v.  Taft,  3  R.  I.  175;  Cheney  v.  Duke,  10  Gill  &  J. 
11;  Kreiss  v.  Seligman,  8  Barb.  439;  Michael  v.  Bacon,  49  Mo.  474; 
Brunswick  v.  Valleau,  50  Iowa,  120;  Webber  v.  Donnelly,  33  Mich. 
469;  Bishop  v.  Honey,  34  Tex.  245;  Wright  v.  Hughes,  119  Ind. 
324,  21  N.  E.  Rep.  907;  Feineman  v.  Sachs,  33  Kan.  621,  7  Pac. 
Rep.  222;  Rose  v.  Mitchell,  6  Colo.  102;  Banchor  v.  Mansel,  47 
Me.  58;  Henderson  v.  Waggoner,  2  Lea,  133;  Gaylord  v.  Soragen, 
32  Vt.  110;  Mahood  v.  Tealza,  26  La.  Ann.  108;  Delavina  v.  Hill, 
(N.  H.)  19  Atl.  Rep.  1000. 

The  agent  who  made  the  sales,  upon  whose  testimony  the  defend- 
ant saw  fit  to  rest  her  case,  knew  that  she  was  engaged  in  the  unlaw- 
ful business  of  keeping  a  house  of  ill  fame,  and  admits  also  that  he 
supposed  the  beer  would  be  used  or  sold  in  her  place  of  business. 
Nothing  further  was  shown  which  connected  the  plaintiff  or  its  agent 
with  any  violation  of  the  law.  The  burden  was  upon  the  defendant 
to  show  that  an  enforcement  of  the  contract  would  be  in  violation  of 
the  settled  policy  of  the  State,  or  injurious  to  the  morals  of  its  people, 
and  no  court  should  declare  a  contract  illegal  on  doubtful  or  uncer- 
tain grounds.  And  it  may  be  difficult  to  distinguish  between  the 
cases  in  which  the  vendor,  with  knowledge  of  the  vendee's  unlawful 
purpose,  does  not  become  a  confederate,  and  those  wherein  he  aids 
and  assists  to  an  extent  sufficient  to  vitiate  the  sale;  but  this  dif- 
ficulty is  not  apparent  in  the  case  at  bar. 

Order  reversed.1 

9  Cyc.  571-673   (50-62);  W.  P.  485   (42). 


PINNEY,  J.,  IN  NATIONAL  DISTILLING  CO.  v.  CREAM 

CITY  CO. 

86  WISCONSIN,  352.— 1893. 

The  first  defense  does  not  deny  any  allegation  of  the  complaint, 
but  the  substance  of  it  is  that  the  sale  and  delivery  of  the 
goods  in  question  to  the  defendant  was  void  as  against  public  policy, 
because  the  vendor  was  at  the  time  a  member  of  an  unlawful  trust 
or  combination  formed  to  unlawfully  interfere  with  the  freedom  of 
trade  and  commerce,  and  in  restraint  thereof,  and  to  accomplish  the 
ends  therein  set  forth.  It  is  not  claimed  in  the  answer  that  the 
trust  or  combination  had  acquired  control  and  monopoly  of  all  such 
goods,  or  that  the  defendant  might  not  have  purchased  the  goods 
in  question  of  other  dealers  in  Milwaukee  or  elsewhere.  Conceding 
for  the  purposes  of  this  case,  that  the  trust  or  combination  in  ques- 

*  But  if  the  seller  intends  to  aid  and  abet  the  immoral  purpose,  he  cannot 
recover  the  purchase  price  of  the  goods.  Reed  v.  Brewer,  90  Tex.  144. 


442  FORMATION    OF    CONTRACT. 

tion  may  be  illegal,  and  its  members  may  be  restrained  from  carry- 
ing out  the  purposes  for  which  it  was  created  by  a  court  of  equity 
in  a  suit  on  behalf  of  the  public,  or  may  be  subject  to  indictment 
and  punishment,  there  is,  nevertheless,  no  allegation  showing  or  tend- 
ing to  show  that  the  contract  of  sale  between  the  plaintiff  and  de- 
fendant was  tainted  with  any  illegality,  or  was  contrary  to  public 
policy.  The  argument,  if  any  the  case  admits  of,  is  that,  as  the 
plaintiff  was  a  member  of  the  so-called  "trust"  or  "combination," 
the  defendant  might  voluntarily  purchase  the  goods  in  question  of 
it  at  an  agreed  price,  and  convert  them  to  its  own  use,  and  be  justi- 
fied in  a  court  of  justice  in  its  refusal  to  pay  the  plaintiff  for  them, 
because  of  the  connection  of  the  vendor  with  such  trust  or  combi- 
nation. The  plaintiff's  cause  of  action  is  in  no  legal  sense  depend- 
ent upon  or  affected  by  the  alleged  illegality  of  the  trust  or 
combination,  because  the  illegality,  if  any,  is  entirely  collateral  to 
the  transaction  in  question,  and  the  court  is  not  called  upon  in  this 
action  to  enforce  any  contract  tainted  with  illegality  or  contrary  to 
public  policy.  The  mere  fact  that  the  plaintiff  is  a  member  of  a 
trust  or  combination  created  with  the  intent  and  purposes  set  forth 
in  the  answer  will  not  disable  or  prevent  it  in  law  from  selling  goods 
within  or  affected  by  the  provisions  of  such  trust  or  combination,  and 
recovering  their  price  or  value.  It  does  not  appear  that  it  had  stip- 
ulated to  refrain  from  such  transactions.  A  contrary  doctrine  would 
lead  to  most  startling  and  dangerous  consequences.  The  defendant 
is  not  a  party  to  any  illegal  contract,  and  the  case  is,  therefore,  not 
within  the  rule  of  Wheeler  v.  Eussell,  17  Mass.  281,  and  many  sim- 
ilar cases,  to  the  effect  that  "no  action  will  lie  upon  a  contract  made 
in  violation  of  a  statute  or  a  principle  of  the  common  law";  for  the 
right  of  the  plaintiff  to  make  the  sale  in  question,  or  of  the  defendant 
to  buy,  was  in  no  way  connected  with  or  dependent  upon  the  alleged 
trust  or  combination,  although  the  plaintiff  was  a  member  of  it. 
These  views  are  sustained  and  illustrated  by  the  cases  of  Brooks  v. 
Martin,  2  Wall.  70,  and  Sharp  v.  Taylor,  2  Phil.  Ch.  801 ;  and  many 
other  cases  might  be  cited  to  the  same  effect. 
27  Cyc.  906  (43)  ;  W.  P.  490  (50)  ;  22  H.  L.  R.  435. 


(Hi.)  Securities  for  money  due  on  an  illegal  transaction. 

BEOWN  v.  KINSEY. 
81  NORTH  CAROLINA,  245.— 1879. 

DILLARD,  J.  The  case  in  the  court  below  was  four  appeals  from  a 
justice's  court,  founded  on  four  bonds  executed  by  the  testator  of  the 
defendant  on  the  13th  of  September,  1872,  to  Winefred  Hill,  and 


LEGALITY    OF   OBJECT.  443 

assigned  by  her  after  due,  to  the  plaintiff.  By  order  of  the  court, 
the  actions  were  consolidated,  and  the  trial  was  had  by  a  jury  on 
the  issue  joined  on  the  plea  of  immoral  consideration,  and  the  evi- 
dence relied  on  by  the  defendant  being  all  in,  His  Honor  being  of 
opinion  that  the  same  was  not  such  as  reasonably  to  warrant  a  finding 
of  the  matter  of  avoidance  pleaded,  so  held.  Thereupon  the  verdict 
was  for  the  plaintiff,  and  the  defendant  appealed. 

The  question  on  the  appeal  is  whether  the  evidence  adduced  was  or 
was  not  such  as  in  law  to  authorize  and  require  the  judge  to  sub- 
mit it  to  the  jury  upon  which  to  find  the  fact  of  immoral  considera- 
tion alleged  by  the  defendant. 

The  evidence  was  that  the  testator  of  defendant  died  in  October, 
1872,  and  that  about  five  years  before  his  death  Winefred  Hill,  the 
assignor  of  the  plaintiff,  gave  birth  to  a  bastard  child  begotten  by 
him  (said  testator),  and  afterwards,  in  the  course  of  the  same  illicit 
intercourse,  he  executed  to  her  a  bond  under  seal  for  three  hundred 
dollars.  Winefred,  on  her  death,  said  he  owed  her  nothing,  and  that 
when  the  bond  was  delivered  to  her,  testator  made  no  declaration 
as  to  his  reason,  or  to  the  consideration  moving  him  thereto.  Upon 
the  death  of  testator's  wife,  the  said  Winefred  went  to  live  in  the 
house  of  testator,  and  took  charge  of  his  domestic  business  about  a 
month  before  the  testator  died.  And  whilst  there,  on  the  13th  of 
September,  1872,  during  the  continuance  of  the  immoral  connection, 
the  testator  took  up  the  bond  for  $300  and  destroyed  it,  and  then 
and  there  executed  to  said  Winifred  the  four  bonds  now  in  suit,  one 
of  them  falling  due  on  each  first  day  of  January  in  the  next  four 
succeeding  years,  stating  at  the  time  that  they  were  executed  in 
place  of  the  bond  for  $300,  and  he  made  no  declaration  to  the  motive 
for  the  substitution  or  the  consideration  on  which  they  were  founded. 

Upon  the  issue  joined,  the  bonds  under  which  the  plaintiff  claims, 
being  under  seal,  the  execution  and  delivery  made  them  effectual 
at  law,  made  them  deeds,  things  done;  and  by  the  common  law 
they  had  the  force  and  effect  to  authorize  plaintiff  to  recover  with- 
out any  consideration,  with  power,  however,  in  the  defendant  to  have 
the  same  held  null  upon  proof  of  illegal  or  immoral  consideration, 
not  from  any  motive  of  advantage  to  him  or  his  testator,  but  from 
consideration  of  the  public  interest  and  morality.  Harrell  v. 
Watson,  63  N.  C.  454;  2  Chitty  on  Contracts,  971;  Collins  v. 
Blantem,  1  Smith's  Lead.  Cases,  153. 

On  the  trial,  then,  we  are  to  take  it  that  plaintiff  was  absolutely 
entitled  to  recover,  unless  the  defendant  showed  the  immoral  con- 
sideration alleged,  by  evidence  full  and  complete,  or  by  proof  of 
such  facts  and  circumstances  as  would  reasonably  warrant  a  jury 
to  find  it  as  a  fact.  In  other  words,  the  onus  was  on  the  defendant, 
and  in  order  to  defeat  the  recovery  it  was  incumbent  on  him  to 


444  FORMATION   OF    CONTRACT. 

show  that  the  bonds  were  not  voluntary,  that  is,  not  executed  as  a 
mere  gift,  and  not  on  the  consideration  of  past  cohabitation,  which 
is  legal,  but  on  the  consideration  in  whole  or  part  for  future  criminal 
intercourse,  or  to  show  that  the  nature  of  the  securities  was  such  as 
to  hold  out  inducement  or  constitute  a  temptation  to  Winefred  Hill 
to  continue  the  connection. 

It  is  indisputable  that  the  bonds,  if  executed  as  a  gift  by  the  testator 
of  the  defendant  to  Winefred  Hill,  the  mother  of  his  bastard  child, 
would  be  legal  and  enforceable,  it  not  being  immoral  to  assist  her 
by  gift  to  raise  his  progeny;  and  it  is  equally  settled  that  if  they 
were  given  for  past  cohabitation,  they  would  be  binding  on  the 
ground  that  the  illicit  connection  was  an  evil  already  past  and  done, 
and  the  public  had  no  interest  to  defeat  them.  The  only  restriction 
put  on  the  contracts  of  the  parties  is  that  they  shall  not  stipulate 
for  future  fornication,  or  in  such  manner  as  that  the  security  given 
shall  operate  as  an  inducement  or  motive  to  go  on  in  the  vicious 
course.  2  Chitty  on  Contracts,  979;  Trovinger  v.  McBurney,  5 
Cowen,  253 ;  Gray  v.  Mathias,  5  Vesey's  Ch.  Eep.  286. 

In  these  cases  it  is  held  that  the  continuation  of  the  criminal  in- 
tercourse after  the  execution  of  the  bond  or  contract  impeached 
for  immorality,  does  not  invalidate  the  same;  but  that  it  is  to  be 
avoided  and  held  null  only  on  proof  that  it  was  executed  in  whole 
or  part  on  the  understanding  that  the  connection  was  to  continue. 
This  will  be  apparent  from  the  following  extracts  taken  therefrom: 
In  the  case  of  Trovinger  v.  McBurney,  supra,  the  court  say :  "A  bond 
executed  for  the  cause  of  past  cohabitation,  although  the  connection 
is  continued,  is  not  invalidated  thereby."  The  test  always  is,  does 
it  appear  by  the  contract  itself,  or  was  there  any  understanding 
of  the  parties,  though  not  expressed,  that  the  connection  was  to  con- 
tinue. In  the  case  of  Gray  v.  Mathias,  supra,  a  bond  was  given 
during  the  cohabitation,  and  in  the  course  of  the  cohabitation,  a 
second  bond  was  given,  which,  upon  its  face,  recited  the  existing 
illegal  connection,  and  stipulated  for  its  continuance  with  an  annuity 
for  the  woman  in  case  of  discontinuance,  and  it  was  held  that  the 
last  bond  was  void,  but  the  former  one  was  good,  although  the  cohabi- 
tation continued  after  its  execution. 

In  the  case  of  Hall  v.  Palmer  (3  Hare,  532)  the  bond  was  executed 
to  the  woman  conditioned  to  pay  an  annuity  from  and  after  the 
death  of  the  obligor,  and  the  parties  lived  together  at  the  time  and 
continued  so  to  live  afterwards,  upon  a  declaration  of  the  obligor 
that  he  did  not  intend  to  break  off  the  connection;  and  upon  a 
reference  to  the  master,  it  being  found  as  a  fact  that  it  was  given 
for  past  cohabitation,,  it  was  held  that  the  continuance  of  the  connec- 
tion after  the  execution  of  the  obligation  had  no  effect  to  invalidate  it. 

From  the  principles  decided  in  these  cases,  it  may  be  taken  as 


LEGALITY    OF   OBJECT.  445 

settled,  that  the  cohabitation  of  the  testator  of  defendant  with 
Winefred  Hill,  after  the  execution  of  the  bonds  to  her,  did  not  by 
any  legal  presumption  invalidate  the  same;  and  that  the  same  could 
only  be  held  void  on  proof  that  there  was  an  understanding,  express 
or  implied,  that  the  criminal  intercourse  was  to  be  continued.  Apply- 
ing these  principles  to  our  case  we  have  this  state  of  things:  At 
the  time  the  first  bond  for  $300  was  given,  Winefred  testified  that 
testator  of  defendant  owed  her  nothing,  and  therefore  the  bond  was 
voluntary;  or  if  not  that,  then  it  may  have  been  on  consideration 
of  past  cohabitation,  and  if  so,  it  was  valid;  or  it  may  have  been 
partly  for  past  and  partly  for  future,  or  altogether  for  future  inter- 
course, and  if  the  latter,  then  the  onus  was  on  the  defendant  to  prove 
it  otherwise  than  by  mere  evidence  of  a  continued  connection  after 
the  bonds  were  executed. 

The  defendant,  on  the  trial  of  the  issue,  had  no  proof,  except  of 
the  execution  of  the  bonds  in  the  course  of  an  illegal  intimacy  be- 
tween the  parties,  and  a  continuation  thereof  afterwards  up  to  the 
death  of  the  testator,  together  with  an  admission  by  Winefred,  that 
they  were  not  executed  for  any  debt  due  her;  and  obviously,  in  such 
state  of  the  proof,  the  jury  could  not  have  done  more  than  have  a 
suspicion  and  conjecture,  whether  the  bonds  were  executed  as  a  gift, 
or  for  past  cohabitation,  or  wholly  or  in  part  for  future  cohabitation. 

The  rule  is  well  settled  that  if  there  be  no  evidence,  or  if  the 
evidence  be  so  slight  as  not  reasonably  to  warrant  the  inference  of  the 
fact  in  issue,  or  furnish  more  than  materials  for  a  mere  conjecture, 
the  court  will  not  leave  the  issue  to  be  passed  on  by  the  jury,  but  rule 
that  there  is  no  evidence  to  be  submitted  to  their  consideration,  and 
direct  a  verdict  against  that  party  on  whom  the  burden  of  proof  is. 
State  v.  Waller,  80  N.  C.  401;  State  v.  Patterson,  78  N.  C.  470; 
Sutton  v.  Madre,  2  Jones,  320 ;  Cobb  v.  Fogalman,  1  Ire.  440. 

In  our  opinion,  therefore,  the  judge  properly  held  that  there  was 
no  evidence  of  the  illegal  or  immoral  consideration  alleged,  and  in 
so  doing  he  committed  no  error. 

Xo  error.  Affirmed.1 

9  Cyc.  516-517   (1-4);  W.  P.  411    (66);  413   (68). 


NEW  v.  WALKER. 

108  INDIANA,  365.— 1886. 

Action  on  a  promissory  note.  Defense,  illegality  of  consideration. 
Reply,  purchase  before  maturity,  for  value,  and  without  knowledge 

i  See  also  Singleton  v.  Bremar,  Harp.  (So.  Car.)  201;  Given  v.  Driggs,  1 
Caines  Rep.  (N.  Y.)  450;  Edwards  v.  Skirving,  1  Brevard  (So.  Car.),  548; 
Swan  v.  Scott,  11  Sergeant  A  Rawle  (Pa.),  155. 


446  FORMATION    OF    CONTRACT. 

of   illegality.     Demurrer   to    reply.     Demurrer    sustained.     Plaintiff 
appeals. 

Defendant  gave  the  note  in  question  for  the  purchase  price  of  a 
patent  right.  By  the  statute,  all  sales  of  patent  rights  are  unlawful 
when  the  seller  has  not  filed  with  the  clerk  of  the  court  of  the  county 
where  the  sale  is  made  copies  of  the  letters  patent,  and  an  affidavit 
that  the  letters  are  genuine,  etc.,  and  all  obligations  given  for  the 
purchase  price  of  such  patent  rights  are  required  to  contain  the 
words  "given  for  a  patent  right."  Non-compliance  with  the  statute 
is  made  a  misdemeanor.  The  payee  of  the  note  in  question  had  not 
complied  with  this  statute. 

ELLIOTT,  C.  J.  .  .  .In  our  opinion,  a  promissory  note  executed 
in  direct  violation  of  a  mandatory  statute,  is  inoperative  as  between 
the  parties  and  those  who  buy  with  notice.  Where  a  statute,  in  im- 
perative terms,  forbids  the  performance  of  an  act,  no  rights  can  be 
acquired  by  persons  who  violate  the  statute,  nor  by  those  who  know 
that  the  act  on  which  they  ground  their  claim  was  done  in  violation 
of  law.  A  promissory  note,  executed  in  a  transaction  forbidden 
by  statute,  is  at  least  illegal  as  between  the  parties  and  those  who 
have  knowledge  that  the  law  was  violated.  It  is  an  elementary  rule 
that  what  the  law  prohibits,  under  a  penalty,  is  illegal,  and  it  cannot, 
therefore,  be  the  foundation  of  a  right  as  between  the  immediate 
parties.  Wilson  v.  Joseph,  107  Ind.  490;  Hedderich  v.  State,  101 
Ind.  571,  51  Am.  E.  768 ;  Case  v.  Johnson,  91  Ind.  477. 

This  rule  also  applies  to  those  who  assume  to  purchase  from  one 
of  the  parties  to  the  transaction,  but  purchase  with  full  knowledge 
that  the  law  has  been  transgressed.  .  .  . 

Having  determined  that  the  promissory  note,  on  which  the  action 
is  founded,  is  negotiable  as  commercial  paper,  the  next  question  is, 
what  are  the  rights  of  the  appellant  as  the  bona  fide  holder  Of  the 
paper?  For  there  can  be  no  doubt  under  the  confessed  allegations 
of  the  reply  that  she  is  such  a  holder.  She  is  such  in  the  strongest 
light,  for  she  purchased  from  a  good-faith  owner,  and  is  herself 
free  from  fault  and  innocent  of  wrong.  Hereth  v.  Merchants'  Nat. 
Bank,  34  Ind.  380;  Newcome  v.  Dunham,  27  Ind.  285. 

The  decisions  agree  that,  where  the  statute  in  direct  terms  declares 
that  a  note  given  in  violation  of  its  provisions  shall  be  void,  it  is  so 
no  matter  into  whose  hands  it  may  pass.  The  rule  is  thus  stated  by 
the  court  in  Vallett  v.  Parker  (6  Wend.  615)  :  "Wherever  the  statute 
declares  notes  void,  they  are  and  must  be  so,  in  the  hands  of  every 
holder ;  but  where  they  are  adjudged  by  the  court  to  be  so,  for  failure 
or  the  illegality  of  the  consideration,  they  are  void  only  in  the  hands 
of  the  original  parties,  or  those  who  are  chargeable  with,  or  have 
had  notice  of  the  consideration." 

It  is  said  by  a  late  writer,  in  stating  the  same  general  rule,  that, 


LEGALITY    OF    OBJECT.  447 

"when  a  statute,  expressly  or  by  necessary  implication,  declares  the 
instrument  absolutely  void,  it  gathers  no  vitality  by  its  circulation  in 
respect  to  the  parties  executing  it."  1  Daniel  Negotiable  Int.  §  197. 
We  regard  this  author's  statement  as  substantially  expressing  the 
general  rule,  and,  accepting  it  as  correct,  the  pivotal  question  is 
whether  our  statute  does  expressly,  or  by  necessary  implication,  declare 
that  notes  given  to  vendors  of  patent  rights  who  have  disobeyed  the 
law  shall  be  void?  There  is  certainly  no  express  declaration  in  the 
statute  that  such  notes  shall  be  void,  nor  do  we  think  that  there  is 
any  necessary  implication  that  they  shall  be  void.  A  man  may  be 
guilty  of  a  misdemeanor,  and  yet  notes  taken  by  him  in  the  trans- 
action which  creates  his  guilt  may  not  be  void  in  the  hands  of  an 
innocent  holder.  A  familiar  illustration  of  this  principle  is  afforded 
by  those  cases  which  declare  that  a  note  given  in  consideration  of  the 
suppression  of  a  criminal  prosecution  is  inoperative  as  between  the 
immediate  parties,  but  valid  in  the  hands  of  a  bona  fide  purchaser. 
This  is  the  settled  law,  although  the  compounding  of  a  felony  is  made 
a  crime  by  statute.  Our  opinion  is,  that  a  statute  making  it  a  crime 
to  take  promissory  notes  in  a  prohibited  transaction  does  not  make 
the  notes  void  in  the  hands  of  innocent  purchasers,  although  the 
person  who  violates  the  statute  commits  a  crime.  This  conclusion 
is  well  sustained  by  authority.  Anderson  v.  Etter,  102  Ind.  115 ; 
Vallett  v.  Parker,  supra;  Taylor  v.  Beck,  3  Band.  (Va.)  316;  Glenn 
v.  Farmers'  Bank,  70  N.  C.  191 ;  Smith  v.  Columbus  State  Bank,  9 
Neb.  31;  Haskell  v.  Jones,  86  Pa.  St.  173;  Palmer  v.  Minar,  8  Hun, 
342;  Cook  v.  Weirman,  51  Iowa,  561. 

A  party  who  executes  a  promissory  note,  negotiable  as  commercial 
paper,  fair  on  its  face  and  complete  in  all  its  parts,  puts  in  circula- 
tion an  instrument  which  he  knows  is  the  subject  of  barter  and  sale 
in  the  commercial  world,  and  it  is  his  own  fault  if  he  does  not  put 
into  it  the  words  which  will  warn  others  not  to  buy  it  in  the  belief 
that  it  will  be  free  from  all  defenses.  The  experience  of  the  business 
world  has  shown  the  necessity  of  affixing  to  promissory  notes  the 
quality  of  negotiability,  and  commercial  transactions  would  be  se- 
riously disturbed  if  notes,  fair  on  their  face,  and  containing  the  re- 
quired words  of  negotiability,  were  not  protected  in  the  hands  of 
innocent  purchasers.  It  is,  therefore,  not  the  policy  of  the  law  to 
multiply  exceptions  to  the  general  rules  governing  notes  negotiable 
by  the  law  merchant,  so  that  in  such  a  case  as  this  it  cannot,  with- 
out an  indefensible  departure  from  that  policy,  be  held  that  the 
promissory  note  is  not  protected  in  the  hands  of  a  good-faith  holder. 

Nor  can  such  a  step  be  taken  without  wandering  from  the  course 
marked  and  defined  by  the  long-established  principle  that,  where  one 
of  two  innocent  persons  must  suffer  from  the  act  of  a  third  person, 
he  who  puts  it  in  the  power  of  the  third  to  do  the  act  must  bear 


448  FORMATION   OF   CONTRACT. 

the  loss.  To  our  minds  it  seems  clear  that  this  principle  rules  here, 
for  the  man  who  executes  to  a  vendor  of  patent  rights  a  promissory 
note,  in  full  and  perfect  form,  puts  it  in  his  power  to  wrong  others 
by  selling  the  note  as  an  article  of  commerce. 

We  regard  the  reply  as  unquestionably  good,  and  adjudge  that  the 
trial  court  erred  in  sustaining  the  demurrer  to  it.  ... 

Judgment  reversed. 

7  Cyc.  948   (77-80). 


KENNEDY  v.  WELCH. 

196  MASSACHUSETTS,  592.— 1907. 

Bill  in  equity,  to  enjoin  the  defendant  from  foreclosing  a  mortgage 
of  real  estate  given  by  the  plaintiff  to  him,  and  to  compel  him  to 
discharge  the  mortgage  and  cancel  the  note  which  it  secured.  The 
case  was  referred  to  a  master  and  was  heard  on  exceptions  by 
the  defendant  to  the  master's  report  by  Crosby,  J.,  who  overruled 
the  exceptions  and  denied  certain  requests  of  the  defendant  for  rulings, 
and  the  defendant  excepted. 

A  firm  named  Whitlaw  and  Smith  purchased  from  the  defendant 
a  bottling  business,  and  gave  the  "first  note,"  to  cover  the  purchase 
price.  The  plaintiff  and  others  signed  the  note  as  makers.  The 
note  not  being  paid  at  maturity,  the  defendant  brought  an  action 
upon  it  against  the  plaintiff  and  others  of  the  makers.  The  master 
found  that,  while  that  action  was  pending,  the  note  and  mortgage 
which  were  the  subject  of  this  suit  "were  given  in  compromise  of  the 
plaintiff's  liability  on  the  first  note  and  the  action  thereon,"  and  that 
they  were  "intended  to  cover  what  was  then  due  on  the  first  note." 

The  defendant's  fourth  request,  was  as  follows:  "Unless  at  the 
time  of  sale  or  prior  thereto,  this  defendant  did  something,  performed 
some  act,  to  aid  and  assist  Whitlaw  and  Smith  in  some  unlawful 
purpose  in  connection  with  the  property  purchased,  this  $3000  note 
was  perfectly  good  and  this  plaintiff  was  liable  and  is  still  liable 
thereon";  as  to  which  the  presiding  judge  ruled:  "The  fourth  re- 
quest is  given  with  the  following  addition :  'But  the  note  was  void  as 
against  the  plaintiff  if  the  defendant  at  or  prior  to  the  sale  and  as  a 
part  of  the  consideration  of  the  sale  for  which  the  note  was  given 
agreed  that  Whitlaw  and  Smith  should  have  the  right  to  carry  on  the 
liquor  business  under  the  defendant's  fifth  class  license  and  that  such 
agreement  entered  into  the  contract  and  was  an  inducement  for  said 
Whitlaw  and  Smith  to  make  the  same.' " 

BRALEY,  J.  .  .  .  The  important  question  upon  which  the  deci- 
sion depends  is  whether  the  second  promissory  note,  secured  by  a 


LEGALITY   OF    OBJECT.  449 

mortgage  of  the  plaintiff's  real  estate,  the  foreclosure  of  which  the 
bill  is  brought  to  enjoin,  is  valid.  By  Pub.  St.  c.  100,  §  10,  as 
amended  by  St.  1891,  p.  948,  c.  369,  in  force  when  the  first  note 
was  given,  a  license  of  the  fifth  class  could  not  lawfully  be  transferred 
by  the  licensee  to  a  purchaser  even  with  the  consent  of  the  license 
commissioners.  St.  1889,  p.  1040,  c.  344.  The  privilege  conferred 
is  personal,  and  can  be  exercised  only  by  the  licensee.  Com.  v. 
Lavery,  188  Mass.  13,  14,  73  N.  E.  884.  The  master  finds  that  the 
purchase  price,  for  which  this  note  was  given,  included  the  transfer 
of  a  license  of  this  class  then  held  by  the  defendant,  for  the  purpose 
and  with  the  design  on  his  part  of  enabling  the  vendees  as  a  part 
of  the  transaction  to  continue  the  business  of  selling  intoxicating 
liquors  on  the  leased  premises,  where  the  personal  property  sold  was 
situated,  or  with  which  it  was  connected.  It  is  evident  from  these 
findings,  as  well  as  from  those  under  the  defendant's  fourth  request, 
that  the  transfer  of  the  license  was  not  only  held  out  as  an  inducement 
to  make  the  purchase,  but  whatever  value  it  had  entered  into  the  sale, 
which  was  fully  executed.  The  master  having  further  determined, 
that  the  valuation  placed  upon  the  license  was  inseparable  from  the 
purchase  price,  the  consideration  was  entire,  and  the  note  being  tainted 
with  illegality,  was  absolutely  void  and  unenforceable  in  the  suit 
brought  against  the  plaintiff,  who  as  between  himself  and  the  defendant 
was  a  joint  maker.  Hubbell  v.  Flint,  13  Gray,  277;  Brigham  v. 
Potter,  14  Gray,  522;  Bishop  v.  Palmer,  146  Mass.  469,  16  N.  E. 
299,  4  Am.  St.  Eep.  339 ;  Lamb  v.  Mclntyre,  183  Mass.  367,  67  N.  E. 
320.  But  if  the  first  note  was  thus  rendered  invalid,  it  is  said 
by  the  defendant,  that  the  second  rests  upon  a  new  consideration. 
The  consideration  for  the  mortgage  note  is  expressly  found  to  have 
been  "the  release  and  discharge  of  the  plaintiff  from  all  liability  on 
the  original  note  or  in  the  suit  brought  thereon."  This 
finding  excludes  whatever  advantage,  if  any,  the  defendant  might 
have  derived  from  other  possible  elements  of  gain  to  himself,  or  of 
benefit  to  the  plaintiff,  disclosed  by  the  report,  and  the  only  question 
is,  whether  the  ruling  that  the  last  note  became  subject  to  the  same 
infirmity  was  wrong.  It  would  be  a  perversion  of  the  explicit 
statements  in  the  report  to  hold,  that  the  defendant  was  ignorant 
of  the  purpose  of  the  purchase,  in  which  he  participated,  and  he 
must  be  presumed  to  have  known,  that  at  the  time  the  writ  in  the 
original  claim  was  sued  out,  that  claim  was  not  well  founded,  because 
of  his  attempt  to  evade  the  statute.  If  under  a  promise  by  the  plain- 
tiff to  pay,  the  defendant  has  forborne  to  sue,  the  forbearance  would 
not  have  furnished  a  sufficient  consideration  to  support  the  promise. 
It  could  not  have  been  upheld  by  the  old  obligation,  as  that  was  void 
for  illegality ;  nor  by  the  new,  for  by  the  repetition  of  a  void  promise 


450  FORMATION    OF   CONTRACT. 

the  creditor  suffers  no  detriment,  and  the  promisor  receives  no  benefit. 
Holden  v.  Cosgrove,  12  Gray,  216;  Howe  v.  Litchfield,  3  Allen,  443; 
Palfrey  v.  Portland,  Saco  &  Portsmouth  Railway  Co.,  4  Allen,  55. 
See  Dunham  v.  Johnson,  135  Mass.  310. 

The  defendant,  however,  insists  that,  suit  having  been  brought, 
its  discontinuance  at  the  plaintiff's  request  furnished  an  independent 
consideration.  Barlow  v.  Ocean  Ins.  Co.  4  Mete.  270;  Dunbar  v. 
Dunbar,  180  Mass.  170,  62  N.  E.  248,  94  Am.  St.  Rep.  623.  But 
there  is  a  clear  distinction  between  the  adjustment  of  a  pending 
suit  to  enforce  a  liability  the  outcome  of  which  may  be  reasonably 
doubtful,  and  a  suit  brought  upon  an  illegal  demand,  which  the 
courts  will  not  lend  their  aid  to  enforce.  See  White  v.  Buss,  3 
Cush.  448;  Cardoze  v.  Swift,  113  Mass.  250;  Scollans  v.  Flynn,  120 
Mass.  271.  In  the  first  instance,  the  consideration,  which  may  be 
and  often  is  inadequate,  is  supported  by  the  compromise,  even  if  the 
original  claim  upon  trial  might  have  been  found  invalid.  Prout  v. 
Pittsfield  Fire  District,  154  Mass.  450,  453,  28  N.  E.  679,  and  cases 
cited;  Miles  v.  New  Zealand,  Alford  Estate  Co.,  32  Ch.  Div.  266, 
283,  284.  In  the  second  instance,  there  is  no  existing  claim  which 
the  law  will  recognize  as  sufficient  to  raise  a  doubt  in  favor  of  the 
creditor,  and  the  essential  basis  for  a  settlement  is  absent.  Murphy 
v.  Rogers,  151  Mass.  118,  24  N.  E.  35;  Bride  v.  Clark,  161  Mass. 
130,  36  N.  E.  745;  Pitkin  v.  Noyes,  48  N.  H.  294,  97  Am.  Dec.  615, 
2  Am.  Rep.  218;  Feeter  v.  Webber,  78  N.  Y.  334.  Besides,  if  it 
were  held  that  the  discontinuance  of  the  suit  was  enough  to  furnish 
a  distinct  and  separate  benefit,  the  consideration  was  indivisible,  and 
as  that  which  is  unlawful  cannot  be  separated,  or  apportioned,  the 
whole  fails.  Loomis  v.  Newhall,  15  Pick.  159 ;  Perkins  v.  Cummings, 
2  Gray,  258;  Bishop  v.  Palmer,  146  Mass.  469,  474,  16  N.  E.  299, 
4  Am.  St.  Rep.  339.  Whichever  way  is  taken,  the  illegal  element 
which  avoided  the  first  note  having  entered  also  into  the  mortgage 
note,  the  plaintiff  cannot  be  held  to  the  performance  of  his  promise. 

We  are  asked  by  the  defendant,  if  this  conclusion  is  reached,  to 
consider  and  adjust  between  the  parties,  the  measure  and  extent  of 
the  relief  to  be  granted.  But  no  error  of  law  being  found  either 
in  the  refusals  to  rule  as  requested,  or  in  the  rulings  given,  the  order 
must  be, 

Exceptions  overruled. 

9  Cyc.  563    (11-12)  ;  W.  P.  491    (51). 


LEGALITY    OF   OBJECT.  451 

(tv.)  Can  a  man  be  relieved  from  a  contract  which  he  knew  to 
be  unlawful? 

BERNARD  v.  TAYLOR. 

23  OREGON,  416.— 1893. 

LORD,  0.  J.  This  was  an  action  to  recover  the  sum  of  five  hundred 
and  sixty  dollars  deposited  with  the  defendant  as  a  wager  on  the 
result  of  a  foot  race.  The  case  was  tried  without  the  intervention 
of  a  jury,  and  the  material  facts  as  found  by  the  court  are:  That 
the  plaintiff  deposited  with  the  defendant  the  sum  of  five  hundred 
and  sixty  dollars  in  gold  for  the  benefit  of  one  George  Grant,  and  as* 
a  wager  upon  a  foot  race  which  said  Grant  and  one  Anderson  were 
to  run  the  next  day  at  a  place  agreed  upon;  that  at  the  time  the 
said  money  was  so  deposited,  it  was  understood  by  Grant  and  the 
defendant  Taylor  and  the  plaintiff  that  the  money  should  be  paid 
back  to  the  plaintiff  on  his  demand  for  the  same  at  any  time  before 
the  race  should  be  run,  which  the  defendant  agreed  to  do;  that 
before  such  race  was  run  the  plaintiff  on  two  occasions  demanded  said 
money  of  the  defendant,  who  refused  to  pay  it  back,  but  pretends 
that  said  race  was  run,  and  that  Anderson  was  the  winner,  to  whom 
he  paid  the  money  before  the  commencement  of  this  action;  that 
the  race  agreed  to  be  run  was  not  run,  but  that  Grant,  at  the 
appointed  time,  refused  to  run,  and  Anderson  ran  over  the  course  alone 
and  was  declared  by  the  defendant  to  be  the  winner;  that  said 
pretended  race  was  never  intended  to  be  a  fair  and  honest  race,  and 
that  plaintiff  knew  at  the  time  he  deposited  his  money  with  the 
defendant  that  the  race  was  to  be  a  "bogus  race";  that  the  parties 
engaged  in  getting  it  up,  namely,  Grant,  Anderson,  and  the  defendant, 
wanted  to  "rope  in"  somebody;  that  it  was  understood  that  Grant 
was  to  win  the  race;  that  the  plaintiff  furnished  the  money  and 
deposited  it  with  the  defendant  as  stakeholder  for  the  benefit  of 
Grant,  in  whom  he  had  confidence  at  the  time,  but  of  whom,  before 
the  time  appointed  for  the  race  to  come  off,  he  became  suspicious; 
that  he  feared  that  he  would  lose  the  money,  and  thereupon,  by 
reason  of  such  suspicion,  and  by  virtue  of  the  agreement  with  the 
defendant,  demanded  of  the  defendant  the  return  of  said  money, 
and  that  said  Grant  then  and  there,  before  the  time  of  running  the 
race  had  arrived,  demanded  of  the  defendant  the  repayment  of  the 
money  to  the  plaintiff,  etc.  Substantially  upon  such  findings,  the 
court  found  as  a  conclusion  of  law  that  the  plaintiff  was  entitled  to 
judgment  for  the  sum  of  five  hundred  and  sixty  dollars  and  interest, 
and  for  costs,  etc.  From  this  judgment  the  appeal  has  been  brought  to 
this  court. 

1.  The    first    contention    for    the   defendant    is,    that   wagers    or 


452  FORMATION   OF   CONTRACT. 

wagering  contracts  upon  indifferent  subjects  are  valid  in  this  State 
by  force  of  the  common  law,  except  when  prohibited  by  statute.  .  .  . 
Wagers  are  inconsistent  with  the  established  interests  of  society, 
and  in  conflict  with  morals  of  the  age,  and  as  such  they  are  void 
as  against  public  policy.  In  view  of  these  considerations,  we  do 
not  think  that  such  transactions,  though  upon  indifferent  subjects, 
are  valid  in  this  State. 

2.  The  next  contention  for  the  defendant  is,  that  the  alleged 
agreement  was  corrupt,  illegal,  and  criminal  in  this,  that  it  was  in 
advance  "fixed"  that  one  of  the  parties  should  win,  and  that  certain 
persons  should  lose  their  money;  in  other  words,  that  the  agreement 
had  in  contemplation  "a  job  race."  This,  it  is  claimed,  put  the 
plaintiff  in  pari  delicto  with  the  defendant,  and  as  a  consequence 
he  is  entitled  to  the  benefit  of  the  rule  potior  est  conditio  possidentis. 
The  general  rule  is,  that  the  law  will  not  interfere  in  favor  of  either 
party  in  pari  delicto,  but  will  leave  them  in  the  condition  in  which 
they  are  found,  from  motives  of  public  policy.  There  is  no  doubt, 
where  money  has  been  paid  on  an  illegal  contract  which  has  been 
executed,  and  both  parties  are  in  pari  delicto,  the  courts  will  not 
compel  the  return  of  the  money  so  paid.  But  the  cases  show  that 
an  important  distinction  is  made  between  executory  and  executed 
illegal  contracts.  While  the  contract  is  executory,  the  law  will  neither 
enforce  it  nor  award  damages,  but  the  party  paying  the  money,  or 
putting  up  the  property,  may  rescind  the  contract  and  recover  back 
his  money.  If  the  contract  is  already  executed,  nothing  paid  or 
delivered  can  be  recovered  back.  This  arises  out  of  a  distinction 
between  an  action  in  affirmance  of  an  illegal  contract  and  one  in 
disafnrmance  of  it.  In  the  former  such  an  action  cannot  be  main- 
tained, but  in  the  latter,  an  action  may  be  maintained  for 
money  had  and  received.  The  reason  is,  that  the  plaintiff's  claim 
is  not  to  enforce,  but  to  repudiate,  an  illegal  agreement.  Wharton, 
Con.  354.  In  such  case  there  is  a  locus  pcenit entice ;  the  wrong  is 
not  consummated,  and  the  contract  may  be  rescinded  by  either  party. 

In  Edgar  v.  Fowler  (3  East,  225,)  Lord  Ellenborough  said:  "In 
illegal  transactions  the  money  has  always  been  stopped  while  it  is  in 
transituto  the  person  entitled  to  receive  it/'  As  Lord  Justice  Mellish 
said :  "To  hold  that  the  plaintiff  is  entitled  to  recover  does  not  carry 
out  the  illegal  transaction,  but  the  effect  is  to  put  everybody  in  the  same 
situation  as  they  were  before  the  illegal  transaction  was  determined 
upon,  and  before  the  parties  took  any  steps.  If  money  is  paid  or  goods 
delivered  for  an  illegal  purpose,  the  person  who  has  so  paid  the 
money  or  delivered  the  goods  may  recover  them  back  before  the 
illegal  purpose  is  carried  out;  but  if  he  waits  till  the  illegal  purpose 
is  carried  out,  or  if  he  seeks  to  enforce  the  illegal  transaction,  in 
neither  case  can  he  maintain  an  action;  the  law  will  not  allow  that 


LEGALITY    OF   OBJECT.  453 

to  be  done."  Taylor  v.  Bowers,  1  Q.  B.  Div.  291.  In  Hastelow  v. 
Jackson  (8  Barn.  &  Cress.  221),  which  was  an  action  by  one  of 
the  parties  to  a  wager  on  the  event  of  a  boxing  match,  commenced 
against  the  stakeholder  after  the  battle  had  been  fought,  Littledale,  J., 
said:  "If  two  persons  enter  into  an  illegal  contract  and  money  is 
paid  upon  it  by  one  to  the  other,  that  may  be  recovered  back  before 
the  execution  of  the  contract,  but  not  afterwards."  Smith  v.  Bick- 
more,  4  Taunt.  474 ;  Tappenden  v.  Randall,  2  Bos.  &  Pul.  467 ;  Lowry 
v.  Bourdien,  2  Doug.  468 ;  Hunt  v.  Stokes,  4  T.  K.  561 ;  Utica  Ins. 
Co.  v.  Kip,  8  Cow.  20;  Merritt  v.  Millard,  4  Keys  (N.  Y.),  208; 
White  v.  Franklin  Bank,  22  Pick.  181;  O'Bryan  v.  Fitzpatrick,  48 
Ark.  490.  "And  this  rule,"  says  Mr.  Justice  Woods,  "is  applied 
in  the  great  majority  of  the  cases,  even  when  the  parties  to  an 
illegal  contract  are  in  pari  delicto,  because  the  question  which  of  two 
parties  is  the  more  blamable  is  often  difficult  of  solution,  and  quite  im- 
material." Spring  Co.  v.  Knowlton,  103  U.  S.  60.  The  object 
of  the  law  is  to  protect  the  public,  and  not  the  parties.  This  is 
upon  the  principle  that  it  best  comports  with  public  policy  to  arrest 
the  illegal  transaction  before  it  is  consummated.  Stacy  v.  Foss,  19 
Me.  335  (36  Am.  Dec.  755). 

3.  It  only  remains  to  apply  these  principles  to  the  facts.  These 
show  that  the  plaintiff  was  cognizant  that  the  race  had  been  fixed  in 
advance — that  one  of  the  parties  should  win,  and  that  certain 
other  persons  should  lose  their  money — that  it  was  a  bogus  race, 
and  the  arrangement  based  upon  it  corrupt,  and  designed  to  cheat 
and  defraud  the  other  parties;  but,  at  the  same  time,  they  show 
that  he  repented  and  repudiated  the  transaction  before  it  was  consum- 
mated, by  demanding  the  return  of  his  money  the  evening  of  the 
day  before  the  race,  and  on  the  day  of  the  race,  but  before  it  was 
to  come  off,  and  that  the  defendant  refused  to  pay  it  back,  and  that 
he  afterwards  forbade  the  defendant  to  pay  said  money  to  any  other 
person  than  himself.  He  availed  himself  of  the  opportunity  which 
the  law  affords  a  person  to  withdraw  from  the  illegal  contract  before 
it  has  been  executed;  he  repented  before  the  meditated  wrong  was 
consummated,  and  twice  demanded  to  withdraw  his  money,  and 
thereby  rescinded  the  contract.  To  allow  the  plaintiff  to  recover  does 
not  aid  or  carry  out  the  corrupt  and  illegal  transaction,  but  the 
effect  is  to  put  the  parties  in  the  same  condition  as  they  were  be- 
fore it  was  determined  upon.  By  allowing  the  party  to  withdraw, 
the  contemplated  wrong  is  arrested,  and  not  consummated.  This 
the  law  encourages,  and  no  obstacle  should  be  thrown  in  the  way  of 
his  repentance.  Hence,  if  the  plaintiff  retreated  before  the  bet  had 
been  decided,  his  money  ought  to  have  been  returned  to  him,  and 
in  default  of  this  he  is  entitled  to  recover. 

There  was  no  error,  and  the  judgment  must  be  affirmed. 

9  Cyc.  551    (60);   W.  P.  501    (64). 


454  FORMATION    OF   CONTRACT. 

(v.)  Conflict  of  laws. 
UNION  NATIONAL  BANK  v.  CHAPMAN  et  al. 

169  NEW  YORK,  538.— 1902. 

HAIGHT,  J.  This  action  was  brought  upon  a  promissory  note 
made  at  Tuscumbia  in  the  State  of  Alabama,  by  the  defendants, 
Chapman,  Reynolds  &  Co.,  a  copartnership  engaged  in  business  at  that 
place,  in  the  building  of  a  lock  in  the  Tennessee  river  for  the  govern- 
ment of  the  United  States,  of  which  note  the  following  is  a  copy : 

"$5,000.  Tuscumbia,  Alabama,  May  1st,  1894.  Six  months  after 
date,  we  promise  to  pay  to  the  order  of  E.  P.  Reynolds,  Jr.,  five 
thousand  and  no  lOOths  dollars,  value  received,  with  interest  at  eight 
per  cent  per  annum  from  date,  payable  at  Union  National  Bank, 
Chicago,  Illinois.  Chapman,  Reynolds  &  Co.  "W.  P.  Chapman. 
Elizabeth  J.  Chapman.  Ella  Howard.  C.  W.  Howard/' 

The  trial  court  has  found  as  facts  that  the  defendant  Elizabeth  J. 
Chapman  was  the  wife  of  William  P.  Chapman,  who  was  a  member 
of  the  firm;  that  she  signed  the  note  at  the  request  of  her  husband 
as  surety  for  the  firm,  and  that,  while  it  was  the  intention  of  the 
firm  that  the  note  should  be  negotiated  and  discounted  in  the  State 
of  Illinois,  she  did  not  know  of  such  intention,  except  from  what 
appeared  on  the  face  of  the  note;  that  she  signed  the  note  for  the 
purpose  of  raising  money  for  the  firm,  to  enable  it  to  continue  its 
work  upon  the  government  contract  in  Alabama,  and  after  the  note 
was  executed  it  was  delivered  to  Reynolds,  the  payee  therein  named, 
who  took  it  to  the  plaintiff's  bank,  in  Chicago,  111.,  indorsed  it,  and 
delivered  it  to  the  bank  for  the  purpose  of  securing  loans  already 
made  to  the  firm,  and  for  the  purpose  of  procuring  additional  loans. 

The  defense  interposed  by  the  defendant  Elizabeth  J.  Chapman 
was  that  she  had  no  capacity  to  make  the  contract  in  question,  under 
section  2349  of  the  Code  of  1886  of  the  State  of  Alabama,  which 
provides  that  "the  wife  shall  not,  directly  or  indirectly,  become  surety 
for  her  husband,"  and  it  was  therefore  invalid  and  of  no  binding 
force  against  her.  On  behalf  of  the  plaintiff  it  is  contended  that 
the  note  had  no  legal  inception  until  it  was  discounted  by  the  plain- 
tiff's bank  in  Illinois,  and  that  it  then  became  a  valid  contract  of 
that  State,  and  under  its  laws  the  wife  was  not  disqualified  from  be- 
coming surety  for  her  husband.  The  question  thus  presented  is  as  to 
whether  this  was  an  Alabama  or  an  Illinois  contract. 

As  we  have  seen,  the  note  was  drawn,  signed,  and  delivered 
to  the  payee  at  Tuscumbia,  Ala.,  and  Mrs.  Chapman  signed  as 
surety  for  her  husband.  She  did  not  authorize  it  to  be  discounted 
in  Illinois,  or  know  that  the  members  of  the  firm  intended  to  have  it 


LEGALITY    OF    OBJECT.  455 

negotiated  there.  She  only  knew  that  it  was  payable  at  the  plaintiff's 
bank,  in  that  State.  It  is  true,  the  note  did  not  have  a  valid  in- 
ception, in  such  a  sense  as  to  create  a  liability  on  the  part  of  the 
makers,  until  it  was  discounted  and  passed  over  to  the  bank;  but 
this  does  not  necessarily  make  it  an  Illinois  contract,  so  far  as  the 
surety  is  concerned.  Mrs.  Chapman's  contract  to  become  surety  was 
complete  when  the  instrument  was  signed  and  delivered  to  the  payee. 
It  was  then  a  contract  beyond  her  recall,  upon  which  she  in  the  future 
might  become  liable  when  negotiated  by  the  payee,  if  otherwise  valid, 
and  the  place  of  the  negotiation  could  not,  under  the  circumstances, 
in  any  manner  change  the  force  or  effect  of  her  contract.  One  of  the 
essential  elements  of  the  contract  is  the  meeting  of  the  minds  of  the 
contracting  parties  upon  the  matter  which  is  the  subject  of  the  con- 
tract. In  this  contract  Mrs.  Chapman  agreed  with  the  payee  of  the 
note  that  she  would  become  surety  for  her  husband  to  the  amount 
thereof,  and  this  agreement  was  made  in  the  State  of  Alabama.  She 
did  not  agree  that  it  should  be  negotiated  in  Illinois  and  made  an 
Illinois  contract.  Her  mind  did  not  meet  the  intention  of  the  payee 
upon  that  subject,  and  she  cannot,  therefore,  be  held  to  have  agreed 
that  it  should  become  a  contract  of  that  State.  She  knew  by  the 
terms  of  the  instrument  that  it  was  payable  at  the  plaintiff's  bank, 
but  this  did  not  advise  her  that  it  was  intended  to  discount  it  there, 
or  to  constitute  it  a  contract  of  that  State.  It  appears  from  the  evi- 
dence that  the  firm  kept  its  accounts  with,  and  made  its  deposits  in 
the  plaintiff's  bank,  and  she  might  well  have  assumed  that  it  was 
made  payable  there  for  the  convenience  of  the  firm. 

We  have  had  occasion  to  examine  many  cases  bearing  upon  the 
question  under  consideration.  It  may  not  be  profitable  to  here  in- 
dulge in  an  extended  discussion  of  the  authorities,  for  we  have  found 
none  that  are  exactly  in  point.  We  shall  therefore  extract  from  them 
some  general  principles  which  appear  to  be  settled  beyond  contro- 
versy, and  apply  them  to  the  question  under  consideration:  (1)  All 
matters  bearing  upon  the  execution,  the  interpretation,  and  the  validity 
of  contracts,  including  the  capacity  of  the  parties  to  contract, 
are  determined  by  the  law  of  the  place  where  the  contract  is  made; 
(2)  all  matters  connected  with  its  performance,  including  presenta- 
tion, notice,  demand,  etc.,  are  regulated  by  the  law  of  the  place 
where  the  contract,  by  its  terms,  is  to  be  performed ;  ( 3 )  all  matters 
respecting  the  remedy  to  be  pursued,  including  the  bringing  of  suits 
and  the  service  of  process,  depend  upon  the  law  of  the  place  where 
the  action  is  brought. 

In  the  case  of  Scudder  v.  Bank,  91  U.  S.  406,  23  L.  Ed.  245,  a 
bill  of  exchange  was  drawn  by  a  party  in  Chicago  upon  a  firm  in  St. 
Louis,  and  verbally  accepted  by  a  member  of  the  St.  Louis  firm, 
then  present  in  Chicago.  Under  the  law  of  Missouri,  acceptances 


456  FORMATION    OF   CONTRACT. 

were  required  to  be  in  writing,  but  under  the  law  of  Illinois  a  parol 
acceptance  was  valid.  The  bill  of  exchange,  as  we  have  seen,  was 
drawn  in  Chicago,  111.,  and  therefore  all  matters  pertaining  to  its 
execution,  interpretation,  and  validity  had  to  be  determined  by  the 
laws  of  that  State.  It  was  made  payable  in  St.  Louis,  Mo.,  and 
ordinarily  the  laws  of  that  State  would  control  with  reference  to 
acceptance  and  performance;  but  a  member  of  the  firm  in  that  State 
was  present  in  Chicago,  and  he  there  accepted  the  bill  of  exchange, 
without  waiting  for  it  to  be  sent  on  to  St.  Louis,  to  his  firm  in  that 
city.  It  was  therefore  held  to  be  an  Illinois  acceptance.  In  the 
case  of  Voigt  v.  Brown,  42  Hun,  394,  the  husband  and  wife  resided 
in  the  State  of  New  York.  The  wife  here  authorized  her  husband 
to  sign  her  name  to  an  accommodation  note.  He  then  went  into 
Connecticut,  and  there  executed  a  note  payable  to  the  order  of  the 
firm  of  which  he  was  a  partner,  and  signed  her  name  thereto.  He 
then  took  the  note  to  New  York,  and  had  it  discounted  by  the  plain- 
tiffs, and  received  the  money.  Under  the  laws  of  Connecticut,  a 
married  woman  could  not  contract,  except  for  the  benefit  of  herself, 
her  family,  or  her  separate  or  joint  estate.  Under  the  laws  of  New 
York,  her  contract  was  valid.  It  was  held  to  be  a  New  York  con- 
tract. The  learned  Appellate  Division  cites  this  case  as  supporting 
their  contention,  but  to  our  minds  it  widely  differs  from  that  which 
we  have  under  consideration.  In  that  case  the  wife,  as  we  have 
seen,  resided  in  this  State,  and  remained  in  this  State.  The  authority 
of  her  husband  to  sign  her  name  to  the  note  was  given  here.  When 
he,  therefore,  as  her  agent,  drew  the  note  and  signed  her  name 
thereto,  he  acted  upon  authority  derived  in  this  State,  and  the  paper 
became  of  the  same  force  and  effect  as  if  the  wife  had  actually 
signed  it  here.  It  was  taken  to  the  city  of  New  York,  and  there, 
negotiated.  We  thus  have  it  drawn  as  .a  New  York  contract,  and 
negotiated  as  a  New  York  contract,  and  it  evidently  was  so  under- 
stood by  the  parties. 

In  the  case  of  Milliken  v.  Pratt,  125  Mass.  374,  28  Am.  Rep.  241, 
a  wife  guaranteed  the  payment  by  her  husband  of  $500  to  one 
Pratt  of  Portland,  Me.  The  guaranty  was  in  writing,  and  was 
dated  at  Portland,  January  29,  1870.  She,  however,  actually  signed 
the  paper  in  Massachusetts,  but  she  sent  it  to  Pratt  at  Portland, 
and  caused  it  to  be  delivered  to  him  there.  Acting  upon  it,  he 
delivered  goods  to  her  husband  which  he  then  purchased.  The  guar- 
anty was  valid  under  the  laws  of  Maine,  but  void  under  the  laws 
of  Massachusetts.  It  was  held  that  the  contract  was  governed  by  the 
laws  of  Maine.  In  this  case  it  will  be  observed  that  the  guaranty 
not  only  purports  to  have  been  executed  in  Maine,  but  that  the  wife 
caused  the  instrument  to  be  sent  to  Maine,  and  there  delivered  to 
the  plaintiff.  She  therefore  knew  and  understood  that  the  contract 


LEGALITY   OF   OBJECT.  457^ 

was  to  have  its  inception  there,  and  consequently  must  have  intended 
it  to  be  controlled  by  the  laws  of  that  State.  In  line  with  this  is 
the  recent  case  of  Grand  v.  Livingston,  4  App.  Div.  589,  38  N.  Y. 
Supp.  490,  affirmed  in  this  court  (158  N.  Y.  688,  53  N.  E.  1125), 
in  which  it  was  expressly  held  that  the  contract  must  be  construed 
and  determined  under  the  law  of  the  State  where  it  was  executed,  un- 
less it  could  fairly  be  said  that  the  parties  at  the  time  of  its  execution 
clearly  manifested  an  intention  that  it  should  be  governed  by  the 
laws  of  another  State. 

Applying  these  principles  to  the  question  under  consideration,  it 
seems  clear  that  the  capacity  of  Mrs.  Chapman  to  contract  must 
be  determined  by  the  law  of  the  State  where  the  contract  was  ex- 
ecuted, unless  it  can  fairly  be  said  that  she,  at  the  time  of  the 
execution  of  the  instrument,  clearly  understood  and  intended  that  it 
should  be  governed  by  the  laws  of  another  State.  Such  an  intention 
or  understanding  is  not  manifest  in  this  case.  Instead  thereof,  it 
is  found  that  she  did  not  know  where  the  paper  was  to  be  discounted. 

The  judgment  should  be  reversed,  and  a  new  trial  granted,  with 
costs  to  abide  the  event. 

VANN,  J.  (dissenting).  The  contract  of  a  surety  rests  upon  the 
contract  of  the  principal,  and  until  the  latter  becomes  operative 
the  former  is  not  binding.  The  promise  of  the  surety  has  nothing 
to  act  upon  until  the  promise  of  the  principal  is  in  force  as  an 
effective  contract.  When  the  firm  negotiated  the  paper  in  Illinois, 
as  they  had  a  right  to  do,  by  selling  it  to  a  bona  fide  purchaser  for 
value,  that  which  theretofore  had  been  merely  a  note  in  form  first 
became  a  note  in  fact.  It  then  became  a  contract,  and  for  the  first 
time  acquired  the  quality  of  commercial  paper.  Until  then  the 
law  did  not  recognize  Mrs.  Chapman  as  a  surety.  She  had  made 
no  enforceable  contract,  but  merely  an  inchoate  promise,  which  was 
without  legal  life  until  what  was  done  in  Alabama  with  implied 
authority  to  complete  it  elsewhere  ripened  into  a  lawful  obligation 
by  what  was  done  in  Illinois.  All  that  was  done  in  Alabama  did  not 
make  a  contract,  and  therefore  the  contract  was  not  made  in  that 
State.  It  was  made  in  Illinois,  because  there  was  no  contract,  either 
of  principal  or  surety,  until  the  paper  was  used  in  that  State.  .  .  . 

Parker,  C.  J.,  and  Gray,  O'Brien,  and  Martin,  JJ.,  concur  with 
Haight,  J.  Bartlett,  J.,  concurs  with  Vann,  J. 

Judgment  reversed,  etc. 

9  Cyc.  671  (23);  666-667  (8-10);  669-670  (12-14);  690-691  (31-34). 
Beale,  What  law  governs  the  validity  of  a  contract,  23  H.  L.  R.  1,  79,  194,  260. 


PART  II. 

THE  OPERATION  OF  CONTRACT. 


CHAPTER  I. 

THE  LIMITS  OF  THE  CONTRACTUAL  OBLIGATION. 

A  man  cannot  incur  liabilities  from  a  contract  to  which  he  was 
not  a  party. 

BRANNON,  J.,  IN  CRUMLISH'S  ADM'R  v.  CENTRAL  IMPROVE- 
MENT CO.  et  al. 

38   WEST  VIRGINIA,  390.— 1893. 

This  payment  was  made  by  a  stranger,  without  request  or  ratifica- 
tion by  the  debtor,  so  far  as  appears.  Does  it  satisfy  the  judgment? 
As  it  seems  to  me,  the  answer  depends  upon  whether  you  mean  as 
to  the  creditor  or  debtor.  It  remains  a  correct  legal  proposition 
to  the  present,  that  one  man,  who  is  under  no  obligation  to  pay  the 
debt  of  another,  cannot  without  his  request  officiously  pay  that  other's 
debt,  and  charge  him  with  it.  If  the  debtor  ratify  such  payment, 
the  debt  is  discharged,  and  he  becomes  liable  to  the  stranger  for 
money  paid  to  his  use.  If  he  refuse  to  ratify  it,  he  disclaims  the 
payment,  and  the  debt  stands  unpaid  as  to  him.  In  the  one  case, 
the  stranger  would  at  law  sue  the  debtor  for  money  paid  to  his 
use;  in  the  other,  enforce  the  debt  in  the  creditor's  name  for  his 
use.  If  his  payment  is  not  ratified,  he  may  go  into  equity  praying 
that,  if  the  debtor  ratify  it,  said  debtor  may  be  decreed  to  repay 
him,  or,  if  the  debtor  do  not  ratify  the  payment,  that  the  debt 
be  treated  as  unpaid  as  between  him  and  the  debtor,  and  that  it  be 
enforced  in  his  favor  as  an  equitable  assignee.  Neely  v.  Jones,  16 
W.  Va.  625 ;  Moore  v.  Ligon,  22  W.  Va.  292 ;  Beard  v.  Arbuckle,  19 
W.  Va.  135. 

But  how  as  to  the  creditor?  When  a  stranger  pays  him  the  debt 
of  a  third  party  without  the  request  of  such  third  party,  as  in  this 
case,  can  the  creditor  say  the  debt  is  yet  unpaid,  and  enforce  it 
against  the  debtor,  as  is  attempted  lo  be  done  by  Jamison  &  Co? 

458 


LIMITS   OF    CONTRACTUAL   OBLIGATION.  459 

Can  he  accept  such  payment  and  say,  because  it  was  made  by  a 
stranger,  it  is  no  payment?  Is  his  acceptance  not  an  estoppel  by 
conduct  in  pais,  as  to  him? 

There  has  been  a  difference  of  opinion  in  this  matter.  The  old 
English  case  of  Grymes  v.  Blofield  (Cro.  Eliz.  541),  decided  in 
Elizabeth's  reign,  is  the  parent  of  the  cases  holding  that  even  the  cred- 
itor accepting  payment  from  a  stranger  may  repudiate,  and  still  en- 
force his  demand  as  unpaid.  That  case  is  said  to  have  decided  that 
a  plea  of  accord  and  satisfaction  by  a  stranger  is  not  good,  while 
Rolle  Abr.  471  (condition  F.)  says  it  was  decided  just  the  other  way. 
Denman,  C.  J.,  questioned  its  authority  in  Thurman  v.  Wild  (11  A. 
&  E.  453,  39  E.  C.  L.  145).  Opposite  holding  has  been  made  in 
England  in  Hawkshaw  v.  Rawlings  (1  Strange,  24).  Its  authority  is 
questioned  at  the  close  of  the  opinion  by  Cresswell,  J.,  in  Jones  v. 
Broadhurst  (9  M.  G.  &  S.,  C.  B.,  173,  67  E.  C.  L.  172),  as  contrary 
to  an  ancient  decision  in  36  Hen.  VI.,  and  against  reason  and  justice. 
Parke,  B.,  seemed  to  think  it  law  in  Simpson  v.  Eggington  (10  Exch. 
845).  It  was  followed  in  Edgcombe  v.  Eodd  (5  East,  294)  and  Stark 
v.  Thompson  (3  T.  B.  Mon.  296).  Lord  Coke  held  the  satisfaction 
good.  Co.  Litt.  206  b,  207  a.  See  5  Eob.  Pr.  (New)  884;  7  Eob. 
Pr.  (New)  548.  The  cases  of  Goodwin  v.  Cremer  (18  A.  &  E.,  N. 
S.  757,  83  E.  C.  L.  757),  and  Kemp  v.  Balls  (10  Exch.  607,  28  Eng. 
Law  &  Eq.  498),  seem  to  hold  that  payment  must  be  made  by  a 
third  person  as  agent  for,  and  on  account  of,  debtor,  with  his  assent  or 
ratification.  In  New  York  old  cases  held  this  doctrine.  Clow  v. 
Borst,  6  Johns.  37;  Bleakley  v.  White,  4  Paige,  654.  But  later,  in 
Wellington  v.  Kelly  (84  N.  Y.  543),  Andrews,  J.,  said  that  the  old 
cases  were  doubtful,  but  had  not  been  overruled,  but  it  was  not  neces- 
sary in  that  case  to  say  whether  it  should  longer  be  regarded  as  law, 
and  the  syllabus  makes  a  quare  on  that  point.  It  was  held  in  Harrison 
v.  Hicks  (1  Port.  Ala.  423),  that  "payment  of  a  debt,  though  made 
by  one  not  a  party  to  the  contract,  and  though  the  assent  of  the  debtor 
to  the  payment  does  not  appear,  is  still  the  extinguishment  of  the 
demand."  The  opinion  says  that,  as  between  the  person  paying  and 
him  for  whose  benefit  it  was  paid,  a  question  might  arise  whether 
it  was  voluntary,  which  would  depend  on  circumstances  of  previous 
request  or  subsequent  [assent],  express  or  implied.  This  doctrine  is 
sustained  by  Martin  v.  Quinn,  37  Cal.  55 ;  Gray  v.  Herman,  75  Wis. 
453  (44  N.  W.  Rep.  248)  ;  Cain  v.  Bryant,  12  Heisk.  45;  Leavitt  v. 
Morrow,  6  Ohio  St.  71;  Webster  v.  Wyser,  1  Stew.  (Ala.)  184;  Har- 
vey v.  Tama  Co.,  53  la.  228  (5  N.  W.  Rep.  130).  Bish.  Cont.  §  211 
holds  that,  if  payment  "be  accepted  by  creditor  in  discharge  of  debt, 
it  has  that  effect/'  See  2  Whart.  Cont.  §  1008. 

It  seems  utterly  unjust  and  repugnant  to  reason,  that  a  creditor 
accepting  payment  from  a  stranger  of  the  third  person's  debt  should 


460  OPERATION   OF   CONTRACT. 

be  allowed  to  maintain  an  action  against  the  debtor  pleading  and 
thereby  ratifying  such  payment,  on  the  technical  theory  that  he  is  a 
stranger  to  the  contract.  The  creditor  has  himself  for  this  purpose 
allowed  him  to  make  himself  a  quasi  party,  and  consents  to  treat  him. 
so,  so  far  as  payment  is  concerned.  To  regard  the  debt  paid,  so  far 
as  he  is  concerned,  is  but  to  hold  him  to  the  result  of  his  own  act. 
Shall  he  collect  the  debt  again?  In  that  case  can  the  stranger  re- 
cover back?  What  matters  it  to  the  creditor  who  pays?  As  the 
Supreme  Courts  of  Wisconsin  and  Ohio,  in  cases  above  cited  said,  this 
doctrine  is  against  common  sense  and  justice.  It  does  not  at  all  in- 
fringe the  rule  that  one  cannot  at  law  make  another  his  debtor  without 
request,  to  allow  such  payment  to  satisfy  the  debt  as  to  the  creditor; 
and  this  court,  while  recognizing  the  rule  that  one  cannot  officiously 
pay  the  debt  of  another  and  sue  him  at  law,  unless  he  has  ratified  it, 
by  allowing  the  stranger  to  go  into  equity  and  get  repayment,  makea 
the  payment  in  the  eyes  of  a  court  of  equity  operate  to  satisfy  the 
creditor,  and  render  the  stranger  a  creditor  of  the  debtor.  Neely  v. 
Jones,  16  W.  Va.  625.  I  know  that  in  that  case  it  is  held  that,  "if 
a  payment  by  a  stranger  is  neither  ratified  or  authorized  by  the  debtor, 
it  will  not  be  held  to  be  a  discharge  of  the  debt";  but,  though  this 
point  is  general,  that  was  a  case  of  the  stranger  seeking  to  make  the 
debtor  repay,  and  the  case  and  opinion  intended  to  lay  down  the  rule 
at  law  only  as  between  the  stranger  paying  and  the  debtor,  not  as 
between  the  creditor  and  debtor.  .  .  .* 

9  Cyc.  386   (31)  ;  7  H.  L.  E.  437. 

i  In  Moody  v.  Moody,  14  Me.  307,  the  court  said:  "To  maintain  this  ac- 
tion there  must  be  a  contract  between  the  parties  either  expressed  or  implied. 
The  evidence  reported  does  not  prove  any  express  contract;  and  the  only 
evidence  from  which  one  can  be  implied  in  law  is,  that  the  defendant  was 
bound  for  the  support  of  one  Jones;  that  he  neglected  and  refused  to  afford 
him  such  support;  and  that  Jones  applied  to  the  plaintiff  to  board  him,  and 
the  plaintiff  did  board  him  with  the  knowledge  of  the  defendant.  The  de- 
fendant's neglect  to  fulfill  his  contract  with  Jones  did  not  authorize  another 
person  to  assume  the  performance  of  it,  and  substitute  himself  as  the  creditor 
of  the  defendant.  The  law  never  implies  a  contract  to  substitute  one  cred- 
itor for  another.  The  defendant  has  a  right  to  say,  'ATon  in  ~ha.ec  foedera 
veni.'"  But  see  Forsyth  v.  Ganson,  5  Wend.  (N.  Y.)  558,  where  there  were 
circumstances  of  family  relationship. 


LIMITS   OF   CONTRACTUAL   OBLIGATION.  461 


Can  a  man  acquire  rights  under  a   contract,  to  which  he  is  not 
a  party?     Promise  for  benefit  of  third  party. 

BORDEN  et  al  v.  BOARDMAN. 

157  MASSACHUSETTS,  410.— 1892. 

Contract.  C.  contracted  to  build  a  house  for  defendant.  When 
the  time  for  the  first  payment  came  defendant  requested  C.  to  have 
present  all  persons  having  claims  against  the  house.  Plaintiffs  had 
a  claim  for  $150,  but  were  not  present,  and  at  C.'s  request  defendant 
reserved  from  the  amount  due  C.  $200  out  of  which  he  promised  to 
pay  plaintiffs'  claim.  Plaintiffs  subsequently  asked  defendant  about 
the  arrangement,  and  defendant  said  he  held  the  money  under  the 
above  agreement  with  C.,  but  had  been  advised  not  to  pay  it  at  present. 
Defendant  claimed  that,  upon  the  evidence,  plaintiffs  were  not  en- 
titled to  recover,  and  offered  to  show  that  a  day  or  so  after  the  above 
settlement  C.  had  abandoned  the  contract,  and  that  when  plaintiffs 
inquired  about  the  arrangement  defendant  informed  them  that  C.  had 
broken  his  contract,  and  that  defendant  was  damaged  thereby.  This 
evidence  was  excluded  and  a  verdict  directed  for  plaintiffs.  If  the 
ruling  was  right,  the  judgment  was  to  be  entered  on  the  verdict; 
otherwise,  judgment  for  defendant. 

MORTON,  J.  The  evidence  offered  in  bar  was  rightly  excluded.  The 
subsequent  failure  of  Collins  to  perform  his  contract  would  not  release 
the  defendant  from  the  obligation,  if  any,  which  he  had  assumed 
to  the  plaintiffs,  in  the  absence  of  any  agreement,  express  or  implied, 
that  the  money  was  to  be  paid  to  the  plaintiffs  only  in  case  Collins 
fulfilled  his  contract.  Cook  v.  Wolfendale,  105  Mass.  401.  There  was 
no  evidence  of  such  an  agreement. 

The  other  question  is  more  difficult.  The  case  does  not  present  a 
question  of  novation;  for  there  was  no  agreement  among  the  plain- 
tiffs, Collins,  and  the  defendant  that  the  defendant  should  pay  to  the 
plaintiffs,  out  of  the  money  in  his  hands  and  due  to  Collins,  a  specific 
sum,  and  that  thenceforward  the  defendant  should  be  released  from 
all  liability  for  it  to  Collins,  and  should  be  liable  for  it  to  the  plain- 
tiffs. Neither  was  there  any.  agreement  between  the  plaintiffs  and 
the  defendant  that  the  latter  would  pay  the  money  to  them.  The 
conversation  between  one  of  the  plaintiffs  and  the  defendant  can- 
not be  construed  as  affording  evidence  of  such  an  agreement.  Coupled 
with  the  defendant's  admission  that  he  was  holding  money  for  the 
plaintiffs  was  his  repudiation  of  any  liability  to  the  plaintiffs  for  it. 
Neither  can  it  be  claimed  that  there  was  an  equitable  assignment  of  the 
amount  in  suit  from  Collins  to  the  plaintiffs.  There  was  no  order  or 
transfer  given  by  him  to  them ;  nor  was  any  notice  of  the  arrangement 


462  OPERATION    OF    CONTRACT. 

between  him  and  the  defendant  given  by  him  to  the  plaintiffs.  Laz- 
arus v.  Swan,  147  Mass.  330.  The  case  upon  this  branch,  therefore, 
reduced  to  its  simplest  form,  is  one  of  an  agreement  between  two 
parties,  upon  sufficient  consideration  it  may  be  between  them,  that 
one  will  pay,  out  of  funds  in  his  hand  belonging  to  the  other,  a  spe- 
cific sum  to  a  third  person,  who  is  not  a  party  to  the  agreement,  and 
from  whom  no  consideration  moves.  It  is  well  settled  in  this  State 
that  no  action  lies  in  such  a  case  in  favor  of  such  third  party  to  recover 
the  money  so  held  of  the  party  holding  it.  Exchange  Bank  v.  Kice, 
107  Mass.  37,  and  cases  cited;  Kogers  v.  Union  Stone  Co.,  130  Mass. 
581 ;  New  England  Dredging  Co.  v.  Eockport  Granite  Co.,  149  Mass. 
381;  Marston  v.  Bigelow,  150  Mass.  45;  Saunders  v.  Saunders,  154 
Mass.  337.  Certain  exceptions  which  were  supposed  to  exist  have 
either  been  shown  not  to  exist,  or  have  been  confined  within  narrower 
limits.  Exchange  Bank  v.  Eice,  and  Marston  v.  Bigelow,  ubi  supra. 

We  have  assumed  that  the  sum  which  the  defendant  agreed  with 
Collins  to  pay  the  plaintiffs  was  specific.  But  it  is  to  be  observed 
that  the  agreement  between  the  plaintiffs  and  Collins  was  that  it 
should  not  cost  more  than  one  hundred  and  fifty  dollars  to  put  the 
building  back.  Collins  told  the  defendant  that  the  sum  was  due  to 
the  plaintiffs.  The  defendant  reserved  two  hundred  dollars.  It  may 
well  be  doubted,  therefore,  whether  the  defendant  had  in  his  hands  a 
specific  sum  to  be  paid  to  the  plaintiffs,  or  whether  he  agreed  with 
Collins  to  hold  and  pay  the  plaintiffs  a  specific  sum.  If  the  sum  was 
not  specific,  the  plaintiffs  do  not  claim,  as  we  understand  them,  that 
they  can  recover. 

Judgment  for  the  defendant.1 

9  Cyc.  375   (92-93);  377   (6);  W.  P.  256   (86);  259-260   (87-96). 


WILLIAMS,  J.,  IN  ADAMS  v.  KUEHN. 

119   PENNSYLVANIA  STATE,   76.— 1887. 

Where  one  person  enters  into  a  contract  with  another  to  pay  money 
to  a  third,  or  to  deliver  some  valuable  thing,  and  such  third  party  is 
the  only  party  interested  in  the  payment  or  the  delivery,  he  can 
release  the  promisor  from  performance  or  compel  performance  by 

i  Accord:  Pipp  v.  Reynolds,  20  Mich.  88;  Halsted  v.  Francis,  31  Mich.  113; 
Linneman  v.  Moross,  98  Mich.  178;  Chamberlain  v.  Ins.  Co.,  55  N.  H.  249 
( semble ) . 

"In  all  the  cases  since  Tweddle  v.  Atkinson  (1  B.  &  S.  393),  in  which  a 
person  not  a  party  to  a  contract  has  brought  an  action  to  recover  some  bene- 
fit stipulated  for  him  in  it,  he  has  been  driven,  in  order  to  avoid  being  ship- 
wrecked upon  the  common  law  rule  which  confines  such  an  action  to  parties 
and  privies,  to  seek  refuge  under  the  shelter  of  an  alleged  trust  in  his  favor." 
—Street,  J.,  in  Faulkner  v.  Faulkner,  23  Ont.  Rep.  252,  258. 


LIMITS   OF    CONTRACTUAL   OBLIGATION.  463 

suit.  If,  on  the  other  hand,  a  debt  already  exists  from  one  person  to 
another,  a  promise  by  a  third  person  to  pay  such  debt  is  for  the  benefit 
of  the  original  debtor  to  whom  it  is  made,  and  can  only  be  released 
or  enforced  by  him.  If  it  could  also  be  enforced  by  the  original  credi- 
tor the  promisor  would  be  liable  to  two  actions  for  the  same  debt  at 
the  same  time  and  upon  the  same  contract.  Among  the  exceptions 
are  cases  where  the  promise  to  pay  the  debt  of  a  third  person  rests 
upon  the  fact  that  money  or  property  is  placed  in  the  hands  of  the 
promisor  for  that  particular  purpose.  Also  where  one  buys  out  the 
stock  of  a  tradesman  and  undertakes  to  take  the  place,  fill  the  con- 
tracts, and  pay  the  debts  of  his  vendor.  These  cases  as  well  as  the 
case  of  one  who  receives  money  or  property  on  the  promise  to  pay  or 
deliver  to  a  third  person,  are  cases  in  which  the  third  person,  al- 
though not  a  party  to  the  contract,  may  be  fairly  said  to  be  a  party 
to  the  consideration  on  which  it  rests.  In  good  conscience  the  title 
to  the  money  or  thing  which  is  the  consideration  of  the  promise  passes 
to  the  beneficiary,  and  the  promisor  is  turned  in  effect  into  a  trustee. 
But  when  the  promise  is  made  to,  and  in  relief  of  one  to  whom  the 
promise  is  made,  upon  a  consideration  moving  from  him,  no  particu- 
lar fund  or  means  of  payment  being  placed  in  the  hands  of  the 
promisor  out  of  which  the  payment  is  to  be  made,  there  is  no  trust 
arising  in  the  promisor  and  no  title  passing  to  the  third  person.  The 
beneficiary  is  not  the  original  creditor  who  is  a  stranger  to  the  contract 
and  the  consideration,  but  the  original  debtor  who  is  a  party  to  both, 
and  the  right  of  action  is  in  him  alone. 


LEHOW  v.  SIMONTON  et  at. 
3  COLORADO,  346.— 1877. 

Assumpsit.     Plea  of  set-off.     A  demurrer  to  the  plea  was  sustained. 

The  plea  set  forth  that  the  plaintiff,  Pierce,  had  purchased  the  in- 
terest of  one  Phifer  in  the  business  of  Simonton  &  Phifer,  and  had 
agreed  to  assume  one-half  of  the  indebtedness  of  the  firm  jointly  with 
the  plaintiff,  Simonton;  that  Simonton  &  Phifer  were  then  indebted 
to  defendant  in  the  sum  of  $2000;  and  that  Pierce  jointly  with 
Simonton,  plaintiffs  herein,  undertook  and  agreed  with  the  old  firm 
to  pay  this  amount  to  defendant. 

WELLS,  J.  1.  Whatever  may  be  the  general  rule  in  the  case  of  a 
plea,  it  is  certain  that  the  declaration  in  counting  upon  a  promise 
good  in  parol  by  the  common  law  need  not  show  a  compliance  with 
the  requisites  of  the  statute  of  frauds.  The  statute  prescribes  a  rule  of. 
evidence,  and  not  a  rule  of  pleading.  Steph.  PI.  313,  374 ;  Browne  on 
Stat.  of  Frauds,  §  505 ;  1  Chit.  PI.  (16th  Am.  ed.)  245.  Now  the  plea 
of  set-off  is  in  the  nature  of  a  declaration,  and  in  respect  to  the  decree 


464  OPERATION   OF    CONTRACT. 

of  certainty  required,  is  governed  by  the  same  rule.  Waterman  on 
Set-off,  §  646.  The  question,  whether  the  undertaking  mentioned  in 
the  plea  is  within  the  statute  of  frauds,  does  not  arise. 

2.  It  seems  to  be  the  settled  doctrine  of  the  courts  of  England  at 
this  day,  that  a  stranger  to  the  consideration  cannot  enforce  the 
contract  by  an  action  thereon  in  his  own  name,  though  he  be  avowedly 
the  party  intended  to  be  benefited.     1  Chit,  on  Cont.  (llth  Am.  ed.) 
74.     In  this  country  there  are  many  cases  which  assert  the  same  rule. 
Salmon  v.  Brown,  6  Blackf.  347 ;  Britzell  v.  Fryberger,  2  Cart.  176 ; 
Clapp  v.  Lawton,   31   Conn.   103;   Conklin  v.   Smith,   7   Ind.   108; 
Mellen  v.  Whipple,  1  Gray,  321 ;  Kobertson  v.  Eeed,  47  Penn.  St.  115 ; 
Exchange  Bank  v.  Price,  107  Mass.  42;  Warren  v.  Bachelder,  15  N. 
H.  139;  McLaren  v.  Hutchison,  18  Cal.  81,  and  some  others  which 
are  not  accessible  to  us. 

But  as  respects  simple  contracts,  the  decided  preponderance  of 
American  authority  sustains  the  action  of  the  beneficiary.  1  Pars, 
on  Cont.  467;  1  Chit.  PI.  (16th  Am.  ed.)  5  n.  (n.  1) ;  2  Greenl.  Ev. 
109;  Thorp  v.  The  Keokuk  Coal  Co.,  48  N.  Y.  253;  McDowell  v. 
Laev,  35  Wis.  175;  Bowhannan  v.  Pope,  42  Me.  93;  Joslin  v.  N.  J. 
Car  Spring  Co.,  36  N".  J.  L.  141 ;  Myer  v.  Lowell,  44  Mo.  328 ;  Sanders 
v.  Clason,  13  Minn.  379;  Thompson  v.  Gordon,  3  Strobh.  (S.  C.)  196; 
Scott's  Adm'r  v.  Gill,  19  Iowa,  187;  Allen  v.  Thomas,  3  Mete.  (Ky.) 
198 ;  Draugham  v.  Bunting,  9  Ired.  10 ;  Hendrick  v.  Lindsay,  3  Otto, 
143;  Beasley  v.  Webster,  64  111.  458;  In  re  Eice,  9  Bankr.  Eeg.  375; 
Bagaley  v.  Waters,  7  Ohio  St.  369,  and  many  others  in  the  reports  of 
the  same  courts,  are  to  this  effect.  To  harmonize  the  decisions  is 
impossible.  The  doctrine  of  those  last  quoted,  while  confessedly  an 
anomaly,  seems  to  us  the  more  convenient.  It  accords  the  remedy  to 
the  party  who  in  most  instances  is  chiefly  interested  to  enforce  the 
promise,  and  avoids  multiplicity  of  actions.  That  it  should  occasion 
injustice  to  either  party  seems  to  us  impossible. 

3.  The  plea  fails  to  show  to  whom  the  promises  relied  upon  were 
made;  but  this  is  equivalent  to  stating  promise  to  the  party  from 
whom  the  consideration  proceeded.     1  Chit.  PI.  (16th  ed.)  309  (k.)  ; 
and  according  to  Delaware  and  Hudson   Canal  Co.  v.  Westchester 
Bank  (4  Denio,  97),  this  is  the  proper  form  of  the  averment. 

Judgment  reversed  with  costs,  and  cause  remanded.     Eeversed. 

9  Cyc.  378  (7)  ;  25  L.  R.  A.  257;  W.  P.  256  (86)  ;  Williston,  Contracts  for 
the  benefit  of  a  third  person,  15  H.  L.  R.  767. 


LIMITS    OF    CONTRACTUAL   OBLIGATION.  465 

WOOD  et  al  v.  MORIARTY. 
15  RHODE  ISLAND,  518.— 1887. 

Plaintiffs'  petition  for  a  new  trial. 

DDRFEE,  C.  J.  This  is  assumpsit  for  the  price  of  lumber  furnished 
to  one  Joshua  W.  Tibbetts  for  use  in  the  erection  of  two  houses  for 
the  defendant,  Tibbetts  having  entered  into  a  written  contract  with 
the  defendant  to  build  the  houses  before  the  lumber  was  furnished. 
Tibbetts,  after  going  on  for  a  while  in  the  execution  of  the  contract, 
released  or  assigned  it  to  the  defendant  by  an  instrument  under  seal. 
The  instrument  begins  by  reciting  the  existence  of  the  contract,  and 
proceeds  as  follows,  to  wit : 

"Now  know  ye  that,  for  good  and  sufficient  reason,  and  in  consideration 
of  the  sum  of  twenty-five  dollars  paid  to  me  this  day  by  said  Moriarty,  I 
hereby  transfer  and  assign  said  contract  back  to  said  Thomas  Moriarty, 
he  agreeing  to  relieve  me  from  further  obligation  under  it,  and  I  hereby 
releasing  him  from  all  claims  or  demands  of  whatsoever  kind  I  may  have 
or  have  had  up  to  this  day,  August  26,  1885,  against  said  Moriarty;  I 
hereby  acknowledging  full  payment  for  said  claims  and  demands,  and  this 
shall  be  his  receipt  in  full  for  the  same  to  date,  meaning  hereby  to  convey 
to  the  said  Moriarty  all  my  right,  title,  and  interest  into  and  under  said 
contract,  desiring  to  relieve  myself  from  completing  the  work  under  the 
contract,  and  hereby  agree  to  withdraw  from  said  work  on  said  houses,  and 
leave  them  to  his  sole  charge  and  care." 

At  the  trial,  testimony  was  introduced  or  offered  to  prove  the  pur- 
chase of  the  lumber;  the  execution  of  the  release  or  assignment;  that 
the  defendant,  besides  paying  the  consideration  recited  therein,  agreed, 
by  way  of  further  consideration,  to  pay  all  bills  incurred  by  Tibbetts 
on  account  of  the  contract  released ;  that  among  these  bills  was  the  bill 
of  the  plaintiffs  for  lumber;  and  that  notice  of  the  arrangement  be- 
tween Tibbetts  and  the  defendant  was  given  by  Tibbetts  to  the  plain- 
tiffs. The  testimony  as  to  the  agreement  to  pay  the  bills  incurred  by 
Tibbetts  was  allowed  to  go  in  de  bene  esse,  and  at  the  close  of  the 
testimony  for  the  plaintiffs  the  court  directed  a  nonsuit.  The  plain- 
tiffs petitioned  for  a  new  trial. 

The  questions  are,  whether  the  plaintiffs  were  entitled  to  prove  by 
oral  testimony  that  the  defendant  agreed  to  pay  the  bills  incurred  by 
Tibbetts  under  his  contract,  by  way  of  further  consideration  for  the 
release  or  assignment,  and  if  so,  whether,  upon  proof  thereof,  the 
plaintiffs  could  maintain  their  action. 

The  general  rule  is,  that  parol  evidence  is  inadmissible  to  con- 
tradict, add  to,  subtract  from,  or  vary  the  terms  of  any  written  in- 
strument. But  when  the  instrument  is  a  deed,  it  is  held  to  be  no 
infringement  of  the  rule  to  permit  a  party  to  prove  some  other  con- 
sideration than  that  which  is  expressed,  provided  it  be  consistent 


466  OPERATION   OF    CONTRACT. 

with  that  which  is  expressed,  and  do  not  alter  the  effect  of  the  in- 
strument. 1  Greenleaf  on  Evidence,  §  304.  In  Miller  v.  Goodwin  (8 
Gray,  542)  it  was  held  that  an  agreement  under  seal  by  a  man  with  a 
woman  who  afterwards  became  his  wife,  to  convey  certain  real  estate 
to  her  in  consideration  of  past  services,  could  be  supplemented  by  parol 
proof  that  the  agreement  was  for  the  further  consideration  of  marriage 
between  the  parties.  See  also  Villers  v.  Beaumont,  2  Dyer,  146  a; 
2  Phillips  on  Evidence,  655.  In  McCrea  v.  Purmort  (16  Wend.  460) 
the  consideration  of  a  deed  conveying  land  was  expressed  to  be  money 
paid,  and  it  was  held  that  parol  evidence  was  admissible  to  show  that 
the  real  consideration  was  iron  of  a  specific  quantity,  valued  at  a  stipu- 
lated price.  Murray  v.  Smith,  1  Duer,  412 ;  Jordan  v.  White,  20  Minn. 
91;  Tyler  v.  Carlton,  7  Me.  175;  Nickerson  v.  Saunders,  36  Me.  413; 
National  Exchange  Bank  v.  Watson,  13  R.  I.  91;  2  Phillips  on  Evi- 
dence, 655 ;  Cowen  &  Hill's  Notes,  No.  490.  We  think  the  nonsuit  is 
not  sustainable  on  this  ground. 

The  defendant  contends  that  the  agreement  was  within  the  statute  of 
frauds,  being  an  agreement  not  in  writing  to  answer  for  the  debt 
of  another.  But  an  agreement  to  answer  for  the  debt  of  another,  to 
come  within  the  statute  of  frauds,  must  be  an  agreement  with  the 
creditor.  A  promise  by  A  to  B  to  pay  a  debt  due  from  B  to  C  is  not 
within  the  statute  of  frauds.  Eastwood  v.  Kenyon,  11  A.  &  E.  438; 
Browne  on  the  Statute  of  Frauds,  §  188.  The  contract  here,  as  made 
between  Tibbetts  and  the  defendant,  was  certainly  not  within  the 
statute. 

The  question,  therefore,  takes  this  form,  namely,  whether  the  plain- 
tiffs are  entitled  to  take  advantage  of  the  contract  and  bring  suit  upon 
or  under  it,  and  if  so,  whether  to  such  suit  the  statute  is  not  a  good 
defense.  Some  of  the  cases  cited  for  the  plaintiffs  cover  both  these 
points  completely.  Barker  v.  Bucklin,  2  Denio,  45;  Johnson  v. 
Knapp,  36  Iowa,  616 ;  Barker  v.  Bradley,  42  N.  Y.  316,  1  Am.  Rep. 
521 ;  Beasley  v.  Webster,  64  111.  458 ;  Jordan  v.  White,  20  Minn.  91 ; 
Joslin  v.  New  Jersey  Car  Spring  Co.,  36  N.  J.  Law,  141 ;  Townsend 
v.  Long,  77  Pa.  St.  143,  146.  Similar  citations  might  be  multiplied 
if  we  cared  to  load  our  opinion  with  them.  See  Browne  on  the  Sta- 
tute of  Frauds,  §§  166  a,  166  b,  and  notes.  On  the  other  hand,  the 
cases  are  numerous  which  hold  that  such  an  action  is  not  maintain- 
able for  want  of  privity  between  the  parties.  Mr.  Browne,  in  §  166  a, 
says  that  this  is  the  settled  doctrine  in  England,  Michigan,  and  Con- 
necticut; that  in  North  Carolina  and  Tennessee  the  question  seems 
to  remain  open ;  and  that  in  Massachusetts  the  English  doctrine  seems 
to  be  growing  in  favor,  contrary  to  the  earlier  cases;  but  that  in  the 
other  States  the  creditor's  right  to  sue  has  been  generally  recognized. 
The  course  of  decision  in  this  State  favors  the  creditor's  right  to  sue, 
and  in  principle,  we  think,  recognizes  it,  though  it  has  not  hitherto 


LIMITS    OF    CONTRACTUAL   OBLIGATION.  467 

extended  to  a  purely  oral  contract.  Urquhart  v.  Brayton,  12  R.  I. 
169 ;  Merriman  v.  Social  Manufacturing  Co.,  12  R.  I.  175.  Courts  that 
allow  the  action  generally  hold  that  it  is  not  affected  by  the  statute 
of  frauds,  though,  as  Mr.  Browne  remarks,  they  do  not  unite  in  the 
reasons  which  they  give  for  so  holding.  Mr.  Browne  himself  sug- 
gests that  the  contract,  as  between  the  creditor  and  promisor,  arises 
by  implication  out  of  the  duty  of  the  promisor  under  his  contract  with 
the  debtor;  and  that,  being  implied,  it  is  not  within  the  statute  of 
frauds.  Browne  on  the  Statute  of  Frauds,  §  166  b.  The  view  ac- 
cords with  the  doctrine  of  Brewer  v.  Dyer  (7  Cush.  337),  where  the 
court  remarks,  p.  340,  "that  the  law,  operating  on  the  act  of  the  par- 
ties, creates  the  duty,  establishes  the  privity,  and  implies  the  promise 
and  obligation  on  which  the  action  is  founded." 

The  diversity  of  decision  shows  that  the  action  cannot  be  main- 
tained without  resorting  to  implications  or  assumptions  which  the 
courts  do  not  always  find  it  easy  to  allow,  and  which  they  sometimes 
refuse  to  allow.  It  seems  to  us  that  we  shall  best  find  the  grounds, 
if  there  are  any,  on  which  the  action  can  be  maintained,  by  an 
analysis  or  explication  of  the  contract  with  the  debtor.  The  contract 
is  this :  A  agrees  with  B,  for  a  consideration  moving  from  B,  to  pay 
to  C  the  debt  which  B  owes  to  C.  The  contract  is  absolute.  If  A  does 
not  pay  the  debt,  and  B  has  to  pay,  it  is  broken.  It  is,  therefore,  a 
contract  by  A  to  pay  the  debt  in  lieu  of  B,  or  in  relief  of  B ;  to  take 
it  on  himself,  and  become,  so  far  as  he  can  independently  of  C,  the 
debtor  of  C  in  place  of  B.  The  contract,  as  between  A  and  B,  is 
not  collateral,  but  substitutional.  But,  this  being  so,  how  does  C, 
who  is  not  a  party  to  it,  get  the  right  to  sue  A  upon  or  by  reason  of 
it?  It  has  been  held  that  he  gets  this  right  directly  from  the  con- 
tract itself,  because  B,  in  making  it  with  A,  makes  it  for  C,  if  C 
desires  to  accede  to  it,  as  well  as  for  himself,  so  that  C  has  only  to 
ratify  or  assent  to  it,  which  he  does  unequivocally  by  suing  on  it.  But, 
in  this  view,  if  C  accepts  the  contract,  he  must  accept  it  as  made ;  that 
is,  as  a  contract  by  which  A  agrees  that  he,  instead  of  B,  will  pay  the 
debt  which  B  owes  to  C.  C  cannot,  at  the  same  time,  assent  to  the  con- 
tract and  dissent  from  the  terms  of  it.  Accordingly,  if  he  sues  A  on 
the  contract,  he  must  sue  him  instead  of  B,  and  cannot  also  sue  B,  and 
B  is  therefore  released.  But,  as  we  have  seen,  another  view  has  been 
taken.  It  has  been  held  that  the  contract  between  A  and  B  imposes  a 
duty  upon  A  to  pay  to  C  the  debt  which  B  owes  to  him,  and  that  from 
this  duty  the  law  implies  a  promise  by  A  in  favor  of  C  to  pay  B's  debt 
to  C.  But  if  a  promise  is  implied  from  the  duty,  the  promise  must  cor- 
respond to  the  duty.  The  duty  which  the  contract  imposes  upon  A  is 
that  he,  instead  of  B,  shall  pay  the  debt  which  B  owes  to  C,  and 
accordingly  so  must  be  the  promise  to  be  implied  from  it.  If,  there- 
fore, C  sues  A  upon  the  implied  promise,  he  must  sue  him  as  liable, 


468  OPERATION  OF   CONTRACT. 

instead  of  B,  for  the  debt  of  B  to  him,  C ;  he  cannot  consistently  sue 
both  A  and  B,  and  consequently  B  is  released. 

We  do  not  claim  that  either  of  these  views  is  free  from  difficulty. 
Either  of  them,  however,  is  free  from  one  difficulty  which  other  views 
encounter,  and  which  is  a  principal  reason  why  the  courts  which 
refuse  to  allow  the  action  refuse  to  do  so.  Other  views  give  the  creditor 
the  benefit  of  the  new  contract  for  nothing,  since  they  allow  him  still  to 
retain  his  hold  upon  the  original  debtor;  whereas,  according  to  either 
of  the  views  above  set  forth,  the  creditor  cannot  have  the  benefit  of  the 
new  contract  without  assenting  to  the  terms  of  it,  thereby  releasing  the 
original  debtor,  so  that  the  assent  is  in  itself  a  consideration.  As 
cases  which  support  these  views,  we  will  refer  to  Warren  v.  Batchelder, 
16  N.  H.  580;  Bohanan  v.  Pope,  42  Me.  93.  See  also  Clough  v.  Giles, 
2  New  Eng.  Eeporter,  870.  Of  course,  if  either  view  be  correct,  the 
liability  under  the  contract  is  not  collateral,  but  direct  and  substitu- 
tional,  and  therefore  not  within  the  statute  of  frauds. 

We  do  not  think  this  case  is  distinguishable  in  principle  from  Urqu- 
hart  v.  Brayton,  12  R.  I.  169.  The  doctrine  of  the  latter  case  is  not 
only  just  and  convenient,  but  also  consonant  with  the  purposes  of  the 
parties,  and  we  are  not  prepared  to  recede  from  it.  As  is  remarked  by 
the  court  in  Lehow  v.  Simonton  et  al.  (3  Colorado,  346),  "it  accords 
the  remedy  to  the  party  who  in  most  instances  is  chiefly  interested  to 
enforce  the  promise,  and  avoids  multiplicity  of  actions." 

We  think  the  declaration  proper  in  point  of  form,  and  we  do  not 
think  the  nonsuit  is  justifiable  on  the  ground  of  variance. 

In  Warren  v.  Batchelder  (16  N.  H.  580)  the  court  held  that  a 
demand  on  the  defendant  was  requisite  before  the  suit.  Whether 
this  is  so  we  need  not  decide,  for  the  evidence  in  this  case  shows  a  de- 
mand before  suit. 

STINESS,  J.,  non-concurring. 

Petition  granted. 

9  Cyc.  378  (7)  ;  W.  P.  256   (86)  ;  271   (46)  ;  274  (55). 


LAWRENCE  v.  FOX. 

20  NEW  YORK,  268.— 1859. 

Appeal  from  the  Superior  Court  of  the  city  of  Buffalo.  On  the 
trial  before  Mr.  Justice  Masten,  it  appeared  by  the  evidence  of  a  by- 
stander, that  one  Holly,  in  November,  1857,  at  the  request  of  the 
defendant,  loaned  and  advanced  to  him  $300,  stating  at  the  time  that 
he  owed  that  sum  to  the  plaintiff  for  money  borrowed  of  him,  and  had 
agreed  to  pay  it  to  him  the  then  next  day ;  that  the  defendant,  in  con- 
sideration thereof,  at  the  time  of  receiving  the  money,  promised  to 
pay  it  to  the  plaintiff  the  then  next  day.  Upon  this  state  of  facts 


LIMITS   OF   CONTRACTUAL   OBLIGATION.  469 

the  defendant  moved  for  a  nonsuit,  upon  three  several  grounds,  viz. : 
That  there  was  no  proof  tending  to  show  that  Holly  was  indebted  to 
the  plaintiff;  that  the  agreement  by  the  defendant  with  Holly  to  pay 
the  plaintiff  was  void  for  want  of  consideration,  and  that  there  was  no 
privity  between  the  plaintiff  and  defendant.  The  court  overruled 
the  motion,  and  the  counsel  for  the  defendant  excepted.  The  cause 
was  then  submitted  to  the  jury,  and  they  found  a  verdict  for  the  plain- 
tiff for  the  amount  of  the  loan  and  interest,  $344.66,  upon  which  judg- 
ment was  entered ;  from  which  the  defendant  appealed  to  the  Superior 
Court,  at  General  Term,  where  the  judgment  was  affirmed,  and  the 
defendant  appealed  to  this  court.  The  cause  was  submitted  on  printed 
arguments. 

H.  GRAY,  J.  The  first  objection  raised  on  the  trial  amounts  to 
this :  That  the  evidence  of  the  person  present,  who  heard  the  declara- 
tions of  Holly  giving  directions  as  to  the  payment  of  the  money  he 
was  then  advancing  to  the  defendant,  was  mere  hearsay  and  there- 
fore not  competent.  Had  the  plaintiff  sued  Holly  for  this  sum  of 
money,  no  objection  to  the  competency  of  this  evidence  would  have 
been  thought  of;  and  if  the  defendant  had  performed  his  promise  by 
paying  the  sum  loaned  to  him  to  the  plaintiff,  and  Holly  had  after- 
wards sued  him  for  its  recovery,  and  this  evidence  had  been  offered 
by  the  defendant,  it  would  doubtless  have  been  received  without  an 
objection  from  any  source.  All  the  defendant  had  the  right  to  de- 
mand in  this  case  was  evidence  which,  as  between  Holly  and  the  plain- 
tiff, was  competent  to  establish  the  relation  between  them  of  debtor 
and  creditor.  For  that  purpose  the  evidence  was  clearly  competent ;  it 
covered  the  whole  ground  and  warranted  the  verdict  of  the  jury. 

But  it  is  claimed  that,  notwithstanding  this  promise  was  established 
by  competent  evidence,  it  was  void  for  the  want  of  consideration.  It 
is  now  more  than  a  quarter  of  a  century  since  it  was  settled  by  the 
Supreme  Court  of  this  State — in  an  able  and  painstaking  opinion  by 
the  late  Chief  Justice  Savage,  in  which  the  authorities  were  fully 
examined  and  carefully  analyzed — that  a  promise  in  all  material  re- 
spects like  the  one  under  consideration  was  valid;  and  the  judgment 
of  that  court  was  unanimously  affirmed  by  the  court  for  the  correction 
of  errors.  Farley  v.  Cleveland,  4  Cow.  432 ;  same  case  in  error,  9  Id. 
639.  In  that  case  one  Moon  owed  Farley  and  sold  to  Cleveland  a 
quantity  of  hay,  in  consideration  of  which  Cleveland  promised  to  pay 
Moon's  debt  to  Farley ;  and  the  decision  in  favor  of  Farley's  right  to 
recover  was  placed  upon  the  ground  that  the  hay  received  by  Cleveland 
from  Moon  was  a  valid  consideration  for  Cleveland's  promise  to  pay 
Farley,  and  that  the  subsisting  liability  of  Moon  to  pay  Farley  was 
no  objection  to  the  recovery.  The  fact  that  the  money  advanced  by 
Holly  to  the  defendant  was  a  loan  to  him  for  a  day,  and  that  it  thereby 
became  the  property  of  the  defendant,  seemed  to  impress  the  defend- 


470  OPERATION   OF    CONTRACT. 

ant's  counsel  with  the  idea  that  because  the  defendant's  promise  was 
not  a  trust  fund  placed  by  the  plaintiff  in  the  defendant's  hands,  out 
of  which  he  was  to  realize  money  as  from  the  sale  of  a  chattel  or  the 
collection  of  a  debt,  the  promise,  although  made  for  the  benefit  of  the 
plaintiff,  could  not  inure  to  his  benefit.  The  hay  which  Cleveland 
delivered  to  Moon  was  not  to  be  paid  to  Farley,  but  the  debt  incurred 
by  Cleveland  for  the  purchase  of  the  hay,  like  the  debt  incurred  by 
the  defendant  for  money  borrowed,  was  what  was  to  be  paid.  That 
case  has  been  often  referred  to  by  the  courts  of  this  State,  and  has 
never  been  doubted  as  sound  authority  for  the  principle  upheld  by  it. 
Barker  v.  Bucklin,  2  Denio,  45;  Hudson  Canal  Company  v.  The 
Westchester  Bank,  4  Id.  97.  It  puts  to  rest  the  objection  that  the  de- 
fendant's promise  was  void  for  want  of  consideration.  The  report  of 
that  case  shows  that  the  promise  was  not  only  made  to  Moon  but  to 
the  plaintiff  Farley.  In  this  case  the  promise  was  made  to  Holly  and 
not  expressly  to  the  plaintiff ;  and  this  difference  between  the  two  cases 
presents  the  question,  raised  by  the  defendant's  objection  as  to  the 
want  of  privity  between  the  plaintiff  and  defendant. 

As  early  as  1806  it  was  announced  by  the  Supreme  Court  of  this 
State,  upon  what  was  then  regarded  as  the -settled  law  of  England, 
"that  where  one  person  makes  a  promise  to  another  for  the  benefit 
of  a  third  person,  that  third  person  may  maintain  an  action  upon  it." 
Schemerhorn  v.  Vanderheyden  (1  John.  R.  140)  has  often  been  re- 
asserted by  our  courts  and  never  departed  from.  The  case  of  Sea- 
man v.  White  has  occasionally  been  referred  to  (but  not  by  the  courts), 
not  only  as  having  some  bearing  upon  the  question  now  under  con- 
sideration, but  as  involving  in  doubt  the  soundness  of  the  proposition 
stated  in  Schemerhorn  v.  Vanderheyden.  In  that  case  one  Hill,  on 
the  17th  of  August,  1835,  made  his  note  and  procured  it  to  be  in- 
dorsed by  Seaman  and  discounted  by  the  Phcenix  Bank.  Before  the 
note  matured  and  while  it  was  owned  by  the  Phcenix  Bank,  Hill 
placed  in  the  hands  of  the  defendant,  Whitney,  his  draft  accepted  by 
a  third  party,  which  the  defendant  indorsed,  and  on  the  7th  of  October, 
1835,  got  discounted  and  placed  the  avails  in  the  hands  of  an  agent  with 
which  to  take  up  Hill's  note;  the  note  became  due,  Whitney  with- 
drew the  avails  of  the  draft  from  the  hands  of  his  agent  and  appro- 
priated it  to  a  debt  due  him  from  Hill,  and  Seaman  paid  the  note  in- 
dorsed by  him  and  brought  his  suit  against  Whitney.  Upon  this 
state  of  facts  appearing,  it  was  held  that  Seaman  could  not  recover: 
first,  for  the  reason  that  no  promise  had  been  made  by  Whitney  to  pay, 
and  second,  if  a  promise  could  be  implied  from  the  facts  that  Hill's 
accepted  draft,  with  which  to  raise  the  means  to  pay  the  note,  had  been 
placed  by  Hill  in  the  hands  of  Whitney,  the  promise  would  not  be  to 
Seaman,  but  to  the  Phcenix  Bank,  who  then  owned  the  note ;  although, 
in  the  course  of  the  opinion  of  the  court,  it  was  stated  that,  in  all  cases 


LIMITS    OF    CONTRACTUAL   OBLIGATION.  471 

the  principle  of  which  was  sought  to  be  applied  to  that  case,  the  fund 
had  been  appropriated  by  an  express  undertaking  of  the  defendant 
with  the  creditor.  But  before  concluding  the  opinion  of  the  court  in 
this  case,  the  learned  judge  who  delivered  it  conceded  that  an  under- 
taking to  pay  the  creditor  may  be  implied  from  an  arrangement  to  that 
effect  between  the  defendant  and  the  debtor.  This  question  was  sub- 
sequently, and  in  a  case  quite  recent,  again  the  subject  of  consideration 
by  the  Supreme  Court,  when  it  was  held,  that  in  declaring  upon  a 
promise,  made  to  the  debtor  by  a  third  party  to  pay  the  creditor  of  the 
debtor,  founded  upon  a  consideration  advanced  by  the  debtor,  it  was 
unnecessary  to  aver  a  promise  to  the  creditor ;  for  the  reason  that  upon 
proof  of  a  promise  made  to  the  debtor  to  pay  the  creditor,  a  promise 
to  the  creditor  would  be  implied.  And  in  support  of  this  proposition, 
in  no  respect  distinguishable  from  the  one  now  under  consideration, 
the  case  of  Schemerhorn  v.  Vanderheyden,  with  many  intermediate 
cases  in  our  courts,  were  cited,  in  which  the  doctrine  of  that  case  was 
not  only  approved  but  affirmed.  The  Delaware  and  Hudson  Canal 
Company  v.  The  Westchester  County  Bank,  4  Denio,  97. 

The  same  principle  is  adjudged  in  several  cases  in  Massachusetts. 
I  will  refer  to  but  few  of  them.  Arnold  v.  Lyman,  17  Mass.  400 ;  Hall 
v.  Marston,  Id.  575;  Brewer  v.  Dyer,  7  Cush.  337,  340.  In  Hall  v. 
Marston  the  court  say:  "It  seems  to  have  been  well  settled  that  if 
A  promises  B  for  a  valuable  consideration  to  pay  C,  the  latter  may 
maintain  assumpsit  for  the  money;"  and  in  Brewer  v.  Dyer,  the  re- 
covery was  upheld,  as  the  court  said,  "upon  the  principle  of  law  long 
recognized  and  clearly  established,  that  when  one  person,  for  a  val- 
uable consideration,  engages  with  another,  by  a  simple  contract,  to  do 
eome  act  for  the  benefit  of  a  third,  the  latter,  who  would  enjoy  the 
benefit  of  the  act,  may  maintain  an  action  for  the  breach  of  such  en- 
gagement ;  that  it  does  not  rest  upon  the  ground  of  any  actual  or  sup- 
posed relationship  between  the  parties,  as  some  of  the  earlier  cases 
would  seem  to  indicate,  but  upon  the  broader  and  more  satisfactory 
basis,  that  the  law  operating  on  the  act  of  the  parties  creates  the 
duty,  establishes  a  privity,  and  implies  the  promise  and  obligation  on 
which  the  action  is  founded."  There  is  a  more  recent  case  decided  by 
the  same  court,  to  which  the  defendant  has  referred,  and  claims  that 
it  at  least  impairs  the  force  of  the  former  cases  as  authority.  It  is 
the  case  of  Mellen  v.  Whipple,  1  Gray,  317.  In  that  case  one  Rollins 
made  his  note  for  $500  payable  to  Ellis  and  Mayo,  or  order,  and  to 
secure  its  payment  mortgaged  to  the  payees  a  certain  lot  of  ground, 
and  then  sold  and  conveyed  the  mortgaged  premises  to  the  defendant, 
by  deed  in  which  it  was  stated  that  the  "granted  premises  were  subject 
to  a  mortgage  for  $500,  which  mortgage,  with  the  note  for  which  it 
was  given,  the  said  Whipple  is  to  assume  and  cancel."  The  deed  thus 
made  was  accepted  by  Whipple,  the  mortgage  was  afterwards  duly 


472  OPERATION   OF   CONTRACT. 

assigned,  and  the  note  indorsed  by  Ellis  and  Mayo  to  the  plaintiffs 
intestate.  After  Whipple  received  the  deed  he  paid  to  the  mortgagees 
and  their  assigns  the  interest  upon  the  mortgage  and  note  for  a  time, 
and  upon  refusing  to  continue  his  payments  was  sued  by  the  plaintiff 
as  administratrix  of  the  assignee  of  the  mortgage  and  note.  The 
court  held  that  the  stipulation  in  the  deed  that  Whipple  should  pay 
the  mortgage  and  note  was  a  matter  exclusively  between  the  two  par- 
ties to  the  deed;  that  the  sale  by  Rollins  of  the  equity  of  redemption 
did  not  lessen  the  plaintiff's  security,  and  that  as  nothing  had  been 
put  into  the  defendant's  hands  for  the  purpose  of  meeting  the  plain- 
tiff's claim  on  Rollins,  there  was  no  consideration  to  support  an  ex- 
press promise,  much  less  an  implied  one,  that  Whipple  should  pay 
Mellen  the  amount  of  the  note.  This  is  all  that  was  decided  in  that 
case,  and  the  substance  of  the  reasons  assigned  for  the  decision;  and 
whether  the  case  was  rightly  disposed  of  or  not,  it  has  not  in  its  facts 
any  analogy  to  the  case  before  us,  nor  do  the  reasons  assigned  for  the 
decision  bear  in  any  degree  upon  the  question  we  are  now  consider- 
ing. 

But  it  is  urged  that  because  the  defendant  was  not  in  any  sense 
a  trustee  of  the  property  of  Holly  for  the  benefit  of  the  plaintiff, 
the  law  will  not  imply  a  promise.  I  agree  that  many  of  the  cases 
where  a  promise  was  implied  were  cases  of  trusts,  created  for  the 
benefit  of  the  promisor.  The  case  of  Felton  v.  Dickinson  (10  Mass. 
189,  190)  and  others  that  might  be  cited  are  of  that  class;  but  con- 
cede them  all  to  have  been  cases  of  trusts,  and  it  proves  nothing  against 
the  application  of  the  rule  to  this  case.  The  duty  of  the  trustee  to 
pay  the  cestuis  que  trust,  according  to  the  terms  of  the  trust,  implies 
his  promise  to  the  latter  to  do  so.  In  this  case  the  defendant,  upon 
ample  consideration  received  from  Holly,  promised  Holly  to  pay  his 
debt  to  the  plaintiff;  the  consideration  received  and  the  promise  to 
Holly  made  it  as  plainly  his  duty  to  pay  the  plaintiff  as  if  the  money 
had  been  remitted  to  him  for  that  purpose,  and  as  well  implied  a 
promise  to  do  so  as  if  he  had  been  made  a  trustee  of  property  to  be 
converted  into  cash  with  which  to  pay.  The  fact  that  a  breach  of 
the  duty  imposed  in  the  one  case  may  be  visited,  and  justly,  with 
more  serious  consequences  than  in  the  other,  by  no  means  disproves  the 
payment  to  be  a  duty  in  both.  The  principle  illustrated  by  the 
example  so  frequently  quoted  (which  concisely  states  the  case  in 
hand),  "that  a  promise  made  to  one  for  the  benefit  of  another,  he  for 
whose  benefit  it  is  made  may  bring  an  action  for  its  breach,"  has  been 
applied  to  trust  cases,  not  because  it  was  exclusively  applicable  to 
those  cases,  but  because  it  was  a  principle  of  law,  and  as  such  applicable 
to  those  cases. 

It  was  also  insisted  that  Holly  could  have  discharged  the  defend- 
ant from  his  promise,  though  it  was  intended  by  both  parties  for  the 


LIMITS   OF   CONTRACTUAL   OBLIGATION.  473 

benefit  of  the  plaintiff,  and  therefore  the  plaintiff  was  not  entitled  to 
maintain  this  suit  for  the  recovery  of  a  demand  over  which  he  had 
no  control.  It  is  enough  that  the  plaintiff  did  not  release  the  de- 
fendant from  his  promise,  and  whether  he  could  or  not  is  a  question 
not  now  necessarily  involved ;  but  if  it  was,  I  think  it  would  be  found 
difficult  to  maintain  the  right  of  Holly  to  discharge  a  judgment  re- 
covered by  the  plaintiff  upon  confession  or  otherwise,  for  the  breach  of 
the  defendant's  promise;  and  if  he  could  not,  how  could  he  discharge 
the  suit  before  judgment,  or  the  promise  before  suit,  made  as  it  was 
for  the  plaintiff's  benefit  and  in  accordance  with  legal  presumption 
accepted  by  him  (Berly  v.  Taylor,  5  Hill,  577-584,  et  seq.),  until 
his  dissent  was  shown.  The  cases  cited,  and  especially  that  of  Farley 
v.  Cleveland,  establish  the  validity  of  a  parol  promise;  it  stands  then 
upon  the  footing  of  a  written  one.  Suppose  the  defendant  had  given 
his  note  in  which,  for  value  received  of  Holly,  he  had  promised  to 
pay  the  plaintiff  and  the  plaintiff  had  accepted  the  promise,  retaining 
Holly's  liability.  Very  clearly  Holly  could  not  have  discharged  that 
promise,  be  the  right  to  release  the  defendant  as  it  may. 

No  one  can  doubt  that  he  owes  the  sum  of  money  demanded  of  him, 
or  that  in  accordance  with  his  promise  it  was  his  duty  to  have  paid  it 
to  the  plaintiff ;  nor  can  it  be  doubted  that  whatever  may  be  the  diver- 
sity of  opinion  elsewhere,  the  adjudications  in  this  State,  from  a  very 
early  period,  approved  by  experience,  have  established  the  defendant's 
liability;  if,  therefore,  it  could  be  shown  that  a  more  strict  and  tech- 
nically accurate  application  of  the  rules  applied  would  lead  to  a  differ- 
ent result  (which  I  by  no  means  concede),  the  effort  should  not  be 
made  in  the  face  of  manifest  justice. 

The  judgment  should  be  affirmed. 

Johnson,  C.  J.,  Denio,  Selden,  Allen,  and  Strong,  JJ.,  concurred. 
Johnson,  C.  J.,  and  Denio,  J.,  were  of  opinion  that  the  promise  was  to 
be  regarded  as  made  to  the  plaintiff  through  the  medium  of  his  agent, 
whose  action  he  could  ratify  when  it  came  to  his  knowledge,  though 
taken  without  his  being  privy  thereto. 

Comstock,  J.,  and  Grover,  J.,  dissented. 

Judgment  affirmed. 

9  Cyc.  378   (7);  W.  P.  241   (19);  258   (85). 


SULLIVAN  v.  SULLIVAN. 

161  NEW  YORK,  554.— 1900. 

Action  by  Patrick  R.  Sullivan,  as  administrator,  etc.,  against  Cath- 
erine Sullivan.  From  a  judgment  of  the  Appellate  Division  (39  App. 
Div.  99 )  affirming  a  judgment  for  the  plaintiff,  defendant  appeals. 

WERNER,  J.    On  the  10th  day  of  October,  1892,  the  plaintiff's  in- 


474  OPERATION  OF  CONTRACT. 

testate,  Catherine  Sullivan,  deposited  with  the  Chemung  Canal  Bank 
the  sum  of  $2000  and  received  therefor  a  certificate  of  deposit  in  the 
following  form : 

"$2000  ELMIBA,  N.  Y.,  Oct.  10th,  1892. 

"Catherine  Sullivan  has  deposited  in  this  bank  two  thousand  dollars,  pay- 
able one  day  after  date  to  the  order  of  herself,  or,  in  the  case  of  her  death, 
to  her  niece,  Catherine  Sullivan,  of  Utica,  upon  the  return  of  this  certificate, 
with  interest  at  3  per  cent  per  annum,  if  held  six  months.  Not  subject  to 
check. 

"No.  26,638.  J.  H.  ABNOT,  V.  P." 

She  retained  possession  of  said  certificate  until  her  death,  which 
occurred  on  the  8th  day  of  February,  1893,  and  after  her  death  it  was 
found  among  her  papers. 

This  action  was  originally  brought  against  the  individuals  who 
composed  the  firm  known  as  the  Chemung  Canal  Bank,  and  was  upon 
their  application  continued  against  the  present  defendant,  who  claims 
to  be  entitled  to  the  moneys  represented  by  said  certificate.  Upon 
the  trial,  oral  evidence  was  adduced  to  show,  and  the  court  found, 
that  it  was  the  intention  of  the  plaintiff's  intestate  to  have  the  said 
certificate  of  deposit  so  drawn  that  in  case  of  her  death,  without  hav- 
ing withdrawn  the  deposit,  it  could  be  drawn  by  the  defendant.  f  The 
trial  court  also  found  that  "no  attempt  was  made  by  the  plaintiff's  in- 
testate to  create  a  trust  to  exist  during  the  life  of  the  said  intestate. 
Until  her  death,  the  bank  was  her  debtor."  Defendant's  father,  whose 
real  name  was  Brown,  was  a  nephew  of  the  plaintiff's  intestate,  and 
lived  with  her  for  thirty-six  years,  taking  the  name  of  Sullivan,  and  be- 
ing regarded  and  treated  as  an  adopted  son,  although  no  legal  adoption 
was  ever  consummated.  The  defendant  was  born  in  the  house  of 
plaintiff's  intestate,  in  Elmira,  and  lived  there  for  four  or  five  years 
after  her  birth,  at  the  end  of  which  period  she  removed  with  her 
parents  to  the  city  of  Utica.  Plaintiff's  intestate,  who  was  childless, 
exhibited  and  expressed  on  all  occasions  great  fondness  for  the  de- 
fendant, and  at  the  time  of  said  deposit  stated  to  the  teller  of  said 
bank  that  "she  wanted  it  fixed  to  herself,  or,  in  case  of  her  death,  to 
her  niece,  Catherine  Sullivan,  of  Utica." 

In  asserting  her  claim  to  this  fund,  the  defendant  invokes  several 
distinct  principles  of  law,  the  first  of  which  is  that  the  deposit  of 
this  money  and  the  issuance  of  this  certificate  constituted  a  valid 
contract  between  plaintiff's  intestate  and  the  bank  for  the  benefit  of 
the  defendant.  Buchanan  v.  Tilden,  158  N.  Y.  109;  Dutton  v. 
Pool,  1  Vent.  318,  and  Todd  v.  Weber,  95  N.  Y.  181,  are  cited 
in  support  of  this  contention.  As  I  read  these  cases,  they  have  no 
application  to  the  case  at  bar ;  for  in  each  of  them  there  was  a  valid 
contract,  founded  upon  a  sufficient  consideration,  for  the  benefit 
of  a  third  person,  which  the  latter  could  enforce.  Here  there  was 


LIMITS   OF   CONTRACTUAL   OBLIGATION.  475 

no  contract  to  which  the  defendant  was  a  privy,  nor  can  it  be  said 
that  the  relations  of  the  plaintiff's  intestate  and  the  defendant  were 
such  as  to  furnish  any  consideration  for  such  a  contract,  if  one 
had  existed. 

[The  court  then  holds  that  the  transaction  did  not  create  a  trust.] 

Judgment  affirmed. 

9  Cyc.  378    (7);   W.  P.  219    (28);   249    (56);   250    (66). 


SMYTH  et  al.  v.  CITY  OF  NEW  YORK  et  al 
203  NEW  YORK,  106.— 1911. 

CULLEN,  C.  J.  This  action  is  brought  by  the  owners  of  the  Murray 
Hill  Hotel,  which  abutted  on  Park  Avenue,  borough  of  Manhattan, 
city  of  New  York,  to  recover  damages  to  such  hotel  caused  by  the 
explosion  of  a  dynamite  magazine  located  on  said  avenue  during 
the  construction  of  the  rapid  transit  subway.  The  construction  of 
the  subway  at  this  point  was  being  carried  on  by  one  Shaler,  a  sub- 
contractor. The  excavation  was  being  made  through  rock  which 
had  to  be  removed  by  blasting.  For  this  purpose  dynamite  was  em- 
ployed— the  central  part  of  the  carriageway  of  the  avenue  being 
fenced  against  use  by  the  public,  and  a  small  wooden  building  was 
placed  there  in  which  the  dynamite  for  use  was  kept.  Of  the  de- 
tails of  the  explosion,  it  is  enough  to  say  that  in  our  opinion  the 
evidence  was  sufficient  to  authorize  the  jury  to  find  that  an  excessive 
amount  of  dynamite  was  stored  in  the  magazine  and  that  proper 
precautions  had  not  been  taken  for  guarding  it  against  the  danger 
of  explosion.  The  action,  however,  is  not  brought  against  the  sub- 
contractor, but  against  the  city  of  New  York,  McDonald,  who  con- 
tracted with  the  city  for  the  construction  and  subsequent  operation 
of  the  subway,  and  the  Rapid  Transit  Subway  Construction  Company, 
which  rendered  financial  aid  to  McDonald  in  the  execution  of  his  con- 
tract. The  question  presented  on  this  appeal  is  whether  any  of  these 
defendants  is  liable  for  the  negligence  of  the  sub-contractor. 

On  February  21,  1900,  under  the  provisions  of  the  Rapid  Transit 
Act  (L.  1892,  ch.  556;  L.  1896,  ch.  729;  L.  1900,  ch.  16;  L.  1901, 
ch.  4;  L;  1904,  ch.  752),  the  rapid  transit  commissioners  were 
authorized  to  enter  into  a  contract  on  behalf  of  the  city  for  the 
construction  and  equipment  of  a  railroad  upon  the  route  and  in 
accordance  with  the  general  plans  adopted  by  the  commissioners. 
Subdivision  5,  section  24  of  the  Rapid  Transit  Act  authorized  the  con- 
tractor to  enter  upon  and  underneath  the  several  streets  of  the  city 
for  the  prosecution  of  the  work  and  the  use  of  such  streets  was 
declared  to  be  a  public  use.  In  September,  1900,  Shaler  entered 


476  OPERATION   OF   CONTRACT. 

into  a  sub-contract  with  McDonald  to  do  the  work  along  the  line  of 
which  the  explosion  occurred. 

We  think  it  clear  that  under  the  previous  decisions  of  this  court 
the  city  was  not  liable  for  the  negligence  of  the  contractor  to  whom 
the  work  had  been  let.  (Froelich  v.  City  of  New  York,  199  N. 
Y.  466;  Uppington  v.  City  of  New  York,  165  N.  Y.  222.)  Nor 
do  we  think  the  city  can  be  held  liable  on  the  ground  that  it  suf- 
fered a  nuisance  to  be  maintained  in  the  street,  the  street  having 
been  withdrawn  from  its  possession  and  control.  It  was  not  liable 
for  the  default  of  the  fire  department  or  of  the  bureau  of  com- 
bustibles. (Maxmilian  v.  Mayor,  etc.,  of  N.  Y.,  62  N.  Y.  160; 
Ham  v.  Mayor,  etc.,  of  N.  Y.,  70  N.  Y.  459;  Smith  v.  City  of 
Rochester,  76  N.  Y.  506,  513 ;  Terhune  v.  Mayor,  etc.,  of  N.  Y.,  88 
N.  Y.  247.)  Nor  was  there  evidence  to  show  that  the  city  author- 
ities were  aware  that  any  excessive  quantity  of  dynamite  was  being 
stored.  The  complaint  was,  therefore,  properly  dismissed  as  against 
the  city,  and  it  may  be  that  the  same  doctrine  that  gives  immunity 
to  the  city  would  also  give  immunity  to  the  defendant  McDonald, 
the  principal  contractor,  for  the  negligence  of  his  independent  sub- 
contractor. Whether  this  is  so,  it  is  unnecessary  to  determine,  as 
we  are  of  opinion  that  McDonald  was  liable  in  this  case  by  the  ex- 
press terms  of  his  contract  with  the  rapid  transit  commissioners. 
The  contract  contained  the  following  provisions: 

"Traffic  to  be  Maintained.  Indemnification  for  Accidents. — The 
contractor  shall  during  the  performance  of  the  work  safely  maintain 
the  traffic  on  all  the  streets,  avenues,  highways,  parks  and  other  public 
places  in  connection  with  the  work,  and  take  all  necessary  precau- 
tions to  place  proper  guards  for  the  prevention  of  accidents,  and 
put  up  and  keep  at  night  suitable  and  sufficient  lights  and  indemnify 
and  save  harmless  the  city  against  and  from  all  damages  and  costs 
to  which  it  may  be  put  by  reason  of  injury  to  the  person  or  property 
of  another  or  others,  resulting  from  negligence  or  carelessness  in 
the  performance  of  the  work  or  from  guarding  the  same,  or  from  any 
improper  materials  used  in  its  construction,  or  by  or  on  account  of 
any  act  or  omission  of  the  contractor  or  the  agents  thereof. 

"Contractor's  Liability  for  Damage  to  Abutting  Property. — The 
contractor  shall  be  responsible  for  alt  damage  which  may  be  done 
to  abutting  property  or  buildings  or  structures  thereon  by  the  method 
in  which  the  construction  hereunder  shall  be  done,  but  not  includ- 
ing in  such  damage  any  damage  necessarily  arising  from  proper 
construction  pursuant  to  this  contract  or  the  reasonable  use,  occupa- 
tion or  obstruction  of  the  streets  thereby" 

An  analysis  of  this  portion  of  the  contract  shows  that  it  con- 
tained three  independent  and  different  covenants  or  agreements  on 
the  part  of  the  contractor.  The  first  is  one  to  safely  maintain 


LIMITS   OF   CONTRACTUAL   OBLIGATION.  477 

traffic  on  the  public  streets  and  to  take  necessary  precautions  and 
erect  proper  guards  for  the  prevention  of  accidents;  the  second, 
to  indemnify  the  city  against  any  or  all  damage  to  which  it  might 
be  put  by  reason  of  negligence  in  the  performance  of  the  work; 
the  third,  to  be  responsible  for  damages  to  abutting  property,  build- 
ings or  structures  arising  from  other  than  the  proper  construction 
of  the  work  and  the  reasonable  use  and  occupation  of  the  streets. 
As  we  construe  this  last  clause — a  construction  supported  by  the 
marginal  notes — it  was  not  an  agreement  of  indemnity  to  the  city, 
for  that  was  sufficiently  covered  by  the  preceding  provisions,  but 
an  agreement  to  be  responsible  to  abutting  owners  for  damages 
arising  from  improper  construction  or  unreasonable  use  and  occupa- 
tion of  the  streets.  Therefore,  the  question  before  us  is  further 
narrowed  to  this:  Can  an  abutting  owner  maintain  an  action  under 
this  provision  of  the  contract  to  which  contract  he  is  not  a  party? 
To  sustain  a  negative  answer  the  respondent  relies  upon  the  decision 
of  this  court  in  French  v.  Vix  (143  N.  Y.  90).  In  that  case  the 
owner  of  a  lot  of  land  entered  into  a  contract  with  the  defendants 
for  the  construction  of  a  house,  under  which  the  latter  agreed  to  be- 
come answerable  "and  accountable  for  any  damages  that  may  be  done 
to  the  property  or  person  of  any  neighbor"  during  the  performance 
of  the  work.  The  defendants  made  a  sub-contract  for  the  excavation, 
the  sub-contractor  agreeing  to  assume  all  responsibility  for  damage 
to  persons  or  property.  The  plaintiff  owned  an  adjoining  house  which 
was  injured  by  the  blasting  carried  on  by  the  sub-contractor.  She 
sought  to  maintain  the  action  on  the  provision  of  the  defendant's 
contract  with  the  owner  of  the  adjacent  land.  She  was  defeated 
in  this  court  on  two  grounds:  1.  That  the  contract  was  simply 
one  of  indemnity  and  was  not  intended  for  the  plaintiff's  benefit. 
That  ground  lias  no  application  to  the  present  case  under  the 
construction  we  have  given  to  the  defendant's  contract.  2.  That 
even  if  the  contract  was  intended  for  her  benefit  she  could  not  re- 
cover because  she  was  not  a  party  to  it,  nor  in  privity  with  the 
parties,  and  as  to  her  it  was  without  consideration.  The  second 
ground  is  but  a  reiteration  of  the  general  rule  of  law  that  a  stranger 
to  a  contract  cannot  maintain  an  action  upon  it,  and  if  the  defend- 
ant's contract  were  with  private  persons  that  rule  of  law  would  be 
applicable.  But  even  between  private  parties  the  rule  is  not  uni- 
versal, and  a  third  party  may  maintain  an  action  on  a  contract  against 
the  promisor  where  the  contract  is  made  for  his  benefit  and  some 
obligation  or  duty  to  the  third  party  rests  on  the  promisee.  Thus, 
where  the  promisee  is  indebted  to  a  stranger  to  the  contract,  a  promise 
made  on  sufficient  consideration  may  be  enforced  by  the  latter. 
(Lawrence  v.  Fox,  20  N.  Y.  268;  Burr  v.  Beers,  24  N.  Y.  178.) 
In  Todd  v.  Weber  (95  N.  Y.  181)  it  was  held  that  the  relation 


478  OPERATION   OF   CONTRACT. 

of  parent  and  child  was  sufficient  consideration  for  a  contract  made 
by  the  parent  with  others  for  the  support  of  the  child,  and  that 
the  latter  might  enforce  it  by  action.  In  Buchanan  v.  Tilden  (158 
N.  Y.  109)  the  same  doctrine  was  held  in  regard  to  a  contract 
made  by  a  husband  for  the  benefit  of  his  wife.  A  still  broader 
doctrine  is  held  in  the  case  of  what  may  be  termed  public  contracts. 
In  Little  v.  Banks  (85  JST.  Y.  258)  it  was  said:  "Contractors  with 
the  State,  who  assume,  for  a  consideration  received  from  the  sov- 
ereign power,  by  covenant,  express  or  implied,  to  do  certain  things, 
are  liable,  in  case  of  neglect  to  perform  such  covenant,  to  a  private 
action  at  the  suit  of  the  party  injured  by  such  neglect,  and  such 
contract  inures  to  the  benefit  of  the  individual  who  is  interested  in 
its  performance/'  (p.  263.)  In  that  case  the  defendant  had  a 
contract  with  the  state  officers  to  sell  and  deliver  to  the  public 
volumes  of  the  law  reports,  which  he  was  about  to  publish,  at  certain 
specified  prices,  and  upon  failure  to  comply  with  that  agreement  he 
agreed  to  pay  to  any  persons  aggrieved  the  sum  of  $100.  It  was 
held  that  the  plaintiff,  a  person  to  whom  the  defendant  had  refused 
to  deliver  such  reports,  might  maintain  his  action  to  recover  the 
stipulated  damages.  In  Robinson  v.  Chamberlain  (34  N.  Y.  389) 
a  contractor  for  keeping  the  State  canal  in  repair  was  held  liable 
for  injuries  sustained  by  the  canal  boat  of  a  private  individual  by 
the  failure  of  the  defendant  to  perform  his  contract.  In  Cook  v. 
Dean  (11  App.  Div.  123;  affd.  on  opinion  below,  160  K  Y.  660) 
a  contractor  who  entered  into  a  contract  with  the  supervisors  of 
two  counties  for  the  construction  of  a  bridge  over  a  creek  dividing 
the  two  counties,  and  also  for  the  construction  and  maintenance  of 
a  temporary  bridge  during  the  progress  of  the  main  work,  was  held 
liable  for  defects  in  the  temporary  structure  through  which  the  plain- 
tiff was  injured,  though  neither  of  the  counties  would  have  been  liable 
for  such  neglect.  (Markey  v.  County  of  Queens,  154  N".  Y.  675, 
684.)  The  most  recent  case  in  this  court  is  that  of  Pond  v.  New 
Rochelle  Water  Co.  (183  N".  Y.  330).  There  the  predecessor  of  the 
defendant  had  made  a  contract  with  the  village  of  Pelham  Manor 
for  supplying  not  only  the  village  itself,  but  also  all  its  inhabitants 
with  a  supply  of  water  at  certain  specified  rates.  The  plaintiff,  who 
was  a  resident  and  householder  of  said  village,  brought  the  action 
to  restrain  the  defendant  from  exacting  from  him  a  higher  water 
rate  than  that  specified  in  the  agreement  with  the  village.  The 
objection  that  the  plaintiff  was  a  stranger  to  the  contract  was 
overruled.  Judge  Edward  T.  Bartlett,  writing  for  the  court,  said: 
"In  the  case  before  us  we  have  a  municipality  entering  into  a  con- 
tract for  the  benefit  of  its  inhabitants,  the  object  being  to  supply 
them  with  pure  and  wholesome  water  at  reasonable  rates.  While  there 
is  ix>t  presented  a  domestic  relation  like  that  of  father  and  child 


LIMITS   OF    CONTRACTUAL   OBLIGATION.  479 

or  husband  and  wife,  yet  it  cannot  be  said  that  this  contract  was 
made  for  the  benefit  of  a  stranger.  In  the  case  before  us  the  mu- 
nicipality sought  to  protect  its  inhabitants,  who  were  at  the  time 
of  the  execution  of  the  contract  consumers  of  water,  and  those 
who  might  thereafter  become  so,  from  extortion  by  a  corporation 
having  granted  to  it  a  valuable  franchise  extending  over  a  long  period 
of  time."  (See,  also,  Eochester  Telephone  Co.  v.  Ross,  195  X.  Y. 
429.) 

In  principle  the  case  cited  and  the  one  before  us  seem  to  be  almost 
identical.  There,  as  here,  the  first  object  of  the  contract  was  for 
the  supply  of  a  corporate,  as  distinguished  from  a  governmental  want ; 
there  it  was  supplying  water  for  the  hydrants,  street  and  fire 
purposes;  here  the  construction  of  a  railroad.  In  the  first  case 
it  was  held  that  the  village  in  its  governmental  character  had 
sufficient  interest  in  the  welfare  of  its  citizens  and  inhabitants  to 
secure  to  each  of  them  a  supply  of  water  at  reasonable  rates.  In 
the  case  before  us  it  was  well  known  and  generally  appreciated  that 
for  at  least  some  very  substantial  part  of  the  discomfort,  damage 
and  injury  occasioned  to  the  abutters  by  even  the  most  careful  and 
proper  prosecution  of  the  work,  the  abutter  could  not  recover  in- 
demnity or  compensation.  It  was  also  appreciated  that  in  the  pro- 
secution of  all  great  works,  at  times  negligence  and  fault  will  occur, 
and  that  such  fault  will  often  be  on  the  part  of  irresponsible  par- 
ties from  whom  there  would  be  small  chance  of  recovering  pecuniary 
redress.  Therefore,  though  the  city  might  not  be  liable  for  injuries 
occasioned  by  such  negligence,  it  was  entirely  proper,  if  not  morally 
obligatory  upon  the  part  of  the  rapid  transit  commissioners  to  secure 
the  abutting  owners  from  loss  or  damage  occasioned  by  negligence 
and  improper  conduct  of  the  work.  This  could  only  be  accomplished 
by  placing  liability  for  the  negligence  upon  a  responsible  contractor 
to  whom  they  might  give  out  the  work,  for  the  commissioners  could 
not  dictate  the  sub-contractors  with  whom  he  might  contract.  We 
are  of  opinion,  therefore,  that  the  defendant  McDonald  was,  under 
his  contract,  liable  for  the  damages  sustained  by  the  plaintiffs,  and 
as  to  him  the  judgment  below  should  be  reversed,  and  a  new  trial 
granted,  with  costs  to  abide  the  event.  It  should  be  affirmed,  with 
costs,  as  to  the  city  of  New  York  and  the  Eapid  Transit  Subway  Con- 
struction Company,  as  to  which  last  defendant  we  see  no  possible 
theory  for  imposing  liability  on  it. 

Werner,  Willard  Bartlett,  Chase  and  Collin,  JJ.,  concur  with 
Cullen,  Ch.  J. ;  Haight,  J.,  reads  opinion  dissenting  from  affirmance 
of  judgment  in  favor  of  the  city  of  New  York;  Hiscock,  J.,  absent.1 

i  Right  of  a  beneficiary  to  sue  in  New  York.  At  present  the  right  of  a 
direct  beneficiary  to  sue  seems  to  be  confined  to  the  following  classes  of  cases: 
(1)  Where  the  promise  runs  to  the  beneficiary  (Rector  v.  Teed,  120  N.  Y. 


480  OPERATION    OF    CONTRACT. 

THOMAS  MFG.  CO.  v.  FEATHER. 

65  ARKANSAS,  27.— 1898. 

Action  by  D.  J.  Prather  .against  the  Thomas  Manufacturing  Com- 
pany. From  a  judgment  for  plaintiff,  defendant  appeals.  Reversed. 

WOOD,  J.  Appellee,  who  was  a  physician  and  surgeon,  sued  appel- 
lant for  $300,  the  alleged  value  of  professional  services  rendered  by 
him  to  one  Brown,  an  employe  of  appellant.  Appellee  alleges  that 
appellant,  for  a  valuable  consideration,  entered  into  a  contract  with 
Brown,  whereby  it  was  to  furnish  him  medical  attendance  in  case  of 
an  accidental  injury  while  engaged  in  appellant's  business.  That 
part  of  the  contract  which  appellee  claims  was  for  his  benefit,  and 
upon  which  he  bases  his  right  to  recover,  is  as  follows:  "This  is  to 
certify  that  we  are  insured  in  a  large  and  reliable  insurance  com- 
pany against  accidents  resulting  in  bodily  injury  or  death  to  J.  R. 
Brown  and  other  employes,  so  that  we  can  agree  that  the  above- 
named  employe  shall  receive  from  us,  in  case  of  an  accident  received 
by  him  when  actively  engaged  in  our  business,  the  following:  (1) 
In  case  of  an  accidental  injury  a  sum  not  exceeding,"  etc.,  "and  fur- 
nish medical  attendance."  The  answer  denied  liability.  The  court 
found  the  following  facts,  so  far  as  may  be  necessary  to  set  them  out, 
to  wit:  "That  the  defendant  company  entered  into  a  contract  by 
which  it,  in  case  of  accident,  while  in  its  employment,  to  one  Brown, 
its  employe,  would,  among  other  things,  furnish  him  a  physician; 
that  on  the  14th  day  of  September,  1892,  and  while  said  contract  was 
in  force,  said  Brown  was  injured  while  in  defendant's  employment; 
that  the  plaintiff,  a  physician,  was  as  such  called  in  by  Brown,  and 
waited  on  him,  and  rendered  him  the  services  sued  for,  extending  from 
September  16,  1892,  to  April  1,  1893,  to  the  value  of  $300 ;  that  this 
employment  of  plaintiff  as  physician  was  known  to  defendant  com- 
pany, and  by  it,  through  its  officers,  fully  approved."  Appellant  asked 
the  court  to  find  as  a  fact  that  "there  was  no  agreement  made  by  the 
Thomas  Manufacturing  Company  with  Brown  to  pay  Dr.  Prather, 
or  any  other  physician,  for  medical  attendance  upon  said  Brown," 

583;  and  see  also  1st  Nat.  Bank  v.  Chalmers,  144  N.  Y.  432  and  Hamilton  v. 
Hamilton,  127  Appellate  Div.  871)  ;  or  (2)  Where  there  is  a  pecuniary  obliga- 
tion running  from  the  promisee  to  the  beneficiary  (Vrooman  v.  Turner,  69  N. 
Y.  280)  ;  or  (8),  Where  the  contract  is  made  for  the  benefit  of  the  wife  (Bu- 
chanan v.  Tilden,  158  N.  Y.  109)  or  of  a  child  of  a  party  to  the  contract 
(Schemerhorn  v.  Vanderheyden,  1  Johns,  139;  Todd  v.  Weber,  95  N.  Y.  181)  ; 
or  (4)  Where  the  contract  is  made  by  the  State  or  municipal  corporation  for 
the  benefit  of  the  individual  citizens  (Smyth  v.  City  of  New  York,  203  N.  Y. 
106).  Beyond  these  classes  of  cases  the  New  York  authorities  do  not  go  (Sul- 
livan v.  Sullivan,  161  N.  Y.  554;  and  especially  Smyth  v.  New  York,  supra.) 


LIMITS   OF   CONTRACTUAL   OBLIGATION.  481 

which  the  court  refused.  And  appellant  asked  the  court  to  declare 
the  following  as  the  law :  "A  contract  entered  into  upon  the  terms 
proposed  in  the  card  aforesaid  would  not  inure  to  the  benefit  of  the 
plaintiff,  and  if  the  court  finds  that  the  defendant  made,  and  Brown 
accepted,  the  contract  there  proposed,  the  plaintiff  cannot  recover"; 
which  the  court  refused,  holding  that  "the  contract  entered  into  by 
defendant  company  with  Brown,  and  services  rendered  by  plaintiff, 
with  the  assent  and  approval  of  defendant  company,  created  a  liability 
to  plaintiff/'  Exceptions  to  the  ruling  of  the  court  upon  these  points 
present  the  only  question  we  need  consider,  to  wit,  was  the  contract  for 
appellee's  benefit? 

This  court  long  ago  ruled,  in  line  with  the  doctrine  which  generally 
obtains  in  this  country,  that  where  a  promise  is  made  to  one  upon  a 
sufficient  consideration,  for  the  benefit  of  another,  the  beneficiary 
may  sue  the  promisor  for  a  breach  of  his  promise.  Chamblee  v. 
McKenzie,  31  Ark.  155;  Talbot  v.  Wilkins,  Id.  411;  Hecht  v.  Caugh- 
ron,  46  Ark.  132.  This  doctrine  operates  as  an  exception  to  the 
elementary  rule  of  law,  that  a-  stranger  to  a  simple  contract,  from 
whom  no  consideration  moves,  cannot  sue  upon  it.  National  Bank  v. 
Grand  Lodge,  98  U.  S.  123 ;  Mellen  v.  Whipple,  1  Gray,  317 ;  Green- 
wood v.  Sheldon,  31  Minn.  254,  17  N.  W.  478.  Therefore  it  should 
be  applied  cautiously,  and  restricted  to  cases  coming  clearly  within 
its  compass.  The  following  prerequisites  for  the  application  of  the 
doctrine  were  announced  by  the  Court  of  Appeals  of  New  York  in 
Vrooman  v.  Turner,  69  N.  Y.  280,  viz.:  "There  must  be — First, 
an  intent  by  the  promisee  to  secure  some  benefit  to  the  third  party; 
and,  second,  some  privity  between  the  two, — the  promisee  and  the 
party  to  be  benefited, — and  some  obligation  or  duty  owing  from,  the 
former  to  the  latter,  which  would  give  him  a  legal  or  equitable  claim 
to  the  benefit  of  the  promise,  or  an  equivalent  from  him  personally." 
In  Durnherr  v.  Rau,  135  N.  Y.  222,  32  N.  E.  50,  the  court  say :  "It 
is  not  sufficient  that  the  performance  of  the  covenant  may  benefit  a 
third  person.  It  must  have  been  entered  into  for  this  benefit,  or,  at 
least,  such  benefit  must  be  the  direct  result  of  performance,  and  so 
within  the  contemplation  of  the  parties."  See,  also,  American  Exch. 
Bank  v.  Northern  Pac.  R.  Co.,  76  Fed.  130.  "Of  course,  the  name 
of  the  person  to  be  benefited  by  the  contract  need  not  be  given,  if 
he  is  otherwise  sufficiently  described  or  designated.  Indeed,  he  may 
be  one  of  a  class  of  persons,  if  the  class  is  sufficiently  described  or 
designated."  Burton  v.  Larkin,  36  Kan.  250,  13  Pac.  400.  Apply- 
ing the  foregoing  principles  to  the  contract  under  consideration,  it 
is  manifest,  from  the  nature  and  terms  of  the  contract,  that  neither 
the  appellee  individually,  nor  any  of  a  class  to  which  he  belonged, 
was  intended  to  be  considered  as  primarily  the  party  in  interest. 
Austin  v.  Seligman,  18  Fed.  523 ;  Simson  v.  Brown,  68  N.  Y.  355,  361, 


482  OPERATION    OF   CONTRACT. 

362 ;  Wright  v.  Terry,  23  Fla.  160,  2  South.  6 ;  Greenwood  v.  Sheldon, 
31  Minn.  254,  17  N.  W.  478;  Washburn  v.  Investment  Co.   (Or.) 
38  Pac.  620.     The  clause,  "we  can  furnish  medical  attendance,"  was 
solely  for  the  benefit  of  Brown,  and  the  purpose  of  making  it  upon 
the  part  of  appellant  was  doubtless  to  induce  him  to  enter  its  service 
upon  terms  that  would,  to  it,  be  advantageous.     The  most  that  can 
be  said  about  it,  so  far  as  any  physician  was  concerned,  is  that,  upon 
the  happening  of  the  contingency  which  it  contemplated, — the  acci- 
dental injury, — the  performance  of  the  contract  would  result  inci- 
dentally  to   his   benefit.     This   would   not   entitle   him   to   sue   the 
company.     Chung  Kee  v.  Davidson,  73  Cal.  522,  15  Pac.  100.     More- 
over, the  contract  here  was  "to  furnish  medical  attendance,"  not  to 
pay  the  wages  or  for  the  services  of  a  physician  whom  Brown  might 
employ.     According  to  the  express  terms  of  the  contract,  the  com- 
pany did  not  surrender  to  Brown  the  right  -to  bind  it  by  a  contract 
he  might  make  with  a  physician,  or  constitute  him  its  agent  to  em- 
ploy a  physician,  and  hence  the  company  i's  not  bound,  according  to 
the  written  contract,  for  the  services  of  a  physician  whom  Brown 
employed.     But  the  court  found   "that  this  employment  of  plain- 
tiff as  physician  was  known  to  defendant  company,  and  by  it  through 
its  officers  fully  approved."     This  might  be  sufficient,  in  a  suit  brought 
by  Brown  against  the  company  to  recover  of  it  the  sum  which  he  had 
paid  his  physician,  to  estop  the  company  from  denying  that  it  had 
waived  its  right  to  furnish  its  own  physician,  provided  the  company 
knew  that  the  physician  was  called  by  Brown  in  reliance  upon  his  con- 
tract for  it  "to  furnish  him  medical  attendance."     But  this  finding 
cannot  avail  appellee,  for  he  is  suing  upon  an  express  written  con- 
tract, which,  as  we  have  seen,  was  not  for  his  benefit.     It  could  not 
avail  him,  upon  any  implied  contract  of  the  company,  to  pay  him 
for  his  services  to  Brown,  for  other  facts  show  that  there  was  no 
such  contract.     Appellee  was  employed  by  Brown,  and  in  his  testimony 
he  says :     "As  to  looking  to  any  one  for  payment,  of  that  I  cannot  say 
that  I  looked  to  any  one  but  Brown.     I  did  not  look  to  the  Thomas 
Manufacturing  Company  when  I  first  went.     I  looked  to  the  Thomas 
Manfacturing  Company  in  general  connection  with  the  other  com- 
pany.    When   the  people  of  the   Thomas  Manufacturing   Company 
intimated  to  ,ne  that  the  company  would  pay,  I  did  not  feel  that  I 
would  look  to  them  especially.  ...  I  would  have  rendered  the  services 
to  Brown  that  I  did  render  regardless  of  whether  the  Thomas  Manu- 
facturing  Company   or   Brown   would   have   been   responsible."     In 
Canney  v.  Railroad  Co.,  63  Cal.  501,  the  plaintiff,  a  physician,  was, 
at  the  instance  and  request  of  certain  parties  wounded  by  a  railroad 
accident,  attending  them,  when  the  president  of  the  railroad  com- 
pany, in  the  absence  of  the  physician,  told  the  wounded  persons  to 
employ  whatever  physician  they  chose,  and  the  company  would  pay 


LIMITS   OF    CONTRACTUAL   OBLIGATION.  483 

the  bills.  The  physician  was  advised  of  this,  but  he  testified  that  he 
attended  the  wounded  until  their  recovery  in  pursuance  of  the  original 
calling.  It  was  held,  in  an  action  against  the  company  upon  con- 
tract for  services  performed,  that  there  was  no  mutuality,  by  contract 
between  them,  and  no  liability  attached  to  the  railroad  company  for 
the  services  performed  by  the  plaintiff  to  the  persons  who  employed 
them.  Note  to  Austin  v.  Seligman,  18  Fed.  525.  As  there  could  be 
no  recovery  by  appellee  upon  the  contract  sued  on,  the  other  questions 
pass  out.  Reversed  and  dismissed.  (Bunn,  C.  J.  dissenting).1 

9  Cyc.  380    (10) ;  W.  P.  277    (62-67)  ;   12  H.  L.  R.  62;  16  H.  L.  R.  373; 
25  H.  L.  R.  738. 


DURNHERR  v.  RAIL 
135  NEW  YORK,  219.— 1892. 

Appeal  from  order  of  the  General  Term  of  the  Supreme  Court  in 
the  fifth  judicial  department,  made  June  2d,  1891,  which  affirmed 
an  order  entered  upon  the  minutes,  setting  aside  a  verdict  in  favor  of 
plaintiff  and  granting  a  new  trial. 

This  was  an  action  to  recover  damages  for  an  alleged  breach  of 
covenant  in  a  deed  from  Emanuel  Durnherr,  plaintiff's  husband,  to 
defendant. 

ANDREWS,  J.  The  deed  from  Emanuel  Durnherr  to  the  defend- 
ant recited  that  it  was  given  in  payment  of  a  debt  owing  by  the 
grantor  to  the  grantee  of  $660,  "and  the  further  considerations  ex- 
pressed herein."  The  grantee  covenanted  in  the  deed  to  pay  all  in- 
cumbrances  on  the  premises  "by  mortgage  or  otherwise."  This  con- 
stitutes the  only  "further  consideration"  on  his  part  expressed  therein. 

i  In  Nolton  v.  Western  R.  R.,  15  N.  Y.  444,  defendant  was  under  contract 
with  the  government  to  carry  mails  and  the  mail  agent.  Plaintiff  was  the 
mail  agent  and  was  injured  in  a  railroad  accident  while  performing  his  du- 
ties. He  sued  the  railroad  company  and  the  court  held:  "In  contracting 
for  the  transportation  of  the  mail  agent,  the  parties  had  no  more  in  view 
any  benefit  or  advantage  to  him,  than  if  the  contract  had  been  to  transport 
a  chattel.  The  government  took  care  of  the  public  interests,  and  left  those 
of  the  mail  agent  to  such  protection  as  the  law  would  afford.  .  .  .  My  con- 
clusion therefore  is,  that  this  action  cannot  be  maintained  upon  the  basis 
of  a  contract  express  or  implied.  It  necessarily  follows  that  it  must  rest 
exclusively  upon  that  obligation  which  the  law  always  imposes  upon  every 
one  who  attempts  to  do  anything,  even  gratuitously,  for  another,  to  exercise 
some  degree  of  care  and  skill  in  the  performance  of  what  he  has  under- 
taken." 

"The  fact  that  the  person  to  whose  benefit  the  promise  may  inure  is  un- 
certain at  the  time  it  is  made,  and  that  it  cannot  be  known  until  the  hap- 
pening of  a  contingency,  cannot  deprive  the  person  who  afterwards  estab- 
lishes his  claim  to  be  the  beneficiary  of  the  promise  of  the  right  to  recover 
upon  it." — Whitehead  v.  Burgess,  61  N.  J.  L.  75. 


484  OPERATION   OF   CONTRACT. 

The  deed  also  declared  that  the  wife  of  the  grantor  (the  plaintiff) 
reserved  her  right  of  dower  in  the  premises.  The  conveyance  con- 
tained a  covenant  of  general  warranty  by  the  grantor,  and  the  only 
legal  operation  of  the  clause  respecting  the  dower  of  the  wife  was  to 
limit  the  scope  of  the  warranty  by  excluding  therefrom  her  dower 
right.  By  the  foreclosure  of  the  mortgages  on  the  premises  existing 
at  the  time  of  the  conveyance,  in  which  (as  is  assumed)  the  wife 
joined,  the  title  has  passed  to  purchasers  on  the  foreclosure,  and  the 
inchoate  right  of  dower  in  the  wife  has  been  extinguished.  This  ac- 
tion is  brought  by  the  wife  on  the  defendant's  covenant  in  the  deed, 
and  she  seeks  to  recover  as  damages  the  value  of  her  inchoate  right 
of  dower,  which  was  cut  off  by  the  foreclosure. 

The  courts  below  denied  relief,  and  we  concur  in  their  conclusion. 
The  covenant  was  with  the  husband  alone.  He  had  an  interest  in 
obtaining  indemnity  against  his  personal  liability  for  the  mortgage 
debts,  and  this,  presumably,  was  his  primary  purpose  in  exacting 
from  the  grantee  a  covenant  to  pay  the  mortgages.  The  cases  also 
attribute  to  the  parties  to  such  a  covenant  the  further  purpose  of  bene- 
fiting the  holder  of  the  securities,  and  the  natural  scope  of  the  cove- 
nant is  extended  so  as  to  give  them  a  right  of  action  at  law  on  the 
covenant,  in  case  of  breach,  as  though  expressly  named  as  covenantees. 
Burr  v.  Beers,  24  N.  Y.  178.  But  the  wife  was  not  a  party  to  the  mort- 
gages, and  in  no  way  bound  to  pay  them.  She  had  an  interest  that 
they  should  be  paid  without  resort  to  the  land,  so  that  her  inchoate 
right  of  dower  might  be  freed  therefrom.  The  husband,  however, 
owed  her  no  duty  enforcible  in  law  or  equity  to  pay  the  mortgages 
to  relieve  her  dower.  The  most  that  can  be  claimed  is  that  the 
mortgages  having  (as  is  assumed)  been  executed  to  secure  his  debts, 
and  he  having  procured  the  wife  to  join  in  them  and  pledge  her  right 
for  their  payment,  he  owed  her  a  moral  duty  to  pay  the  mortgages, 
and  thereby  restore  her  to  her  original  situation.  But  according  to 
our  decisions  no  legal  or  equitable  obligation,  of  which  the  law  can 
take  cognizance,  was  created  in  favor  of  the  wife  against  the  husband 
or  his  property  by  these  circumstances.  She  was  not  in  the  position 
of  a  surety  for  her  husband.  Her  joinder  in  the  mortgages  was  a 
voluntary  surrender  of  her  right  for  the  benefit  of  the  husband,  and 
bound  her  interest  to  the  extent  necessary  to  protect  the  securities. 
Manhattan  Co.  v.  Evertson,  6  Pai.  467;  Hawley  v.  Bradford,  9  Pai. 
200.  There  is  lacking  in  this  case  the  essential  relation  of  debtor  and 
creditor  between  the  grantor  and  a  third  person  seeking  to  enforce  such 
a  covenant,  or  such  a  relation  as  makes  the  performance  of  the  cove- 
nant at  the  instance  of  such  third  person  a  satisfaction  of  some  legal  or 
equitable  duty  owing  by  the  grantor  to  such  person,  which  must  exist 
according  to  the  cases  in  order  to  entitle  a  stranger  to  the  covenant 


LIMITS   OF    CONTRACTUAL   OBLIGATION.  485 

to  enforce  it.  It  is  not  sufficient  that  the  performance  of  the  cove- 
nant may  benefit  a  third  person.  It  must  have  been  entered  into  for 
his  benefit,  or  at  least  such  benefit  must  be  the  direct  result  of  per- 
formance and  so  within  the  contemplation  of  the  parties,  and  in 
addition  the  grantor  must  have  a  legal  interest  that  the  covenant  be 
performed  in  favor  of  the  party  claiming  performance.  Garnsey  v. 
Rogers,  47  N.  Y.  233 ;  Vrooman  v.  Turner,  69  N.  Y.  280 ;  Lorillard 
v.  Clyde,  122  N.  Y.  498.  The  application  of  the  doctrine  of 
Lawrence  v.  Fox,  20  N.  Y.  268,  to  this  case  would  extend  it  much 
further  than  hitherto,  and  this  cannot  be  permitted  in  view  of  the 
repeated  declarations  of  the  Court  that  it  should  be  confined  to  its 
original  limits. 

The  order  should  be  affirmed,  and  judgment  absolute  ordered  for 
the  defendant  with  costs. 

All  concur. 

Order  affirmed  and  judgment  accordingly. 

W.  P.  277    (65). 


ECONOMY  BUILDING  &  LOAN  ASS'N  v.  WEST 
JERSEY  TITLE  &  GUARANTEE  CO. 

64  NEW  JERSEY  LAW,  27.— 1899. 

This  action  is  upon  contract.  Its  purpose  is  a  recovery  of  damages 
alleged  to  have  been  suffered  by  plaintiff  because  it  made  a  loan  on 
the  security  of  a  mortgage  on  real  estate  upon  the  faith  of  a  certif- 
icate of  defendant  that  it  was  free  from  prior  incumbrances,  which 
certificate  was  untrue,  there  being  in  fact  a  prior  recorded  incum- 
brance,  the  foreclosure  of  which  caused  the  loss  of  plaintiff's  loan. 
Plaintiff  has  set  out  his  cause  of  action  in  two  special  counts,  and 
defendant  has  demurred  to  each.  Overruled. 

MAGIE,  C.  J.  It  is  not  claimed  that  there  has  been  imposed  by  law 
upon  defendant  a  duty  in  respect  to  the  transaction  with  plaintiff 
for  the  breach  of  which  an  action  would  lie  under  the  authority  of 
Appleby  v.  State,  45  N.  J.  Law,  161.  In  the  opinion  of  Mr.  Justice 
Depue  in  that  case  it  was  suggested  whether  the  liability  of  a  county 
clerk  for  untrue  statements  in  a  certificate  of  search  of  title  would  arise 
out  of  his  official  position,  or  rather  out  of  his  employment  to  make 
the  search,  in  which  case  his  liability  would  extend  only  in  favor 
of  the  person  employing  him,  and  with  whom  he  was  in  privity  by  the 
contract  of  employment.  The  defendant  has  no  official  character,  but 
from  the  statements  of  the  declaration  we  must  assume  that  it  has 
corporate  capacity  to  do  the  acts  which  it  is  charged  with  doing,  viz. 
examining  the  title  of  real  estate,  and  certifying  to  incumbrances 


486  OPERATION   OF    CONTRACT. 

thereon.  If  possessed  of  such  capacity,  there  can  be  no  doubt  that, 
upon  being  employed  to  examine  and  certify,  it  undertook  a  duty  in 
favor  of  the  employer  for  the  breach  of  which  it  would  become  liable 
to  him. 

The  question  presented  by  the  demurrers  is  whether  these  counts 
sufficiently  disclose  a  duty  owed  by  defendant  to  plaintiff,  and  a  breach 
of  such  duty.  It  will  be  convenient  to  first  consider  the  second  count. 
Omitting  extraneous  and  unnecessary  matters,  that  count  may  be  thus 
paraphrased:  It  charges  that  one  Moore  desired  to  procure  a  loan 
of  $3000,  and  applied  to  plaintiff  therefor;  that  plaintiff  agreed  to 
make  the  loan  on  condition  that  Moore  should  secure  it  by  a  mort- 
gage on  certain  land,  which  mortgage  should  be  certified  by  defendant 
to  be  a  first  lien  on  said  lands ;  that  Moore  applied  to  defendant,  and 
made  known  to  it  his  agreement  with,  plaintiff;  that  he  requested 
defendant  to  make  the  required  search  and  certificate,  which  it  agreed 
to  do;  that  it  agreed  to  make  and  deliver  such  search  and  certificate 
to  Moore,  to  be  by  him  delivered  to  plaintiff,  and  used  for  the  purpose 
of  obtaining  said  loan;  that  it  made  the  certificate,  a  copy  of  which 
was  annexed  to  and  made  part  of  the  declaration,  and  delivered  it  to 
Moore,  who  paid  defendant  therefor,  and  then  delivered  it  to  plaintiff, 
who  thereupon  made  the  loan  on  the  faith  of  the  certificate.  The 
certificate  avers  that  the  mortgaged  lands  were  not  incumbered  by 
any  previous  mortgage.  The  count  proceeds  to  aver  that  the  certifi- 
cate was  carelessly  made,  and  was  untrue,  because  the  lands  were  in 
fact  subject  to  a  prior  recorded  mortgage,  which  has  since  been  fore- 
closed, to  the  injury  of  plaintiff. 

The  sole  contention  of  the  demurrant  is  that  the  count  discloses  no 
privity  between  it  and  plaintiff,,  but  only  a  contract  between  it  and 
Moore.  But  this  is  too  narrow  a  view  of  the  transaction  set  out  in 
this  count.  Upon  its  averments  there  is  disclosed  either  a  contract 
between  plaintiff  and  defendant,  made  through  the  agency  of  Moore, 
by  which  defendant  was  employed  to  examine  and  certify  the  title,  or 
a  contract  of.  like  employment  between  Moore  and  defendant,  made  for 
the  benefit  of  plaintiff,  upon  which  a  right  of  action  by  plaintiff  would 
arise.  Joslin  v.  Spring  Co.,  36  N".  J.  Law,  141 ;  Whitehead  v.  Burgess, 
61  N.  J.  Law,  75.  It  is  unnecessary  to  determine  in  which  aspect 
the  facts  averred  place  the  plaintiff's  right  of  action.  Either  will 
support  this  count.  In  either  aspect  the  contract  disclosed  a  contract 
which  included  an  undertaking  to  use  care  in  discovering  and  certify- 
ing to  previous  recorded  incumbrances.  The  averment  that  defendant 
carelessly  omitted  to  certify  to  a  previous  incumbrance  appearing 
in  the  public  records  establishes  a  complete  right  of  action  on  the  con- 
tract. This  demurrer  must  be  overruled. 

The  question  whether  the  first  count  demurred  to  exhibits  a  good 
cause  of  action  in  favor  of  plaintiff  is  of  more  difficulty.  The  court 


LIMITS   OF   CONTRACTUAL  OBLIGATION.  487 

is  equally  divided  in  its  views  upon  that  question.     It  results  that  the 
demurrer  to  that  count  must  also  be  overruled.1 
9  Cyc.  373-374    (86-87). 


GERMAN  ALLIANCE  INSURANCE  CO.  v.  HOME 
WATER  SUPPLY  CO. 

226  UNITED  STATES,  220.— 1912. 

On  writ  of  certiorari  to  the  United  States  Circuit  Court  of  Appeals 
for  the  Fourth  Circuit  to  review  a  judgment  which  affirmed  a  judg- 
ment of  the  Circuit  Court  for  the  District  of  South  Carolina,  sustain- 
ing a  demurrer  to  and  dismissing  the  complaint  in  an  action  by  an 
insurance  company  to  recover  from  a  water  company  because  of  its 
failure  to  furnish  water  for  fire  protection. 

"The  Spartan  Mills"  owned  a  number  of  houses  in  Spartanburg, 
South  Carolina.  They  were  damaged  by  fire  on  March  25,  1907.  The 
German  Alliance  Company,  which  had  insured  the  buildings,  paid 
$68,000,  the  amount  of  the  loss,  took  from  the  mills  an  assignment 
"of  all  claims  and  demands  against  any  person  arising  from  or  con- 
nected with  the  loss  or  damage,"  and  brought  suit,  in  the  United 
States  court  for  the  district  of  South  Carolina,  against  the  Home 
Water  Supply  Company,  on  the  ground  that  the  fire  could  easily  have 
been  extinguished  and  the  damage  prevented  if  the  water  company  had 
complied  with  its  contract  and  duty  to  furnish  the  inhabitants  of 
the  city  with  water  for  fire  protection. 

Mr.  Justice  LAMAR.  In  Ancrurn  v.  Camden  Water,  Light,  &  Ice 
Co.,  82  S.  C.  284,  21  L.  R.  A.  (N.  S.)  1029,  64  S.  E.  151,  the  Supreme 
Court  of  South  Carolina,  construing  a  contract  much  like  the  one  here 

i  In  Ward  v.  Savings  Bank,  100  U.  S.  195,  it  is  held  (three  justices  dis- 
senting) that  an  attorney  employed  by  A  to  examine  and  report  upon  A's 
title  to  certain  premises,  and  who  gives  a  certificate  that  A's  title  "is  good 
and  unincumbered,"  is  not  liable  to  B,  who  lends  money  on  the  strength  of 
this  certificate,  taking  the  premises  as  security,  and  afterwards  discovers 
that  there  was,  at  the  time  the  certificate  was  given,  a  prior  duly  recorded 
conveyance  of  the  premises  by  A.  This  case  is  followed  in  Day  v.  Eeynolds, 
23  Hun  (N.  Y.),  131;  Mechanics  BIdg.  Ass'n  v.  Whitacre,  92  Ind.  547;  Mal- 
lory  v.  Ferguson,  50  Kans.  685;  Zweigardt  v.  Birdseye,  57  Mo.  App.  462; 
Tapley  v.  Wright,  61  Ark,  275;  Contra,  Dickie  v.  Abstract  Co.,  89  Tenn.  431; 
Gate  City  Abstract  Co.  v.  Post,  55  Neb.  742.  If  it  is  shown  that  the  ab- 
stractor or  attorney  is  acting  for  the  plaintiff,  although  he  is  engaged  and 
paid  by  another  person,  a  duty  is  undertaken  toward  plaintiff  for  the  breach 
of  which  an  action  will  lie.  Lawall  v.  Groman,  180  Pa.  St.  532;  Brown  v. 
Sims,  22  Ind.  App.  317. 

In  Buckley  v.  Gray,  110  Cal.  339,  it  is  held  that  an  attorney  employed  by 
a  testator  is  not  liable  to  a  legatee  for  negligently  having  the  legatee  witness 
th«  will,  thus  rendering  the  will  ineffective  as  to  him. 


488  OPERATION  OF  CONTRACT. 

involved,  held  that  a  taxpayer  could  not  maintain  an  action  against  a 
water  company  for  damage  due  to  its  failure  to  furnish  water  as 
required  by  such  an  agreement  with  the  city.  The  plaintiff,  however, 
contends  that  although  the  present  suit  is  for  damage  to  property 
located  in  South  Carolina,  that  decision  is  not  of  controlling  authority, 
because  it  was  rendered  two  years  after  this  action  was  begun. 
Relying  on  Burgess  v.  Seligman,  107  U.  S.  20,  27  L.  ed.  359,  2  Sup. 
Ct.  Rep.  10,  it  insists  that  when  the  contract  was  made,  February, 
1900,  there  was  no  settled  State  law  on  the  subject,  and  therefore  the 
Federal  courts  must  decide  for  themselves,  as  matter  of  general  law, 
the  much  controverted  question  as  to  a  water  company's  liability  to  a 
taxpayer  for  failure  to  furnish  fire  protection,  according  to  the  terms 
of  its  contract  with  the  city. 

The  courts  have  almost  uniformly  held  that  municipalities  are  not 
bound  to  furnish  water  for  fire  protection.  Such  was  the  unques- 
tioned rule  when  they  relied,  as  some  still  do,  on  wells  and  cisterns 
as  a  source  of  supply ;  nor  was  there  any  increase  of  liability  with  the 
gradual  increase  of  facilities;  though,  with  the  introduction  of  reser- 
voirs, standpipes,  pumping  stations,  and  steam  engines,  cities  were 
frequently  sued  for  damages  resulting  from  an  inadequate  supply  or 
insufficient  pressure.  But  the  city  was  under  no  legal  obligation  to 
furnish  the  water ;  and  if  it  voluntarily  undertook  to  do  more  than  the 
law  required,  it  did  not  thereby  subject  itself  to  a  new  or  greater 
liability.  It  acted  in  a  governmental  capacity,  and  was  no  more  re- 
sponsible for  failure  in  that  respect  than  it  would  have  been  for  failure 
to  furnish  adequate  police  protection. 

If  the  common  law  did  not  impose  such  duty  upon  a  public  cor- 
poration, neither  did  it  require  private  companies  to  furnish  fire  pro- 
tection to  property  reached  by  their  pipes.  And  there  could,  of  course, 
be  no  liability  for  the  breach  of  a  common-law,  statutory,  or  charter 
duty  which  did  not  exist.  It  is  argued,  however,  that  even  if,  in  the 
first  instance,  the  law  did  not  oblige  the  company  to  furnish  property 
owners  with  water,  such  a  duty  arose  out  of  the  public  service  upon 
which  the  defendant  entered.  But  if,  where  it  did  not  otherwise  exist, 
a  public  duty  could  arise  out  of  a  private  bargain,  liability  would  be 
based  on  the  failure  to  do  or  to  furnish  what  was  reasonably  necessary 
to  discharge  the  duty  imposed.  The  complaint  proceeds  on  no  such 
theory.  It  makes  no  allegation  that  the  defendant  failed  to  furnish 
a  plant  of  reasonable  capacity,  or  neglected  to  extend  the  pipes  where 
they  were  reasonably  required.  Nor  is  it  charged  that  what  the  com- 
pany actually  did  was  harmful  in  itself  or  likely  to  cause  injury  to 
others,  so  as  to  bring  the  case  within  the  principle  applicable  to  the 
sale  of  unwholesome  provisions,  or  misbranded  poisons,  which,  in  their 
intended  use,  would  be  injurious  to  purchasers  from  the  original 
vendee.  So  that,  notwithstanding  numerous  charges  of  culpable, 


LIMITS   OF    CONTRACTUAL   OBLIGATION.  489 

wanton,  and  malicious  neglect  of  duty,  this  suit — whether  regarded  as 
ex  contractu  or  ex  delicto — is  for  breach  of  the  provisions  of  the  con- 
tract of  February  14,  1900,  which  must,  therefore,  be  the  measure  of 
plaintiff's  right  and  of  the  defendant's  liability. 
'  Whether  a  right  of  action  arises  out  of  such  a  contract,  in  favor  of 
a  taxpayer,  is  a  matter  about  which  there  has  been  much  discussion 
and  some  conflict  in  decisions.  Although  for  nearly  a  century  it  has 
been  common  for  private  corporations  to  supply  cities  with  water 
under  this  sort  of  agreement,  we  find  no  record  of  a  suit  like  this 
prior  to  1878,  when  the  Supreme  Court  of  Connecticut,  in  a  brief  de- 
cision (Nickerson  v.  Bridgeport  Hydraulic  Co.,  46  Conn.  24,  33  Am. 
Rep.  1),  held  that  the  property  owner  was  a  stranger  to  the  agreement 
with  the  municipality,  and  therefore  could  not  maintain  an  action 
against  the  company  for  a  breach  of  its  contract  with  the  city.  Since 
that  time  similar  suits,  some  in  tort  and  some  for  a  breach  of  the  con- 
tract, have  been  brought  in  many  other  States.  In  view  of  the  im- 
portance of  the  question,  the  subject  has  been  examined  and  re-exam- 
ined, the  contract  subjected  to  the  most  critical  analysis,  and  many 
elaborate  opinions  have  been  rendered.  They  are  cited  in  3  Dill. 
Mun.  Corp.  §  1340,  and  in  the  Ancrum  Case,  supra. 

From  them  it  appears  that  the  majority  of  American  courts  hold 
that  the  taxpayer  has  no  direct  interest  in  such  agreements,  and  there- 
fore cannot  sue  ex  contractu.  Neither  can  he  sue  in  tort,  because,  in 
the  absence  of  a  contract  obligation  to  him,  the  water  company  owes 
him  no  duty  for  the  breach  of  which  he  can  maintain  an  action  ex 
delicto.  A  different  conclusion  is  reached  by  the  Supreme  Courts  of 
three  States  in  cases  ci'ted  and  discussed  in  Mugge  v.  Tampa  Water- 
works Co.,  52  Fla.  371,  6  L.  E.  A.  (N.  S.)  1171,  120  Am.  St.  Rep.  207, 
42  So.  8 1.1  They  hold  that  such  a  contract  is  for  the  benefit  of  tax- 
payers, who  may  sue  either  for  its  breach,  or  for  a  violation  of  the 
public  duty  which  was  thereby  assumed. 

The  plaintiff  presses  these  decisions  to  their  logical  conclusion  and 
sues  not  for  negligence  in  operating  the  plant,  but  for  breach  of  the 
contract  of  construction.  The  complaint  charges  that  as  a  direct 
consequence  of  the  refusal  to  lay  the  pipes,  as  provided  by  the  con- 
tract, there  was  no  plug  near  enough  to  extinguish  the  fire.  The  other 
allegations  as  to  putting  in  4-inch  instead  of  6-inch  pipe,  and  failing  to 
install  the  electric  cut-off,  are  immaterial,  except  on  the  theory  that 
if  the  property  owner  was  indeed  a  beneficiary,  it,  after  acceptance, 
would  be  entitled  to  all  the  rights  of  the  original  promisee,  and  if  not 
otherwise  injured,  might  at  least  recover  nominal  damages  for  any 
breach.  By  the  same  reasoning  it,  with  the  other  members  of  the  class, 
might  release  the  company  from  liability  already  incurred,  or  even 

i  Kentucky,  North  Carolina,  Florida. 


490  OPERATION    OF    CONTRACT. 

discharge  it  altogether  from  the  duty  of  carrying  out  the  agreement 
in  the  future.  If  this  did  not  entirely  substitute  the  taxpayer  for  the 
municipality,  it  would  at  least  subject  the  promisor  to  liability  to 
many,  where  it  only  had  contracted  with  one.  Dow  v.  Clark,  7  Gray, 
198,  201. 

In  many  jurisdictions  a  third  person  may  now  sue  for  the  breach 
of  a  contract  made  for  his  benefit.  The  rule  as  to  when  this  can  be 
done  varies  in  the  different  States.  In  some  he  must  be  the  sole  bene- 
ficiary. In  others  it  must  appear  that  one  of  the  parties  owed  him  a 
debt  or  duty,  creating  the  privity  necessary  to  enable  him  to  hold  the 
promisor  liable.  Others  make  further  conditions.  But  even  where 
the  right  is  most  liberally  granted,  it  is  recognized  as  an  exception  to 
the  general  principle,  which  proceeds  on  the  legal  and  natural  pre- 
sumption that  a  contract  is  only  intended  for  the  benefit  of  those  who 
made  it.  Before  a  stranger  can  avail  himself  of  the  exceptional  priv- 
ilege of  suing  for  a  breach  of  an  agreement  to  which  he  is  not  a  party, 
he  must,  at  least,  show  that  it  was  intended  for  his  direct  benefit. 
For,  as  said  by  this  court,  speaking  of  the  right  of  bondholders  to  sue 
a  third  party  who  had  made  an  agreement  with  the  obligor  to  dis- 
charge the  bonds,  they  "may  have  had  an  indirect  interest  in  the 
performance  of  the  undertakings  but  that  is  a  very  different 
thing  from  the  privity  necessary  to  enable  them  to  enforce  the  con- 
tract by  suits  in  their  own  names."  Second  Nat.  Bank  v.  Grand 
Lodge,  F.  &  A.  M.,  98  U.  S.  124,  25  L.  ed.  76.  Hendrick  v.  Lind- 
say, 93  U.  S.  149,  23  L.  ed.  857 ;  National  Sav.  Bank  v.  Ward,  100  U. 
S.  202,  205,  25  L.  ed.  623,  625. 

Here  the  city  was  under  no  obligation  to  furnish  the  manufactur- 
ing company  with  fire  protection,  and  this  agreement  was  not  made  to 
pay  a  debt  or  discharge  a  duty  to  the  Spartan  Mills,  but,  like  other 
municipal  contracts,  was  made  by  Spartanburg  in  its  corporate  ca- 
pacity, for  its  corporate  advantage,  and  for  the  benefit  of  the  inhab- 
itants collectively.  The  interest  which  each  taxpayer  had  therein 
was  indirect, — that  incidental  benefit  only  which  every  citizen  has  in 
the  performance  of  every  other  contract  made  by  and  with  the  govern- 
ment under  which  he  lives,  but  for  the  breach  of  which  he  has  no 
private  right  of  action. 

He  is  interested  in  the  faithful  performance  of  contracts  of  service 
by  policemen,  firemen,  and  mail  contractors,  as  well  as  in  holding  to 
their  warranties  the  vendors  of  fire  engines.  All  of  these  employees, 
contractors,  or  vendors  are  paid  out  of  taxes.  But  for  the  breaches 
of  their  contracts  the  citizen  cannot  sue,  though  he  suffer  loss  because 
the  carrier  delayed  in  hauling  the  mail,  or  the  policeman  failed  to 
walk  his  beat,  or  the  fireman  delayed  in  responding  to  an  alarm,  or 
the  engine  proved  defective,  resulting  in  his  building  being  destroyed 
by  fire.  1  Beven,  Neg.  3d  ed.  305;  Pollock,  Torts,  8th  ed.  434,  547; 


LIMITS    OF    CONTRACTUAL   OBLIGATION.  491 

Davis  v.  Clinton  Waterworks  Co.,  54  Iowa,  61,  37  Am.  Eep.  185,  6  N. 
W.  126. 

Each  of  these  promisors  of  the  city,  like  the  water  company  here, 
would  be  liable  for  any  tort  done  by  him  to  third  persons.  But  for 
acts  of  omission  and  breaches  of  contract,  he  would  be  responsible  to 
the  municipality  alone.  To  hold  to  the  contrary  would  unduly  ex- 
tend contract  liability,  would  introduce  new  parties  with  new  rights, 
and  would  subject  those  contracting  with  municipalities  to  suits  by  a 
multitude  of  persons  for  damages  which  were  not,  and,  in  the  nature 
of  things,  could  not  have  been,  in  contemplation  of  the  parties. 

The  result  is  that  plaintiff  cannot  maintain  this  action,  and  though 
based  upon  the  general  principle  that  the  parties  to  a  contract  are 
those  who  are  entitled  to  its  rights,  is  in  accordance  with  the  particu- 
lar intent  of  those  who  made  this  agreement. 

If  the  company  had,  indeed,  made  a  valid  contract  for  the  benefit 
of  a  third  person,  the  amount  of  the  damages  for  which  it  might  be 
liable  would  be  immaterial.  Yet,  where  there  is  no  such  express  agree- 
ment, and  liability  to  a  taxpayer  is  sought  to  be  raised  by  implication, 
it  is  proper  to  test  the  correctness  of  the  proposed  construction  by  not- 
ing the  results  to  which  it  would  lead.  The  contract  was  made  in 
February,  1900.  By  its  terms  the  city  was,  during  a  period  of  ten 
years,  to  pay  $40  per  annum  for  each  hydrant.  During  that  time  the 
property  subject  to  damage  by  fire  might  double  or  quadruple  in  value. 
The  failure  to  provide  that  the  water  rent  of  $40  per  hydrant  should 
rise  or  fall  with  the  increase  or  decrease  in  such  values  indicates  that 
liability  for  damage  to  that  property  was  not  in  the  contemplation  of 
the  parties,  and  that  no  payment  therefor  was  included  in  the  price 
for  each  hydrant.  Otherwise  the  amount  of  payment  would  naturally 
have  varied  with  the  risk  assumed. 

In  some  States  it  is  held  that,  in  the  absence  of  a  statute,  a  city  can 
neither  directly  nor  indirectly  make  a  contract  with  a  water  company 
that  the  latter  should  pay  private  individuals  for  fire  damage,  since 
that  would  involve  the  use  of  public  money  to  secure  a  private  benefit 
to  the  owner  of  private  property.  Hone  v.  Presque  Isle  Water  Co., 
104  Me.  217,  21  L.  E.  A.  (N.  S.)  1021,  71  Atl.  769.  In  the  Ancrum 
Case,  supra,  the  South  Carolina  court  held  that  the  amount  paid  per 
hydrant  was  so  insignificant  by  comparison  with  the  enormous  risk 
involved,  as  clearly  to  indicate  that  neither  the  city  nor  the  water 
company  intended  that  the  latter  should  be  liable  to  the  taxpayer  for 
a  breach  of  the  company's  contract  with  the  city. 

This  conclusion  deprives  the  property  owner  of  no  right,  for  if  the 
city  had  owned  the  works,  and  had  been  guilty  of  the  same  acts  as 
are  charged  against  the  water  company  here,  no  suit  could  have  been 
maintained  against  the  municipality.  There  was  no  creation  of  a 
right  to  fire  protection  if,  instead  of  doing  so  itself,  the  city  contracted 


492  OPERATION  OF  CONTRACT. 

with  a  private  company  to  furnish  water.  It  bought  the  citizen  no 
new  right  of  action,  and  did  not  bargain  to  secure  for  him  an  indemnity 
against  loss  by  fire,  but  left  him  to  protect  himself  against  that  hazard 
by  insurance,  paying  the  premium  direct  to  an  insurance  company  in- 
stead of  indirectly,  through  taxation.  When,  in  pursuance  of  such 
precaution,  the  Spartan  Mills  insured  the  houses,  and  the  plaintiff  later 
settled  the  fire  loss,  there  was  no  right  of  action  in  favor  of  the  manu- 
facturing company  against  the  water  company  to  which  the  insurance 
company  could  be  surrogated. 

The  plaintiff  urges  that,  whatever  the  rule  elsewhere,  it  is  entitled 
to  recover  under  the  decision  in  Guardian  Trust  &  D.  Co.  v.  Fisher, 
200  U.  S.  57,  50  L.  ed.  367,  26  Sup.  Ct.  Eep.  186.  But  the  facts 
there  differ  from  those  in  this  record.  There  the  water  company  had 
an  exclusive  right  to  use  the  streets  in  the  city  of  Greensboro,  under 
an  ordinance  which,  among  other  things,  provided  that  "said  water 
company  shall  be  responsible  for  all  damage  sustained  by  the  city,  or 
any  individual  or  individuals,  for  any  injury  sustained  from  the  negli- 
gence of  the  said  company,  either  in  the  construction  or  operation  of 
their  plant."  P.  58.  Buildings  were  destroyed  as  a  result  of  the  negli- 
gent failure  of  the  company  to  furnish  sufficient  water  while  operating 
its  plant.  The  owner  brought  suit  against  the  water  company  in  the 
courts  of  North  Carolina,  where  it  had  previously  been  settled  that 
such  actions  could  be  maintained.  He  recovered  a  judgment  "for  the 
tortious  injury  and  damage  done  to  the  plaintiff  by  the  negligence  of 
the  defendant."  128  N.  C.  375,  38  S.  E.  912,  115  Fed.  187.  Execu- 
tion issued,  but  no  levy  could  be  made,  because  the  property  of  the 
water  company  was  in  possession  of  a  receiver,  appointed  in  foreclosure 
proceedings  pending  in  the  United  States  court.  The  plaintiff  in- 
tervened therein,  claiming  that  he  was  entitled  to  be  paid  before  the 
bondholders  by  virtue  of  the  North  Carolina  statute,  which  provided 
that  "judgments  for  corporate  torts"  should  take  priority  over  older 
mortgages. 

It  was  urged,  among  other  things,  by  the  bondholders,  that  the  suit 
in  the  state  court  was  really  for  breach  of  contract,  and  that  entering 
the  judgment  as  for  a  tort  did  not  change  the  nature  of  the  action  so 
as  to  entitle  the  plaintiff  to  the  benefits  of  the  North  Carolina  statute. 

It  was  that  question  alone,  as  to  the  character  of  the  suit  and  judg- 
ment which  was  before  this  court.  What  was  said  in  the  opinion  must 
be  limited,  under  well-known  rules,  to  the  facts  and  issues  involved 
in  the  particular  record  under  investigation.  The  Fisher  Case  could 
not  have  decided  the  primary  question  as  to  the  right  of  the  taxpayer 
to  sue,  for  that  issue  had  been  finally  settled  by  the  State  court.  It 
raised  no  Federal  question  and  was  not  in  issue  on  the  hearing  in  this 
court.  Neither  did  the  Fisher  Case  overrule  the  principle  annouced  in 
Second  Nat.  Bank  v.  Grand  Lodge,  F.  &  A.  M.,  98  U.  S.  124,  25  L. 


LIMITS   OF   CONTRACTUAL   OBLIGATION.  493 

ed.  76,  that  a  third  person  cannot  sue  for  the  breach  of  a  contract  to 
which  he  is  a  stranger  unless  he  is  in  privity  with  the  parties  and  is 
therein  given  a  direct  interest.  The  judgment  of  the  Circuit  Court  of 
Appeals  is  affirmed.1 

9  Cyc.  374  (88)  ;  W.  P.  249  (56)  ;  254  (77)  ;  20  H.  L.  R.  242;  5  Mich.  L. 
R.  362;  19  Green  Bag  129;  Sunderland,  Liability  of  water  companies  for  fire 
losses,  3  Mich.  L.  R.  442;  Kales,  Liability  of  water  companies  for  fire  losses, 
3  Mich.  L.  R.  501. 


GIFFORD,  AS  RECEIVER,  v.  CORRIGAN,  AS  EXECUTOR. 

117  NEW  YORK,  257.— 1889. 

Appeal  by  defendant  Corrigan,  as  executor  of  Cardinal  John  Mc- 
Cloekey,  deceased.  This  action  was  brought  to  foreclose  a  mortgage 
executed  by  defendant,  the  Father  Mathew  Temperance  Society.  De- 
fendant Corrigan,  as  executor,  was  sought  to  be  charged  for  any  de- 
ficiency on  sale  upon  a  covenant  in  a  deed  of  the  mortgaged  premises 
executed  to  his  testator  by  John  McEvoy,  by  the  terms  of  which  the 
grantee  assumed  and  agreed  to  pay  the  mortgage.  The  facts,  so  far 
as  material  to  the  questions  discussed,  are  stated  in  the  opinion. 

FINCH,  J.  .  .  .  Just  after  the  issue  of  a  summons  in  this  action 
and  the  filing  of  a  Us  pendens,  the  executor  of  McEvoy  formally  re- 

i  In  New  York,  although  it  is  held  that  a  contract  between  a  municipal 
corporation  and  a  water  company  for  an  adequate  water  supply  for  the  ex- 
tinguishment of  fires  is  not  for  the  direct  benefit  of  the  property  owner 
(Wainwright  v.  Water  Co.,  78  Hun,  146;  Smith  v.  Water  Co.,  82  Appellate 
Division,  427),  yet  a  contract  between  such  corporations,  fixing  the  rate  at 
which  consumers  shall  be  supplied,  is  for  the  benefit  of  the  individual  resi- 
dent and  he  may  sue  to  enjoin  the  collection  of  a  higher  rate.  (Pond  v. 
Water  Co.,  183  N.  Y.  330). 

In  Adams  v.  Union  R'y,  21  R.  I.  134,  a  town  had  made  a  contract  with 
defendant  whereby  defendant  was  not  to  charge  a  fare  to  exceed  five  cents. 
Plaintiff,  a  passenger,  refused  to  pay  more  than  a  five  cent  fare  and  was 
ejected.  He  sued  in  trespass  for  damages  fop  assault  and  battery.  Upon 
the  point  as  to  whether  the  plaintiff  'could  claim  the  benefit  of  the  contract 
the  court  said:  "The  contract  in  question  was  made  for  the  benefit  of  passen- 
gers using  the  defendant's  cars.  The  town  can  hardly  show  damages  for  its 
breach,  and  therefore,  if  the  people  for  whose  benefit  it  was  made  cannot 
recover  for  its  breach,  no  one  can.  True,  the  town  might  take  steps  to  avoid 
the  contract  and  stop  the  road  for  failure  to  perform  conditions;  but,  in  so 
doing,  it  would  cut  off  the  privileges  of  many  to  redress  the  wrong  of  one. 
This  would  neither  be  a  reasonable  nor  an  adequate  remedy.  It  must  have 
been  intended  to  be  a  contract  for  the  benefit  of  the  public,  made  through 
the  town  as  their  corporate  representative,  upon  which  passengers  could 
rely,  and  for  breach  of  which  they  could  seek  redress;  otherwise,  it  is  a  con- 
tract of  little  obligation  and  force.  Suppose  the  defendant  should  charge 
ten  cents  for  one  ride,  and  should  eject  a  passenger  for  refusing  to  pay  it; 
under  its  contention,  the  passenger  would  be  without  redress." 


494  OPERATION   OF   CONTRACT. 

leased  McCloskey  from  his  covenant,  and  the  latter  pleads  that  release. 
It  asserts  that  the  deed  was  never  delivered,  which  is  found  to  be  an 
untruth;  that  the  assumption  clause  was  inserted  by  mistake  and 
inadvertence,  of  which  there  is  not  a  particle  of  proof;  and  then  in 
further  consideration  of  $1  formally  releases  the  Cardinal  from  his 
covenant.  This  release  was  executed  after  the  knowledge  of  the  deed 
of  McCloskey  and  the  covenant  contained  in  it  had  reached  the  mort- 
gagee; after  the  latter  had  accepted  and  adopted  it  as  made  for  his 
benefit  and  communicated  that  fact  to  the  debtor  by  a  formal  demand 
of  payment;  after  the  mortgagee  had,  for  three  years,  permitted  the 
grantee  to  absorb  and  appropriate  the  rents  and  profits  in  reliance  upon 
the  covenant ;  and  after  he  had  commenced  an  action  for  f orclosure  by 
the  issue  of  a  summons  and  filing  of  a  Us  pendens,  at  a  moment  when 
the  executor  who  released  was  aware  that  trouble  was  approaching, 
but  before  McCloskey  was  actually  served  or  had  appeared  in  the 
action. 

Is  this  release  thus  executed  a  defence  to  this  action?  I  shall  not 
undertake  to  decide,  if,  indeed,  the  question  is  open  (Knickerbocker 
Life  Ins.  Co.  v.  Nelson,  78  N.  Y.  137;  Comley  v.  Dazian,  114  N.  Y. 
161,  167),  whether  in  the  interval  between  the  making  of  the  con- 
tract and  the  acceptance  and  adoption  of  it  by  the  mortgagee  it  was 
or  was  not  revocable  without  his  assent.  However  that  may  be,  the 
only  inquiry  now  presented  is,  whether  it  is  so  revocable  after  it  has 
come  to  the  knowledge  of  the  creditor,  and  he  has  assented  to  it  and 
adopted  it  as  a  security  for  his  own  benefit.  My  judgment  leads  me 
to  answer  that  question  in  the  negative. 

Of  course  it  is  difficult,  if  not  impossible,  to  reason  about  it  without 
recurring  to  Lawrence  v.  Fox,  20  N.  Y.  268,  and  ascertaining  the 
principle  upon  which  its  doctrine  is  founded.  That  is  a  difficult  task, 
especially  for  one  whose  doubts  are  only  dissipated  by  its  authority, 
and  becomes  more  difficult  when  the  number  and  variety  of  its  alleged 
foundations  are  considered.  But  whichever  of  them  may  ultimately 
prevail,  I  am  convinced  that  they  all  involve,  as  a  logical  consequence, 
the  irrevocable  character  of  the  contract  after  the  creditor  has  accepted 
and  adopted  it,  and  in  some  manner  acted  upon  it.  The  prevailing 
opinion  in  that  case  rested  the  creditor's  right  upon  the  broad  proposi- 
tion that  the  promise  was  made  for  his  benefit,  and,  therefore,  he 
might  sue  upon  it,  although  privy  neither  to  the  contract  or  its  con- 
sideration. That  view  of  it  necessarily  involves  an  acquisition  at  some 
moment  of  time  of  the  right  of  action  which  he  is  permitted  to  enforce. 
If  it  be  possible  to  say  that  he  does  not  acquire  it  at  the  moment  when 
the  promise  for  his  benefit  is  made,  it  must  be  that  he  obtains  it  when 
it  has  come  to  his  knowledge  and  he  has  assented  to  and  acted  upon 
it.  For  he  may  sue ;  that  is  decided  and  conceded.  If  he  may  sue,  he 
must,  at  that  moment,  have  a  vested  right  of  action.  If  it  was  not 


LIMITS   OF   CONTRACTUAL   OBLIGATION.  495 

obtained  earlier  it  must  have  vested  in  him  at  the  moment  when  his 
action  was  commenced,  so  that  the  right  and  the  remedy  were  born 
at  the  same  instant.  But  there  is  no  especial  magic  in  a  lawsuit. 
If  it  serves  for  the  first  time  to  originate  the  right  which  it  seeks  to 
enforce,  it  can  only  be  because  the  act  of  bringing  it  shows  unequivo- 
cally that  the  promise  of  the  grantee  has  come  to  the  knowledge  of  the 
plaintiff,  that  the  latter  has  accepted  and  adopted  it,  that  he  intends 
to  enforce  it  for  his  own  benefit,  and  gives  notice  of  that  intention  to 
the  adversary.  From  that  moment  he  must  be  assumed  to  act  or  omit 
to  act  in  reliance  upon  it.  But  if  all  these  things  occur  before  a  suit 
commenced,  why  do  they  not  equally  vest  the  right  of  action  in  the 
assignee?  What  more  does  the  mere  lawsuit  accomplish?  And  so 
the  contract  between  grantor  and  grantee,  if  revocable  earlier,  ceases 
to  be  so  when  by  his  assent  to  it  and  adoption  of  it  the  creditor  brings 
himself  into  privity  with  it  and  elects  to  avail  himself  of  it,  and  must 
be  assumed  to  have  governed  his  conduct  accordingly.  I  see  no  escape 
from  that  conclusion.  .  .  . 

Judgment  affirmed.1 

9  Cyc.  386   (29-30)  ;  W.  P.  274   (55)  ;   16  H.  L.  R.  523. 


BARNES  v.  HEKLA  FIRE  INSURANCE  CO. 

56  MINNESOTA,  38.— 1893. 

VANDERBURGH,  J.  The  plaintiff  demurred  to  the  second  and  third 
defences  set  up  in  the  defendant's  answer,  and  this  appeal  is  from  the 
order  sustaining  the  demurrer. 

The  action  is  brought  upon  a  policy  of  insurance  issued  by  the  de- 
fendant to  the  plaintiff  for  a  loss  covered  thereby.  It  is  alleged,  by 
way  of  defence,  that  subsequent  to  the  date  of  plaintiff's  policy  the  St. 
Paul  German  Insurance  Company,  a  corporation  lawfully  doing  busi- 
ness in  this  State,  had  "reinsured  the  said  policy,  and  promised  and 
agreed  with  the  said  plaintiff  and  this  defendant  to  pay  the  plaintiff  any 
loss  which  she  might  suffer  under  said  policy,  and  said  agreement  was 
in  full  force  and  effect  at  the  time  of  the  pretended  occurrence  of  the 
fire  described  in  the  complaint,  if  any  such  fire  did  occur,  and  that  said 
plaintiff  had  always  full  notice  and  knowledge  thereof."  It  further 

i  In  Bay  v.  Williams,  112  Ills.  91,  the  court  says:  "The  principle  upon 
which  this  court  has  acted  is  that  such  a  promise  invests  the  person  for 
whose  use  it  is  made  with  an  immediate  interest  and  right,  as  though  the 
promise  had  been  made  to  him.  This  being  true,  the  person  who  procures 
the  promise  has  no  legal  right  to  release  or  discharge  the  person  who  made 
the  promise,  from  his  liability  to  the  beneficiary.  Having  the  right,  it  is 
under  the  sole  control  of  the  person  for  whose  benefit  it  is  made — as  much 
so  as  if  made  directly  to  him." 


496  OPERATION   OF   CONTRACT. 

appears  that  thereafter,  and  before  the  commencement  of  this  action, 
the  St.  Paul  German  Insurance  Company  duly  made  an  assignment 
under  the  insolvency  laws  of  the  State,  and  that  the  plaintiff  has  duly 
filed  and  proved  her  claim  in  the  insolvency  proceedings  for  the  loss  in- 
demnified against  by  defendant,  and  so  assumed  by  the  German  In- 
surance Company.  It  is  claimed  by  the  defendant  in  this  action  that, 
by  electing  to  proceed  against  the  estate  of  the  German  Insurance 
Company,  the  plaintiff  has  effectually  waived  her  remedy  against  the- 
defendant  upon  the  policy  sued  on. 

It  will  be  conceded  that  the  agreement  between  the  two  companies 
set  out  in  the  answer  is  not  merely  a  contract  of  reinsurance,  but  also 
to  pay,  and  assume  the  payment  of,  losses  of  parties  indemnified  by 
policies  issued  by  the  defendant  company  reinsured.  Eeinsurance  is 
a  mere  contract  of  indemnity,  in  which  an  insurer  reinsures  risks  in 
another  company.  In  such  a  contract  the  policy  holders  have  no  con- 
cern, are  not  the  parties  for  whose  benefit  the  contract  of  reinsurance 
is  made,  and  they  cannot,  therefore,  sue  thereon.  But  the  agreement 
alleged  in  this  case  is  not  a  mere  reinsurance  of  the  risks  by  the  rein- 
surer, but  it  embraces  also  an  express  agreement  to  assume  and  pay 
losses  of  the  policy  holder,  and  is  therefore  an  agreement  upon  which 
he  is  entitled  to  maintain  an  action  directly  against  the  reinsurer. 
Johannes  v.  Phenix  Ins.  Co.,  66  Wis.  50  (27  N.  W.  414). 

This  is  not,  however,  a  case  where  the  insurer  is  put  to  an  election 
between  his  remedies  against  the  two  companies. 

Unless  there  was  a  substitution  of  debtors,  in  the  nature  of  a  nova- 
tion, between  the  three  parties,  upon  the  plaintiff's  consent  to  the  new 
agreement  the  plaintiff  has  not  waived  or  lost  her  right  of  action  against 
the  defendant.  A  creditor  is  put  to  an  election  only  where  his  remedies 
are  inconsistent,  and  not  where  they  are  consistent  and  concurrent. 
In  the  latter  case  a  party  may  prosecute  as  many  as  he  has,  as  in  the 
case  of  several  debtors.  And  so,  if,  in  this  instance,  the  remedy  against 
the  insolvent  company,  as  respects  the  plaintiff,  was  merely  cumula- 
tive, there  is  no  reason  why  she  may  not  pursue  either  or  both.  As 
between  the  two  companies,  the  defendant  occupies  no  better  position 
than  a  surety.  It  is  not  like  the  case  of  a  former  suit  pending  be- 
tween the  same  parties.  She  may  have  an  action  against  each  at  the 
same  time,  but  only  one  satisfaction;  and  to  this  end  the  court  may 
interpose  by  a  stay  when  found  necessary.  But  an  action  against  the 
party  primarily  or  originally  liable  in  such  cases  may  be  necessary,  in 
order  to  save  rights  under  the  statute  of  limitations,  or  for  like  rea- 
sons. 

The  new  agreement  between  the  companies  referred  to,  which  inured 
to  plaintiff's  benefit,  lacks  the  essential  elements  of  novation. 

It  is  not  alleged  that  it  was  mutually  understood  or  agreed  between 
the  two  companies  that  the  liability  of  the  defendant  should  be  dis- 


LIMITS   OF    CONTRACTUAL   OBLIGATION.  497 

charged,  and  the  new  promisor  should  be  substituted  and  accepted  as 
plaintiff's  debtor  in  the  place  of  the  defendant,  or  that  plaintiff  ever 
assented  to  or  adopted  any  such  thing. 

In  some  few  cases — notably  in  Ehode  Island — it  is  held  that  such 
an  agreement  necessarily  implies  an  intention  to  substitute  the  new  for 
the  original  debtor,  and  that  the  creditor,  in  assenting  to  it,  adopts  it 
as  a  substitutional  agreement.  Urquhart  v.  Brayton,  12  R.  I.  172; 
Wood  v.  Moriarty,  15  E.  I.  522  (9  Atl.  427).  But  this,  we  think,  is 
importing  a  stipulation  into  the  agreement  by  construction  which  the 
parties  have  not  made.  It  is  frequently  the  case  that  the  creditor  con- 
sents to  the  arrangement  as  a  favor,  or  for  the  convenience  of  his 
debtor ;  and  we  apprehend  it  would  be  a  surprise  to  the  parties,  as  well 
as  an  injustice,  in  many  cases,  if  it  were  held  to  operate  as  a  release 
of  the  original  liability ;  and  therefore  it  should  distinctly  appear,  from 
the  express  terms  of  the  agreement,  or  as  a  necessary  inference  from 
the  situation  of  the  parties,  and  the  special  circumstances  of  the  case, 
that  such  was  the  intention  and  understanding  of  the  parties,  of  which 
the  creditor  was  chargeable  with  notice,  and  this  is  the  generally  ac- 
cepted doctrine  of  the  courts.  11  Amer.  &  Eng.  Enc.  Law,  889-890. 

In  the  early  case  of  Farley  v.  Cleveland,  4  Cow.  432,  in  which  this 
remedy  of  a  creditor,  upon  a  promise  for  his  benefit  made  to  his  debtor, 
upon  a  consideration  moving  from  the  latter,  is  elaborately  considered, 
the  fact  of  the  subsisting  liability  of  the  original  debtor  is  recognized, 
and  held  no  obstacle  to  the  right  of  recovery  by  the  third  party  creditor, 
and  such  continued  liability  is  generally  assumed  by  the  courts. 

The  exact  ground  upon  which  the  direct  liability  to  the  creditor  in 
this  class  of  cases  should  be  placed,  appears  to  be  left  in  doubt  by  the 
cases.  It  is  called  the  "American  doctrine,"  because  peculiar  to  the 
courts  of  this  country,  though  all  do  not  assent  to  it — notably  those 
of  Massachusetts. 

It  is  an  equitable  rule,  adopted  for  convenience,  and  to  avoid  circuity 
of  action,  and  the  formality  of  an  assignment  by  the  original  debtor  of 
the  new  agreement  with  him,  and  is  strictly  in  accordance  with  the  in- 
tention of  the  parties  to  the  contract  in  creating  a  liability  in  favor 
of  a  third  party  creditor.  Gifford  v.  Corrigan,  117  N.  Y.  264-265 
(22  N".  E.  756) .  The  same  rule  of  procedure  is  held  applicable,  though 
not  uniformly,  where  the  grantee  of  a  mortgagor  assumes  in  his  deed 
to  pay  off  the  incumbrance.  The  mortgagee  may  proceed  by  action 
directly  against  the  grantee,  but  the  mortgagor  still  remains  liable, 
and  is  held  to  occupy  the  relation  of  surety  for  the  grantee,  who,  as 
between  them,  becomes  the  principal  debtor.  Thorp  v.  Keokuk  Coal 
Co.,  48  N.  Y.  257-258;  Klapworth  v.  Dressier,  78  Am.  Dec.  76-77, 
note. 

There  is  no  double  liability.  There  is  no  dividend  as  yet  shown  in 
the  insolvency  proceedings,  and  there  is  of  course  nothing  to  be  credited 


498  OPERATION   OF   CONTRACT. 

upon  the  plaintiff's  claim.  The  receipt  of  a  dividend  would  only 
operate  as  a  pro  tanto  satisfaction;  and  if  defendant  is  required  to 
pay  before  the  dividend,  it  will  be  entitled  to  it,  and  may  be  subrogated 
to  the  rights  of  plaintiff  therein,  so  that  there  need  be  no  embarrass- 
ment in  adjusting  the  rights  of  the  parties. 

Other  questions  in  the  case  do  not,  we  think,  demand  any  discussion. 

Order  affirmed.1 

9  Cyc.  380  (9)  ;  W.  P.  271   (46^7). 

i  Contracts  under  seal. — "It  is  settled  in  this  State  that  an  agreement  made 
on  a  valid  consideration,  by  one  with  another,  to  pay  money  to  a  third,  can 
be  enforced  by  the  third  in  his  own  name.  Lawrence  v.  Fox,  20  N.  Y.  268; 
Secor  v.  Lord,  3  Keyes,  525.  And  though  a  distinction  has  sometimes  been 
made  in  favor  of  a  simple  contract  (Hall  v.  Marston,  17  Mass.  575;  D.  & 
H.  Canal  Co.  v.  W.  Co.  Bank,  4  Den.  97),  it  is  now  held  that  when  the 
agreement  is  in  writing,  and  under  seal,  the  same  rule  prevails.  Van  Schaick 
v.  Third  Ave.  R.  R.,  38  N.  Y.  346;  Ricard  v.  Sanderson,  2  Hand,  179."— Cos- 
ter v.  City  of  Albany,  43  N.  Y.  399.  But  see  Case  v.  Case,  203  N.  Y.  263. 

Contra,  Fairchild  v.  Mutual  Life  Assoc.,  51  Vt.  613,  an  action  by  a  bene- 
ficiary upon  a  life  insurance  policy  under  seal.  The  court  said:  "In  de- 
ciding who  is  the  proper  party  to  bring  covenant  broken  on  that  policy,  it  is 
not  material  that  the  covenant  is  for  the  benefit  of  a  third  person.  The 
law  is  well  settled  that  upon  instruments  under  seal  suit  must  be  brought 
by  the  covenantee;  and  although  the  instrument  may  be  expressed  to  be  for 
the  benefit  of  a  third  person,  there  is  not  sufficient  privity  in  law  between 
such  third  person  and  the  covenantor  to  enable  him  to  maintain  an  action." 
See  9  Cyc.  385-386  (25-27)  ;  W.  P.  276  (61)  ;  25  H.  L.  R.  386. 

Right  of  beneficiary  derivative. — "It  is  said  that  the  action  can  be  sus- 
tained upon  the  doctrine  of  Lawrence  v.  Fox,  20  N.  Y.  268,  and  kindred  cases. 
But  I  know. of  no  authority  to  support  the  proposition  that  a  person  not  a 
party  to  the  promise,  but  for  whose  benefit  the  promise  is  made,  can  main- 
tain an  action  to  enforce  the  promise  where  the  promise  is  void  as  between 
the  promisor  and  promisee,  for  fraud,  or  want  of  consideration,  or  failure 
of  consideration.  It  would  be  strange,  I  think,  if  such  an  adjudication 
should  be  found.  The  party  suing  upon  the  promise  in  cases  like  Lawrence 
v.  Fox,  is  in  truth  asserting  a  derivative  right.  .  .  .  There  is  no  justice  in 
holding  that  an  action  on  such  a  promise  is  not  subject  to  the  equities  be- 
tween the  original  parties  springing  out  of  the  transaction  or  contract  be- 
tween them.  It  may  be  true  that  the  promise  cannot  be  released  or  dis- 
charged by  the  promisee,  after  the  rights  of  the  party  for  whose  benefit  it  is 
said  to  have  been  made  have  attached.  But  it  would  be  contrary  to  justice 
or  good  sense  to  hold  that  one  who  comes  in  by  what  Allen,  J.,  in  Vrooman  v. 
Turner,  calls  'the  privity  of  substitution,'  should  acquire  a  better  right 
against  the  promisor  than  the  promisee  himself  had." — Dunning  v.  Leavitt, 
85  N.  Y.  30. 


CHAPTEE  II. 

THE  ASSIGNMENT  OF  CONTRACT. 

Assignment  by  act  of  the  parties. 

(t.)  Assignment  of  liabilities. 

ARKANSAS  VALLEY  SMELTING  CO.  v.  BELDEN 
MINING  CO. 

127  UNITED  STATES,  379.— 1888. 

Action  for  damages  for  breach  of  contract.  Demurrer  to  complaint 
sustained.  Plaintiff  brings  error. 

Defendants  contracted  with  Billing  and  Eilers  to  sell  and  deliver  to 
them  10,000  tons  of  carbonated  lead  ore  at  the  rate  of  50  tons  a  day, 
on  condition  that  "all  ore  so  delivered  shall  at  once,  upon  the  delivery 
thereof,  become  the  property  of  the  second  party."  The  ore  after 
delivery  was  to  be  sampled  and  assayed  in  lots  of  about  100  tons  each, 
the  price  to  be  fixed  in  accordance  with  the  state  of  the  New  York 
market  on  the  day  of  the  delivery  of  samples.  Defendants  delivered 
some  ore  to  Billing  and  Eilers  under  this  contract,  when  the  firm  was 
dissolved  and  the  business,  together  with  the  above  contract,  assigned 
to  G.  Billing,  to  whom  defendants  continued  to  deliver  ore.  The  busi- 
ness, together  with  the  above  contract,  was  then  assigned  by  G.  Bill- 
ing to  plaintiff,  who  notified  defendant  of  the  fact.  Defendant  refused 
to  deliver  to  plaintiff  and  notified  plaintiff  that  it  considered  the  con- 
tract canceled  and  annulled. 

GRAY,  J.  If  the  assignment  to  the  plaintiff  of  the  contract  sued  on 
was  valid,  the  plaintiff  is  the  real  party  in  interest,  and  as  such  entitled, 
under  the  practice  in  Colorado,  to  maintain  this  action  in  its  own 
name.  Rev.  Stat.  §  914 ;  Colorado  Code  of  Civil  Procedure,  §  3 ;  Al- 
bany &  Rensselaer  Co.  v.  Lundberg,  121  U.  S.  451.  The  vital  ques- 
tion in  the  case,  therefore,  is  whether  the  contract  between  the 
defendant  and  Billing  and  Eilers  was  assignable  by  the  latter,  under 
the  circumstances  stated  in  the  complaint. 

At  the  present  day,  no  doubt,  an  agreement  to  pay  money,  or  to 
deliver  goods,  may  be  assigned  by  the  person  to  whom  the  money  is  to 
be  paid  or  the  goods  are  to  be  delivered,  if  there  is  nothing  in  the  terms 
of  the  contract,  whether  by  requiring  something  to  be  afterwards  done 
by  him,  or  by  some  other  stipulation,  which  manifests  the  intention  of 
the  parties  that  it  shall  not  be  assignable. 

499 


500  OPERATION   OF   CONTRACT. 

But  every  one  has  a  right  to  select  and  determine  with  whom  he  will 
contract,  and  cannot  have  another  person  thrust  upon  him  without 
his  consent.  In  the  familiar  phrase  of  Lord  Denman,  "you  have  the 
right  to  the  benefit  you  anticipate  from  the  character,  credit,  and  sub- 
stance of  the  party  with  whom  you  contract."  Humble  v.  Hunter,  12 
Q,  B.  310,  317;  Winchester  v.  Howard,  97  Mass.  303,  305;  Boston  Ice 
Co.  v.  Potter,  123  Mass.  28;  King  v.  Batterson,  13  R.  I.  117,  120; 
Lansden  v.  McCarthy,  45  Missouri,  106.  The  rule  upon  this  subject,  as 
applicable  to  the  case  at  bar,  is  well  expressed  in  a  recent  English 
treatise.  "Eights  arising  out  of  contract  cannot  be  transferred  if  they 
are  coupled  with  liabilities,  or  if  they  involve  a  relation  of  personal 
confidence  such  that  the  party  whose  agreement  conferred  those  rights 
must  have  intended  them  to  be  exercised  only  by  him  in  whom  he  ac- 
tually confided."  Pollock  on  Contracts  (4th  ed.),  425. 

The  contract  here  sued  on  was  one  by  which  the  defendant  agreed  to 
deliver  ten  thousand  tons  of  lead  ore  from  its  mines  to  Billing  and 
Eilers  at  their  smelting  works.  The  ore  was  to  be  delivered  at  the 
rate  of  fifty  tons  a  day,  and  it  was  expressly  agreed  that  it  should 
become  the  property  of  Billing  and  Eilers  as  soon  as  delivered.  The 
price  was  not  fixed  by  the  contract,  or  payable  upon  the  delivery  of  the 
ore.  But  as  often  as  a  hundred  tons  of  ore  had  been  delivered,  the  ore 
was  to  be  assayed  by  the  parties  or  one  of  them,  and,  if  they  could  not 
agree,  by  an  umpire;  and  it  was  only  after  all  this  had  been  done, 
and  according  to  the  result  of  the  assay,  and  the  proportions  of  lead, 
silver,  silica,  and  iron,  thereby  proved  to  be  in  the  ore,  that  the  price 
was  to  be  ascertained  and  paid.  During  the  time  that  must  elapse 
between  the  delivery  of  the  ore  and  the  ascertainment  and  payment  of 
the  price,  the  defendant  had  no  security  for  its  payment,  except  in  the 
character  and  solvency  of  Billing  and  Eilers.  The  defendant,  there- 
fore, could  not  be  compelled  to  accept  the  liability  of  any  other  person 
or  corporation  as  a  substitute  for  the  liability  of  those  with  whom  it 
had  contracted. 

The  fact  that  upon  the  dissolution  of  the  firm  of  Billing  and  Eilers, 
and  the  transfer  by  Eilers  to  Billing  of  this  contract,  together  with 
the  smelting  works  and  business  of  the  partnership,  the  defendant  con- 
tinued to  deliver  ore  to  Billing  according  to  the  contract,  did  not 
oblige  the  defendant  to  deliver  ore  to  a  stranger,  to  whom  Billing  had 
undertaken,  without  the  defendant's  consent,  to  assign  the  contract. 
The  change  in  a  partnership  by  the  coming  in  or  the  withdrawal  of 
a  partner  might  perhaps  be  held  to  be  within  the  contemplation  of 
the  parties  originally  contracting ;  but,  however  that  may  be,  an  assent 
to  such  a  change  in  the  one  party  cannot  estop  the  other  to  deny 
the  validity  of  a  subsequent  assignment  of  the  whole  contract  to  a 
stranger.  The  technical  rule  of  law,  recognized  in  Murray  v.  Harway 
(56  N.  Y.  337),  cited  for  the  plaintiff,  by  which  a  lessee's  express 


ASSIGNMENT   OF   CONTRACT.  501 

covenant  not  to  assign  has  been  held  to  be  wholly  determined  by  one 
assignment  with  the  lessor's  consent,  has  no  application  to  this  case. 

The  cause  of  action  set  forth  in  the  complaint  is  not  for  any 
failure  to  deliver  ore  to  Billing  before  his  assignment  to  the  plaintiff 
(which  might  perhaps  be  an  assignable  chose  in  action),  but  it  is  for 
a  refusal  to  deliver  ore  to  the  plaintiff  since  this  assignment.  Perform- 
ance and  readiness  to  perform  by  the  plaintiff  and  its  assignors, 
during  the  periods  for  which  they  respectively  held  the  contract, 
is  all  that  is  alleged;  there  is  no  allegation  that  Billing  is  ready  to 
pay  for  any  ore  delivered  to  the  plaintiff.  In  short,  the  plaintiff 
undertakes  to  step  into  the  shoes  of  Billing,  and  to  substitute  its 
liability  for  his.  The  defendant  had  a  perfect  right  to  decline  to 
assent  to  this,  and  to  refuse  to  recognize  a  party,  with  whom  it  had 
never  contracted,  as  entitled  to  demand  further  deliveries  of  ore. 

The  cases  cited  in  the  careful  brief  of  the  plaintiff's  counsel,  as 
tending  to  support  this  action,  are  distinguishable  from  the  case  at 
bar,  and  the  principal  ones  may  be  classified  as  follows: 

First.  Cases  of  agreements  to  sell  and  deliver  goods  for  a  fixed 
price,  payable  in  cash  on  delivery,  in  which  the  owner  would  re- 
ceive the  price  at  the  time  of  parting  with  his  property,  nothing  further 
would  remain  to  be  done  by  the  purchaser,  and  the  rights  of  the 
seller  could  not  be  affected  by  the  question  whether  the  price  was 
paid  by  the  person  with  whom  he  originally  contracted  or  by  an 
assignee.  Sears  v.  Conover,  3  Keyes,  113,  and  4  Abbot  (N.  Y.  App.), 
179;  Tyler  v.  Barrows,  6  Robertson  (N.  Y.),  104. 

Second.  Cases  upon  the  question  how  far  executors  succeed  to 
rights  and  liabilities  under  a  contract  of  their  testator.  Hambly  v. 
Trott,  Cowper,  371,  375;  Wentworth  v.  Cock,  10  Ad.  &  El.  42,  and 
2  Per.  &  Dav.  251;  Williams  on  Executors  (7th  ed.),  1723-1725. 
Assignment  by  operation  of  law,  as  in  the  case  of  an  executor,  is 
quite  different  from  assignment  by  act  of  the  party;  and  the  one 
might  be  held  to  have  been  in  the  contemplation  of  the  parties  to 
this  contract,  although  the  other  was  not.  A  lease,  for  instance, 
even  if  containing  an  express  covenant  against  assignment  by  the 
lessee,  passes  to  his  executor.  And  it  is  by  no  means  clear  that  an 
executor  would  be  bound  to  perform,  or  would  be  entitled  to  the 
benefit  of,  such  a  contract  as  that  now  in  question.  Dickinson  v. 
Calahan,  19  Penn.  St.  227. 

Third.  Cases  of  assignments  by  contractors  for  public  works,  in 
which  the  contracts,  and  the  statutes  under  which  they  were  made, 
were  held  to  permit  all  persons  to  bid  for  the  contracts,  and  to  execute 
them  through  third  persons.  Taylor  v.  Palmer,  31  California,  240, 
247 ;  St.  Louis  v.  Clemens,  42  Missouri,  69 ;  Philadelphia  v.  Lock- 
hardt,  73  Penn.  St.  211 ;  Devlin  v.  New  York,  63  N.  Y.  8. 

Fourth.  Other  cases  of  contracts  assigned  by  the  party  who  was 


602  OPERATION   OF   CONTRACT. 

to  do  certain  work,  not  by  the  party  who  was  to  pay  for  it,  and  in 
which  the  question  was  whether  the  work  was  of  such  a  nature 
that  it  was  intended  to  be  performed  by  the  original  contractor  only. 
Eobson  v.  Drummond,  2  B.  &  Ad.  303;  British  Waggon  Co.  v.  Lea, 
5  Q.  B.  D.  149 ;  Parsons  v.  Woodward,  2  Zabriskie,  196. 

Without  considering  whether  all  the  cases  cited  were  well  decided, 
it  is  sufficient  to  say  that  none  of  them  can  control  the  decision  of 
the  present  case.  Judgment  affirmed.1 

4  Cyc.  22-23  (42-44);  20  H.  L.  R.  423;  4  C.  L.  R.  70;  Woodward,  As- 
signability  of  contract,  18  H.  L.  R.  23. 


COCHRAN,  D.  J.,  IN  AMERICAN  BONDING  CO.  v.  BALTIMORE 
&  0.  S.  W.  R.  R. 

124  FEDERAL  REPORTER,  866.— 1903. 

In  Pollock  on  Contracts,  p.  201,  it  is  stated  that  the  origin  of 
the  rule  that  the  benefit  of  a  contract — i.  e.,  the  right  of  one  party 
thereto  to  have  the  other  perform  an  obligation  on  his  part  arising 
therefrom — could  not  be  assigned  at  common  law,  so  as  to  enable 
the  assignee  to  sue  in  his  own  name  for  a  breach  thereof,  was  attributed 
by  Coke  to  the  "wisdom  and  policy  of  the  founders  of  our  law"  in 
discouraging  maintenance  and  litigation.  In  opposition  to  this  the 
author  states : 

"But  there  can  be  little  or  no  doubt  that  it  was  in  truth  a  logical  conse- 
quence of  the  primitive  view  of  a  contract  as  creating  a  strictly  personal 
obligation  between  the  creditor  and  the  debtor." 

According  to  this  conception  of  a  contract,  the  relation  created  by 
it  cannot  be  severed  by  either  party  thereto,  the  creditor  or  debtor, 
without  the  consent  of  the  other.  It  is  as  impossible  for  either  to 
substitute  another  in  his  place  as  it  is  for  him  to  change  any  other 
term  of  the  contract.  This  primitive  view  of  a  contract  prevails  no 
longer.  The  treatment  by  courts  of  equity  of  such  assignments,  the 
judicial  cognizance  by  courts  of  law  of  the  usage  of  merchants  in  rela- 
tion to  bills  of  exchange  rendering  it  a  part  of  the  common  law,  the 

i  "A  contract  to  pay  money  may  doubtless  be  assigned  by  the  person  to 
whom  the  money  is  payable,  if  there  is  nothing  in  the  terms  of  the  contract 
which  manifests  the  intention  of  the  parties  to  it  that  it  shall  not  be  as- 
signable. But  where  rights  arising  out  of  contract  are  coupled  with  obli- 
gations to  be  performed  by  the  contractor,  and  involve  such  a  relation  of 
personal  confidence  that  it  must  have  been  intended  that  the  rights  should 
be  exercised  and  the  obligations  performed  by  him  alone,  the  contract,  in- 
cluding both  his  rights  and  his  obligations,  cannot  be  assigned  without  the 
consent  of  the  other  party  to  the  original  contract." — Delaware  County  v. 
Diebold  Co.,  133  U.  S.  473. 


ASSIGNMENT   OF   CONTRACT.  503 

passage  of  statutes  making  certain  contracts  assignable,  the  construc- 
tion placed  upon  the  statutes  enacted  in  numerous  jurisdictions  re- 
quiring actions  to  be  brought  in  the  name  of  the  real  party  in  interest, 
and  the  conception  of  such  rights  as  property  and  the  possession 
thereof  as  ownership,  account  for  its  passing  away.  But,  notwith- 
standing this,  it  is  still  possible  that  a  certain  contract  may  create  such 
a  relation  between  the  parties  thereto — a  relation  that  cannot  be 
severed  by  the  creditor  assigning  to  another  his  right  to  have  the  debtor 
perform  his  obligation.  It  will  do  so  if  it  contains  an  express  stipula- 
tion prohibiting  such  an  assignment.  In  the  case  of  Devlin  v. 
Mayor,  etc.,  of  New  York,  63  N.  Y.  8,  Judge  Allen  said :  "Parties 
may,  in  terms,  prohibit  the  assignment  of  any  contract,  and  declare 
that  neither  personal  representatives  nor  assignees  shall  succeed  to  any 
right  in  virtue  of  it,  or  be  bound  by  its  obligations."  .... 

It  will  also  do  it  if  it  is  a  bilateral  contract,  and  the  counter  obliga- 
tion on  the  part  of  the  creditor  to  the  debtor  is  of  such  a  nature  that 
the  reasonable  inference  therefrom  is  that  it  was  the  intention  of  the 
parties  that  it  should  be  performed  by  the  creditor,  and  no  one  else. 
Perhaps  a  more  careful  statement  would  be  that  in  such  a  case  the 
right  cannot  be  assigned  so  as  to  compel  the  debtor  to  accept  per- 
formance of  that  obligation  from  the  assignee,  and,  if  an  attempt  is 
made  to  so  assign  it,  the  assignment  will  be  invalid.  It  is  so  stated 
in  Bishop  on  Contracts,  §  1182,  where  he  says:  "An  agreement 
involving  personal  trust  in  the  party,  or  to  be  carried  out  by  his 
personal  skill,  cannot  be  so  assigned  as  to  compel  the  other  party  to 
accept  performance  by  the  assignee,  and  pay  him  therefor."  If  the 
rule  here  goes  no  further  than  this,  there  is  nothing  in  the  existence 
of  such  a  counter  obligation  to  prevent  an  assignment  by  a  creditor 
of  his  right  after  he  has  performed  that  obligation,  and  thus  perfected 
his  right,  or,  even  before,  if  no  attempt  is  made  to  shift  the  duty  of 
performing  it  from  himself  to  the  assignee.  Instances  of  where  the 
counter  obligation  involved  personal  skill  on  the  part  of  the  creditor, 
and  because  of  this  it  was  held  that  the  reasonable  inference  was 
that  it  was  the  intention  of  the  parties  that  it  be  performed  by  him 
alone,  and  therefore  he  could  not  assign  his  right  to  another  so  as 
to  compel  the  debtor  to  accept  performance  from  the  assignee,  may 
be  found  in  the  recent  cases  of  Sloan  v.  Williams,  138  111.  43,  27  N".  E. 
531,  12  L.  R.  A.  496;  Edison  v.  Babka,  111  Mich.  235,  69  N".  W. 
499 ;  Eastern  Advertising  Co.  v.  McGaw,  89  Md.  72,  42  Atl.  923.  An 
instance  of  where  it  involved  personal  credit,  and  the  same  signifi- 
cance and  effect  was  given  to  it,  may  be  found  in  the  case  of  Arkansas 
Valley  Smelting  Co.  v.  Belding  Mining  Co.  (127  U.  S.  379). 

4  Cyc.  22-23    (42-44). 


504  OPERATION    OF    CONTRACT. 


EOCHESTER  LANTERN  CO.  v.  STILES  AND  PARKER 

PRESS  CO. 

135  NEW  YORK,  209.— 1892. 

Action  for  damages  for  alleged  breach  of  contract.  Judgment  for 
plaintiff  affirmed  at  General  Term.  Defendant  appeals. 

EARL,  C.  J.  .  .  .  In  disposing  of  this  case,  we  must  take  the  facts 
as  found  by  the  referee,  and  they  are  as  follows : 

On  the  19th  day  of  March,  1887,  James  H.  Kelly  entered  into  a  contract 
with  the  defendant  whereby  it  was  to  make  and  deliver  to  him  certain  dies 
to  be  used  by  him  in  the  manufacture  of  lanterns;  that  it  agreed  to  make 
and  deliver  the  dies  within  a  reasonable  time,  that  is,  within  five  weeks 
from  the  time  of  the  order,  to  manufacture  and  deliver  the  same;  that  the 
plaintiff  was  incorporated  shortly  prior  to  the  27th  day  of  August,  1887, 
and  on  the  twenty-ninth  day  of  that  month  Kelly  duly  assigned  to  the  plain- 
tiff his  contract  with  the  defendant,  and  all  his  rights  and  claims  thereunder; 
that  the  plaintiff  failed  to  establish  by  evidence  that  at  or  prior  to  the  time 
of  making  the  contract,  the  defendant  was  informed  that  any  corporation 
was  intended  to  be  organized,  or  that  the  contract  was  made  for  the  use 
or  benefit  of  any  other  person  or  corporation  than  Kelly;  that  the  first  noti- 
fication received  by  the  defendant  that  the  plaintiff  had  any  interest  in 
the  contract,  or  that  such  a  corporation  as  the  plaintiff  existed,  so  far  as 
was  proven  upon  the  trial,  was  given  to  it  by  a  letter  dated  March  22,  1888, 
stad  signed  "Rochester  Lantern  Company,  by  James  H.  Kelly,  President"; 
that  from  time  to  time  after  making  the  contract  samples  were  sent  by 
Kelly  to  the  defendant  and  dies  were  shipped  to  him  by  the  defendant;  that 
the  last  sample  for  the  last  die  to  be  made  was  sent  by  Kelly  to  the  de- 
fendant on  the  29th  day  of  July,  1887;  that  by  the  conduct  of  Kelly  and  the 
defendant  performance  of  the  contract  within  the  time  originally  stipu- 
lated was  waived,  and  the  contract  except  as  to  time  of  performance  was 
regarded  as  still  in  force  at  the  date  of  the  assignment  thereof;  that  a 
reasonable  time  in  which  the  defendant  could  have  carried  out  and  per- 
formed the  contract  after  August  29,  1889,  was  five  weeks,  which  expired 
October  third;  that  Kelly  was  a  manufacturer  of  lanterns  in  Rochester  and 
required  the  dies  for  the  manufacture  of  lanterns  which  he  designed  to  put 
upon  the  market  as  the  defendant  was  informed  and  well  knew,  and  that  the 
plaintiff  after  its  incorporation  succeeded  him  in  the  business  of  manufactur- 
ing lanterns;  that  the  defendant  failed  to  carry  out  the  contract  and  to 
furnish  dies  as  thereby  required ;  that  the  plaintiff,  for  the  sole  purpose  of 
carrying  on  the  business  of  manufacturing  the  lanterns  which  it  was  intended 
that  these  dies  should  make,  entered  into  certain  obligations  and  incurred 
certain  liabilities  as  follows:  It  paid  one  Butts  for  rent  of  room  from  Oc- 
tober 3  to  November  1,  1887,  the  sum  of  $31.86;  it  paid  one  Broad,  an  em- 
ploye", for  his  wages  from  October  3,  1887,  to  March  24,  1888,  the  sum  of 
$250;  and  one  Briston,  an  employe1,  for  his  wages  during  the  same  time  the 
same  sum;  it  paid  to  Crouch  &  Sons  for  the  rent  of  premises  from  November 
1,  1887,  to  March  24,  1888,  $278.46;  that  by  reason  of  defendant's  failure  to 
perform  the  contract  as  agreed  by  it  the  plaintiff  was  unable  to  manufac- 
ture any  lanterns  for  the  market  until  after  the  commencement  of  this  action 
on  the  24th  day  of  March,  1888,  and  that  the  plaintiff  by  reason  of  such 
failure  sustained  loss  in  the  sums  above  mentioned  which  it  actually  paid, 


ASSIGNMENT   OF    CONTRACT.  505 

and  the  referee  awarded  judgment  for  the  amount  of  the  items  above  speci- 
fied. 

We  do  not  think  these  facts  sufficient  to  justify  the  recovery  of  the 
items  of  damages  specified.  There  had  been  no  breach  of  the  contract 
at  the  time  of  the  assignment  thereof  to  the  plaintiff,  and  at  that 
time  Kelly  had  no  claim  against  the  defendant  for  damages.  After 
the  assignment  Kelly  had  no  interest  in  the  contract  and  the  defendant 
owed  him  no  duty  and  could  come  under  no  obligation  to  him  for 
damages  on  account  of  a  breach  of  the  contract  by  it. 

There  is  no  doubt  that  Kelly  could  assign  this  contract  as  he 
could  have  assigned  any  other  chose  in  action,  and  by  the  assign- 
ment the  assignee  became  entitled  to  all  the  benefits  of  the  con- 
tract. Devlin  v.  Mayor  &c.,  63  N.  Y.  8.  The  contract  was  not 
purely  personal  in  the  sense  that  Kelly  was  bound  to  perform  in 
person,  as  his  only  obligation  was  to  pay  for  the  dies  when  delivered, 
and  that  obligation  could  be  discharged  by  any  one.  He  could  not, 
however,  by  the  assignment,  absolve  himself  from  all  obligations  under 
the  contract.  The  obligations  of  the  contract  still  rested  upon  him, 
and  resort  could  still  be  made  to  him  for  the  payment  of  the  dies  in 
case  the  assignee  did  not  pay  for  them  when  tendered  to  it.  After  the 
assignment  of  the  contract  to  the  plaintiff  the  defendant's  obligation 
to  perform  still  remained,  and  that  obligation  was  due  to  the  plaintiff, 
and  for  a  breach  of  the  obligation  it  became  entitled  to  some  damages, 
and  so  we  are  brought  to  the  measure  of  damages  in  such  a  case  as 
this.1 

i  "We  have  not  overlooked  the  distinction  pointed  out  by  counsel  between 
executory  contracts  and  contracts  which  have  been  executed  on  one  side. 
What  we  have  said  applies  where  something  remains  to  be  done  by  the  party 
who  assigns.  And  as  a  matter  of  course  (since  a  party  cannot  release  him- 
self from  an  obligation  by  his  own  act  without  the  consent  of  the  other 
party),  it  is  only  the  benefit  of  a  contract  which  can  be  assigned.  Where 
there  is  a  burden,  it  cannot  be  transferred  without  the  consent  of  the  other 
party.  Civ.  Code,  sec.  1457." — Hayne,  C.,  in  La  Rue  v.  Groezinger,  84  Cal. 
281. 

"When  the  contract  is  executory  in  its  nature,  and  an  assignee  or  personal 
representative  can  fairly  and  sufficiently  execute  all  that  the  original  con- 
tractor could  have  done,  the  assignee  or  representative  may  do  so  and  have 
the  benefit  of  the  contract.  ...  In  principle  it  would  not  impair  the  rights 
of  the  assignee,  or  destroy  the  assignable  quality  of  the  contract  or  claim, 
that  the  assignee,  as  between  himself  and  the  assignor,  has  assumed  some 
duty  in  performing  the  conditions  precedent  to  a  perfected  cause  of  action, 
or  is  made  the  agent  or  substitute  of  the  assignor  in  the  performance  of  the 
contract.  If  the  service  to  be  rendered  or  the  condition  to  be  performed  is 
not  necessarily  personal,  and  such  as  can  only  with  due  regard  to  the  intent 
of  the  parties,  and  the  rights  of  the  adverse  party,  be  rendered  or  performed 
by  the  original  contracting  party,  and  the  latter  has  not  disqualified  himself 
from  the  performance  of  the  contract,  the  mere  fact  that  the  individual 
representing  and  acting  for  him  is  the  assignee,  and  not  a  mere  agent  or 


506  OPERATION   OF   CONTRACT. 

It  is  frequently  difficult  in  the  administration  of  the  law  to  apply 
the  proper  rule  of  damages,  and  the  decisions  upon  the  subject  are 
not  harmonious.  The  cardinal  rule  undoubtedly  is  that  the  one 
party  shall  recover  all  the  damage  which  has  been  occasioned  by  the 
breach  of  the  contract  by  the  other  party.  But  this  rule  is  modified 
in  its  application  by  two  others:  The  damages  must  flow  directly 
and  naturally  from  the  breach  of  the  contract,  and  they  must  be 
certain,  both  in  their  nature  and  in  respect  of  the  cause  from  which 
they  proceeded.  Under  this  latter  rule  speculative,  contingent,  and  re- 
mote damages  which  cannot  be  directly  traced  to  the  breach  com- 
plained of  are  excluded.  Under  the  former  rule  such  damages  only  are 
allowed  as  the  parties  may  fairly  be  supposed  when  they  made  the  con- 
tract to  have  contemplated  as  naturally  following  its  violation.  Had- 
ley  v.  Baxendale,  9  Excheq.  341;  Griffin  v.  Colver,  16  N.  Y.  489; 
Leonard  v.  N.  Y.  &c.  Tel.  Co.,  41  Id.  544,  566 ;  Cassidy  v.  Le  Fevre, 
45  Id.  562. 

The  natural  and  obvious  consequence  of  a  breach  of  this  contract 
on  the  part  of  the  defendant  would  be  to  compel  Kelly  or  his  assignee 
to  procure  the  dies  from  some  other  manufacturer,  and  the  increased 
cost  of  the  dies,  if  any,  would  be  the  natural  and  ordinary  measure  of 
the  damages ;  and  such  would  be  the  damages  which  it  could  be  fairly 
supposed  the  parties  expected,  when  they  made  the  contract,  would 
flow  from  a  breach  thereof.  It  does  not  appear  that  Kelly  was  en- 
gaged in  the  manufacture  of  lanterns  when  the  contract  was  made, 
or  that  he  contemplated  engaging  in  the  business  until  dies  were  fur- 
nished. N"o  fact  is  found  showing  that  the  defendant  had  any  reason 
to  suppose  that  he  would  hire  any  workmen  or  persons  before  the  dies 
were  furnished,  and  it  cannot  be  said  that  it  was  a  natural  and  proxi- 
mate consequence  of  a  breach  of  the  contract  that  he  would  have  idle 
men  or  unused  real  estate  causing  him  the  expenses  now  claimed. 
Much  less  can  it  be  supposed  that  the  defendant  could,  when  the  con- 
tract was  made,  anticipate  that  the  contract  would  be  assigned  and 
that  the  assignee  would  employ  men  and  premises  to  remain  idle  after 
the  defendant  had  failed  to  perform  the  contract  and  in  consequence 
of  such  failure.  Such  damages  to  the  assignee  could  not  have  been 
contemplated  as  the  natural  and  proximate  consequence  of  a  breach 
of  the  contract.  If  we  should  adopt  the  rule  of  damages  contended 
for  by  the  plaintiff,  what  would  be  the  limits  of  its  application? 
Suppose  instead  of  employing  two  men,  the  plaintiff  had  projected 
an  extensive  business  in  which  the  dies  were  to  be  used,  and  had  em- 
servant,  will  not  operate  as  a  recission  of,  or  constitute  a  cause  for,  termi- 
nating the  contract.  Whether  the  agent  for  performing  the  contract  acts 
under  a  naked  power,  or  a  power  coupled  with  an  interest,  cannot  affect  the 
character  or  vary  the  effect  of  the  delegation  of  power  by  the  original  con- 
tractor."—Allen,  J.,  in  Devlin  v.  Mayor,  63  N.  Y.  8,  17-18,  15-16. 


ASSIGNMENT   OF    CONTRACT.  507 

ployed  one  hundred  men,  and  had  hired  or  even  constructed  a  large 
and  costly  building  in  which  to  carry  on  the  business,  and  had  kept 
the  men  and  the  building  unemployed  for  months,  and,  perhaps,  years, 
could  the  whole  expense  of  the  men  and  building  be  visited  on  the  de- 
fendant as  a  consequence  of  its  breach  of  contract?  If  it  could,  we 
should  have  a  rule  of  damages  which  might  cause  ruin  to  parties  unable 
from  unforeseen  events  to  perform  their  contracts. 

The  damages  allowed  by  the  referee  in  this  case  are  special  damages, 
not  flowing  naturally  from  the  breach  of  the  contract,  and,  we  think, 
the  only  damages  such  an  assignee  in  a  case  like  this  can  recover  is 
the  difference  between  the  contract  price  of  these  dies  and  the  value  or 
cost  of  the  dies  if  furnished  according  to  the  contract.  Even  if  Kelly 
could  have  recovered  special  damages,  we  see  no  ground  for  holding 
that  his  assignee,  of  whose  connection  with  the  contract  the  defendant 
had  no  notice,  could  recover  special  damages  not  contemplated  when 
the  contract  was  made. 

We  are,  therefore,  of  opinion  that  the  award  of  damages  made  by 
this  judgment  was  not  justified  by  the  facts  found,  and  that  the  judg- 
ment should  be  reversed  and  a  new  trial  granted,  costs  to  abide  event. 
All  concur. 

Judgment  reversed.1 

4  Cyc.  20   (38)  ;  W.  P.  595  (46). 


NEW  YOKK  BANK  NOTE  CO.  v.  THE  HAMILTON 
BANK  NOTE  CO.AND  KIDDER  PRESS  CO. 

180  NEW  YORK,  280.— 1905. 

The  Kidder  Press  Co.,  a  corporation  engaged  in  manufacturing 
presses  for  printing,  numbering  and  perforating  strip  tickets,  entered 
into  a  contract  with  the  plaintiff's  assignor,  the  New  York  Bank  Note 
Co.,  which  was  a  printing  company,  incorporated  under  the  laws  of 
New  Jersey.  The  contract  provided  that  all  future  sales  of  the  presses 

i  In  Liberty  Wall  Paper  Co.  v.  Stoner  Wall  Paper  Co.,  59  N.  Y.  Appellate 
Div.  353,  affirmed  170  N.  Y.  582,  a  contract  between  plaintiff  and  Stoner  to 
sell  Stoner  paper  hangings  was  held  assignable  by  Stoner  to  the  defendant 
company  although  a  period  of  credit  was  given  to  Stoner  by  the  contract,  i.  e., 
that  Stoner  should  settle  all  bills  within  30  days  from  shipment.  The  court 
said:  "The  contract  is  not  a  personal  one  in  the  sense  that  Stoner  was  bound 
to  perform  in  person.  Stoner  had  a  right  to  assign  the  contract,  or  in 
case  of  his  death  his  executors  or  administrators  would  have  succeeded  to 
his  rights  and  liabilities  under  the  contract.  The  obligations  of  Stoner  under 
the  contract  could  have  been  discharged  by  any  one.  If  the  assignment  was 
made  without  the  consent  of  the  plaintiff,  the  obligations  of  the  contract  would 
still  have  rested  upon  Stoner,  and  resort  could  have  been  had  to  him  for  the 
fulfillment  of  the  contract  if  the  same  had  not  been  carried  out  and  discharged 
by  his  assignee." 


508  OPERATION  OF  CONTRACT. 

should  be  made  to  and  through  the  printing  company,  which  should 
have  the  right  to  lease  the  presses  to  purchasers  thereof  under  a  per- 
petual lease,  the  price  of  the  presses  to  be  collected  by  the  printing  com- 
pany and  paid  by  it  to  the  press  company.  The  press  company 
further  agreed  not  to  attach  the  numbering  and  perforating  devices 
to  any  press  previously  manufactured  and  sold,  the  object  of  the  con- 
tract being  to  prevent  any  competitor  from  obtaining  or  using  any 
press  built  by  the  press  company  with  the  numbering  and  perforating 
attachments,  or  which  could  be  used  for  printing  strip  tickets  of  form, 
design  or  purpose  similar  to  those  printed  or  that  might  be  printed  by 
the  printing  company.  The  printing  company  later,  and  without 
the  consent  of  the  press  company,  assigned  the  contract  to  another 
corporation,  likewise  named  the  New  York  Bank  Note  Company,  but 
organized  and  incorporated  under  the  laws  of  West  Virginia,  for  the 
purpose  of  taking  over  the  business,  property  and  contracts  of  the  New 
Jersey  corporation,  which,  after  assigning  all  its  property  and  con- 
tracts to  its  successor,  was  dissolved.  After  the  dissolution  of  plain- 
tiff's assignor  (the  New  Jersey  corporation)  the  press  company  fur- 
nished the  strip  ticket  attachments  to  the  Hamilton  Bank  Note  Co. 
and  also  delivered  to  it,  a  press  with  attachments  complete.  The 
assignee,  the  New  York  Bank  Note  Co.  of  West  Virginia,  here  sues 
the  Kidder  Press  Co.  and  the  Hamilton  Bank  Note  Co.,  praying  an 
injunction  and  damages. 

CULLEN,  C.  J.  .  .  .  The  appellants  first  claim  that  the  contract 
between  the  Kidder  Company  and  the  plaintiff's  predecessor  was  per- 
sonal and  not  the  subject  of  assignment.  This  claim  was  fully  dis- 
cussed by  the  Appellate  Division  on  the  appeal  from  the  interlocutory 
judgment.  (28  App.  Div.  411.)  It  was  there  held  by  a  divided 
court  that  the  assignment  to  the  plaintiff  was  effectual.  Doubtless, 
the  general  rule  is  that  an  executory  contract  not  necessarily  personal 
in  its  character,  which  can,  consistent  with  the  rights  and  interests  of 
the  adverse  party,  be  sufficiently  executed  by  the  assignee,  is  assign- 
able in  the  absence  of  agreement  in  the  contract.  (Devlin  v.  Mayor, 
etc.,  of  N.  Y.,  63  N.  Y.  8;  New  England  Iron  Company  v.  Gilbert 
Elevated  R.  R.  Co.,  91  N.  Y.  153 ;  Rochester  Lantern  Co!!  v.  Stiles  & 
Parker  Press  Co.,  135  N.  Y.  209.)  So  an  agreement  by  a  vendor  on  a 
sale  of  a  business  and  its  good  will  not  to  enter  into  a  similar  business 
at  the  same  place  during  a  specified  period  may  be  assigned  by  the 
vendee  on  a  subsequent  sale  of  the  business  by  him.  (Francisco  v. 
Smith,  143  N.  Y.  488.)  Therefore,  the  objection  to  the  assignment  of 
this  contract  does  not  lie  in  that  feature.  It  lies,  if  at  all,  in  those  pro- 
visions of  the  contract  which  prescribe  that  the  title  to  all  presses 
manufactured  by  the  Kidder  Company  for  third  parties  shall  be  trans- 
ferred to  the  New  York  Company  and  the  presses  leased  by  that  com- 
pany under  restrictions  as  to  their  use,  the  New  York  Company  to 


ASSIGNMENT   OF    CONTRACT.  509 

collect  from  such  third  parties  the  purchase  price  of  the  presses  and 
account  for  the  same  to  the  Kidder  Company.  Judge  Patterson,  writ- 
ing for  the  minority  of  the  court,  thought  these  provisions  constituted 
a  contract  of  agency  and  that  the  contract  was  not  assignable  because 
it  involved  the  duties  of  agency.  Judge  O'Brien,  for  the  majority  of 
the  co4urt,  while  holding  that  under  the  contract  the  purchase  price 
for  the  machines  sold  to  third  parties  was  to  be  collected  in  the  first 
instance  by  the  New  York  Company,  which  was  to  account  therefor  to 
the  Kidder  Company,  and  while  admitting  the  general  rule  that  rights 
arising  out  of  a  contract  cannot  be  transferred  if  they  are  coupled  with 
liabilities  (Arkansas  Smelting  Co.  v.  Belden  Mining  Co.,  127  TJ.  S. 
379),  thought  that  the  general  doctrine  did  not  apply  to  this  particu- 
lar case.  He  said  there  was  no  substantial  substitution  of  parties. 
"Technically,  the  contract  was  assigned;  but  practically,  it  was  not. 
The  assignment  was  part  of  the  reorganization,  and  but  a  means  to 
that  end.  With  it  were  assigned  all  the  property  and  choses  in  action 
of  the  original  company,  with  the  exception  of  one  designated  claim. 
The  stock  of  the  new  company  was  distributed  ratably  among  the 
stockholders  of  the  old.  Technically,  the  new  company  was  a  dis- 
tinct legal  entity  from  the  old;  but  to  all  intents  and  purposes  it 
was  the  same  concern.  .  .  .  The  risk  of  such  changes  is  assumed  by 
every  one  who  contracts  with  a  corporation.  ...  To  hold  that  it  was 
an  'assignee'  of  the  contract,  within  the  meaning  of  the  rule  relied 
upon,  is  to  regard  the  form  and  disregard  the  substance."  From  this 
we  wholly  dissent.  The  plaintiff  was  not  only  technically  but  sub- 
stantially a  different  entity  from  its  predecessor.  It  is  true  that  in 
dealing  with  corporations  a  party  cannot  rely  on  what  may  be  termed 
the  human  equation  in  the  company ;  the  personnel  of  the  stockholders 
and  officers  of  the  company  may  entirely  change.  But  though  there 
is  no  personal  or  human  equation  in  the  management  of  a  corpora- 
tion there  is  a  legal  equation  which  may  be  of  the  utmost  importance 
to  parties  contracting  with  it.  In  dealing  with  natural  persons  in 
matters  of  trust  and  confidence  personal  character  is,  or  may  be,  a 
dcaninant  factor.  In  similar  transactions  with  a  corporation,  a  sub- 
stitute for  personal  character  is  the  charter  rights  of  the  corporation, 
the  limits  placed  on  its  power,  especially  to  incur  debt,  the  statutory 
liability  of  its  officers  and  stockholders.  These  are  matters  of  great 
importance  when,  as  at  present,  many  States  and  territories  seem  to 
have  entered  into  the  keenest  competition  in  granting  charters,  each 
seeking  to  outbid  the  other  by  offering  to  directors  and  stockholders 
the  greatest  immunity  from  liability  at  the  lowest  cash  price.  The 
defendant,  the  Kidder  Company,  could  not  be  obliged  to  intrust  its 
money,  collected  on  the  sale  of  the  presses,  to  the  responsibility  of  an 
entirely  different  corporation  from  that  with  which  it  had  contracted, 
and  we  hold  that  the  contract  could  not  be  assigned  to  the  plaintiff 


510  OPERATION    OF    CONTRACT. 

without  the  assent  of  the  other  party  to  it.     [The  court  then  holds 
further  that  the  original  contract  was  not  void  as  in  restraint  of  trade, 
and  also  discusses  the  measure  of  damages.] 
4  Cyc.  22  (43)  ;  W.  P.  595  (46). 


HAYES  v.  WILLIO. 

4  DALY.  259.— 1872. 
(New  York  Common  Pleas.) 

Injunction  to  restrain  defendant  from  playing  at  any  other  theater 
than  the  plaintiff's.  Motion  to  vacate  injunction  denied.  Defendant 
appeals.  Also,  appeal  from  an  order  denying  a  motion  to  vacate  a 
writ  of  ne  exeat  against  the  defendant. 

K.  engaged  defendant  to  appear  as  a  contortionist,  bird  imitator,  and 
pantomimist  under  K.'s  personal  control  at  such  places  as  K.  might 
direct.  K.  assigned  the  contract  to  plaintiff. 

ROBINSON,  J.  ...  As  a  general  rule,  a  contract  for  the  performance 
of  personal  duties  or  services  is  unassignable,  so  as  to  vest  in  the 
assignee  the  right  to  compel  its  execution.  Ch.  on  Cont.  739 ;  Burrill 
on  Assignments,  67,  and  cases  cited,  note  3.  As  to  slaves  it  is  differ- 
ent; but  as  to  apprentices,  an  assignment  of  their  indentures  merely 
operates  as  a  covenant  that  they  shall  serve  the  assignees  (Nickerson 
v.  Howard,  19  Johns.  113),  except  as  to  the  indenture  of  an  infant  im- 
migrant to  pay  his  passage,  as  authorized  by  2  E.  S.  156,  §§  12,  13,  14; 
and  as  to  convicts,  the  right  of  control  still  remains  in  the  officer  of  the 
State.  Homer  v.  Wood,  23  N.  Y.  350. 

These  considerations  do  not  appear  to  have  been  presented  on  the 
motion  for  the  orders  for  the  injunction  and  ne  exeat,  now  under  re- 
view; they  are  controlling  as  to  the  merits  of  this  controversy,  and 
without  discussing  the  other  questions  presented  on  the  argument  and 
in  the  opinion  of  the  judge  who  granted  the  orders,  these  orders  should 
be  reversed,  with  costs,  and  the  ne  exeat  superseded  and  discharged. 

Order  reversed. 

4  Cyc.  22-23  (43-44). 


(ii.)  Assignment  of  rights. 

a.  At  common  law. 

HEATON  v.  ANGIER. 

7  NEW  HAMPSHIRE,  397.— 1835. 

Assumpsit  for  a  wagon  sold  and  delivered.     Verdict  for  plaintiff, 
subject  to  the  opinion  of  the  court  upon  the  following  case. 


ASSIGNMENT   OF   CONTRACT.  511 

The  plaintiff,  on  the  29th  of  March,  1832,  sold  the  wagon  to  the  de- 
fendant at  auction  for  $30.25.  Immediately  afterwards,  on  the  same 
day,  one  John  Chase  bought  the  wagon  of  the  defendant  for  $31.25. 
Chase  and  the  defendant  then  went  to  plaintiff,  and  Chase  agreed  to 
pay  the  $30.25  to  the  plaintiff  for  the  defendant,  and  the  plaintiff 
agreed  to  take  Chase  as  paymaster  for  that  sum ;  and  thereupon  Chase 
took  the  wagon  and  went  away. 

GREEN,  J.  In  Tatlock  v.  Harris  (3  D.  &  E.  180),  Buller,  J.,  said: 
"Suppose  A  owes  B  £100,  and  B  owes  C  £100,  and  the  three  meet  and 
it  is  agreed  between  them  that  A  shall  pay  C  the  £100,  B's  debt  is 
extinguished,  and  C  may  recover  the  sum  from  A." 

The  case  thus  put  by  Buller  is  the  very  case  now  before  us.  Heaton, 
Angier,  and  Chase  being  together,  it  was  agreed  between  them  that  the 
plaintiff  should  take  Chase  as  his  debtor  for  the  sum  due  from  the 
defendant.  The  debt  due  to  the  plaintiff  from  the  defendant  was  thus 
extinguished.  It  was  an  accord  executed.  And  Chase,  by  assuming 
the  debt  due  to  the  plaintiff,  must  be  considered  as  having  paid  that 
amount  to  the  defendant,  as  part  of  the  price  he  was  to  pay  the  defend- 
ant for  the  wagon. 

The  agreement  of  the  plaintiff  to  take  Chase  as  his  debtor  was 
clearly  a  discharge  of  the  defendant.  Wilson  v.  Coupland,  5  B.  &  A. 
228 ;  Wharton  v.  Walker,  4  B.  &  C.  163 ;  Cuxon  v.  Chadley,  3  B.  &  C. 
591. 

A  new  trial  granted. 

29  Cyc.  1136  (38). 


McKINNEY  v.  ALVIS. 
14  ILLINOIS,  33.— 1852. 

Action  for  the  value  of  certain  rails.     Judgment  for  plaintiff. 

TRUMBULL,  J.  One  Piper,  since  deceased,  had  a  claim  on  McKinney 
for  eight  hundred  rails,  which  Alvis,  under  a  claim  of  purchase  from 
Piper,  called  on  McKinney  to  pay  to  him.  McKinney  agreed  to  deliver 
the  rails  to  Alvis,  but  failing  to  comply  with  his  contract,  Alvis  sued 
to  recover  their  value. 

The  important  question  in  this  case,  and  the  only  one  we  deem  it 
necessary  to  notice  is,  can  Alvis  maintain  the  action  in  his  own  name  ? 

It  i's  a  general  rule  that  choses  in  action,  except  negotiable  instru- 
ments, are  not  assignable  at  law  so  as  to  authorize  the  assignee  to 
maintain  an  action  in  his  own  name ;  but  it  is  insisted  that  an  express 
promise,  as  in  this  case,  to  pay  the  debt  to  the  assignee,  forms  an  ex- 
ception to  the  rule.  To  constitute  an  exception,  however,  in  a  case 
like  this,  requires  something  more  than  a  mere  promise  on  the  part 
of  the  debtor  to  pay  to  the  assignee ;  there  must  be  a  communication, 
and  a  new  arrangement  between  all  the  parties,  by  which  the  assignor's 


512  OPERATION   OF    CONTRACT. 

claim  upon  his  debtor,  and  his  liability  to  the  assignee,  are  extin- 
guished. In  this  case  there  was  no  communication  between  Piper  and 
McKinney;  nor  did  Alvis  agree  to  release  Piper,  and  look  alone  to 
McKinney  for  the  debt.  It  is  not  like  the  case  put  in  the  books,  where 
it  is  said:  "Suppose  A  owes  B  £100,  and  B  owes  C  £100,  and  the 
three  meet,  and  it  is  agreed  between  them  that  A  shall  pay  C  the  £100, 
B's  debt  is  extinguished,  and  C  may  recover  that  sum  against  A." 
Chitty  on  Contracts,  482,  613 ;  Wharton  v.  Walker,  4  Barnwell  &  Cress- 
well,  163;  Butterfield  v.  Hartshorn,  7  N.  H.  345.  Nor  is  it  a  case 
where  one  person  can  be  said  to  have  withheld  the  money  of  another, 
and  thereby  subjected  himself  to  an  action  at  the  suit  of  the  latter  for 
money  had  and  received;  but  it  is  an  attempt  to  maintain  an  action 
in  his  own  name,  by  the  assignee  of  a  contract  for  the  delivery  of  cer- 
tain articles  of  personal  property,  on  the  ground  alone  of  an  express 
parol  promise  by  the  debtor  to  pay  the  property  to  him.  No  considera- 
tion for  the  promise  is  shown  by  the  record,  for  it  does  not  appear 
that  the  defendant  was  released  by  it  from  his  liability  to  Piper,  nor 
is  there  any  legitimate  evidence  in  the  record  of  a  transfer  of  the  claim 
by  Piper  to  Alvis. 

Judgment  reversed,  and  cause  remanded. 
4Cyc.  7  (7). 


COMPTON  v.  JONES. 
4  COWEN   (N.  Y.),  13.— 1825. 

Assumpsit.     Demurrer  to  declaration  overruled. 

Defendant  made  a  bond  to  one  Wood,  promising  to  pay  Wood  a 
certain  sum.  Wood  afterward  assigned  the  bond  to  the  plaintiff. 
Plaintiff  gave  notice  of  the  assignment  to  defendant,  who  promised  to 
pay  the  amount  to  plaintiff. 

SAVAGE,  C.  J.,  remarked,  that  what  was  said  by  the  court  in  the 
authority  cited  by  the  defendant's  counsel,  was  intended  of  a  case 
where  the  action  was  brought  by  the  party  to  the  specialty.  And  the 
whole  court  were  clear  that  the  action  was  sustainable,  being  on  a 
promise  to  the  assignee. 

Judgment  for  the  plaintiff. 

4  Cyc.  92    (45);  96-98    (62-67). 


JESSEL  v.  WILLIAMSBUEGH  INS.  CO. 
3  HILL  (N.  Y.),  88.— 1842. 

Assumpsit  on  a  fire  insurance  policy.     Plaintiff  nonsuited,  and  judg- 
ment for  defendants. 

The  policy  was  issued  to  S.  and  contained  a  provision  that  it  should 


ASSIGNMENT   OF   CONTRACT.  513 

not  be  assignable  without  the  consent  of  the  company.    The  company 
gave  their  consent  to  the  assignment  to  plaintiff. 

Per  Curiam.  We  know  of  no  principle  upon  which  the  assignee  of 
a  policy  of  insurance  can  be  allowed  to  sue  upon  it  in  his  own  name. 
The  general  rule  applicable  to  personal  contracts  is,  that,  if  assigned, 
the  action  for  a  breach  must  be  brought  in  the  name  of  the  assignor,  ex- 
cept where  the  defendant  has  expressly  promised  the  assignee  to  re- 
spond to  him.  Compton  v.  Jones,  4  Cowen,  13;  1  Chitty's  Plead.  9, 
10 ;  Innes  v.  Dunlop,  8  Term  Eep.  595 ;  Currier  v.  Hodgdon,  3  N".  H. 
82;  Wiggin  v.  Damrell,  4  Id.  69;  Skinner  v.  Somes,  14  Mass.  107; 
Howry  v.  Todd,  12  Id.  281 ;  Crocker  v.  Whitney,  10  Id.  316 ;  Duboi's  v. 
Doubleday,  9  Wend.  317;  and  see  Chit,  on  Cont.  614,  note  1,  5th  Am. 
ed.  In  Granger  v.  The  Howard  Insurance  Company  (5  Wend.  200, 
202)  the  point  now  raised  was  discussed,  and,  we  think,  decided  against 
the  present  plaintiff.  The  argument  that  the  policy  in  question 
originally  contemplated  an  assignment,  would  be  equally  cogent  in  all 
cases,  for  aught  we  see,  of  a  promise  in  form  to  one  and  his  assigns; 
and  yet  it  is  settled  that  the  latter  words  do  not  impart  a  negotiable 
quality  to  the  promise  so  as  to  enable  the  assignee  to  sue  upon  it  in 
his  own  name.  Skinner  v.  Somes,  14  Mass.  107-8.  The  judgment 
below  is  clearly  right  and  should  not  be  disturbed. 

Judgment  affimed. 


HOUGH  v.  BARTON. 

20  VERMONT,  455.— 1848. 

Indebitatus  assumpsit  for  money  had  and  received.  Verdict  for 
plaintiff.  Exceptions  by  defendant. 

Defendant  made  and  delivered  a  note  to  Hough,  which  was  by  him 
transferred  to  K.,  and  by  K.  to  Barker,  who  was  the  real  party  in  in- 
terest in  this  suit.  The  note  was  lost,  and  defendant  offered  to  prove 
that,  after  its  transfer  to  Barker,  Hough,  the  nominal  plaintiff,  had 
admitted  that  it  was  a  negotiable  note.  This  evidence  was  excluded. 

DAVIS,  J.  It  was  conceded  on  trial  that  Barker  was  the  owner  of 
the  note  given  by  the  defendant  to  Hough,  and  that  the  suit  was 
commenced  and  prosecuted  by  him,  for  his  own  benefit,  though  in  the 
name  of  the  payee.  Although  the  language  of  the  record  is  not  per- 
fectly explicit  on  this  subject,  it  may  reasonably  be  inferred,  that,  at 
the  time  of  bringing  the  action,  and  before,  the  defendant  was  apprised 
of  the  transfer  to  Kidder,  and  afterwards  by  him  to  Barker.  Under 
such  circumstances,  although  a  different  rule  prevails  in  England, 
yet  in  this  State  and  in  most  of  the  American  States,  it  is  regarded 
as  inequitable  and  unjust  to  permit  the  defendant  to  avail  himself  of 
any  discharge,  release,  retraxit,  or  admission,  by  the  nominal  plain- 


514  OPERATION    OF    CONTRACT. 

tiff,  to  defeat  the  action.  It  was  not  competent  for  Hough  to  make 
admissions,  after  suit  brought,  to  prejudice  the  rights  of  the  real 
party  in  interest.  Sargeant  v.  Sargeant  et  al.,  18  Vt.  371;  Cow.  and 
Hill's  notes  to  Phil.  Ev.  172;  1  Greenl.  Ev.§  172-3,  and  note  (2).  ... 

In  this  very  case,  so  far  as  appears,  the  note  was  neither  payable  to 
order,  or  bearer,  and  yet  Barker,  by  reason  of  the  blank  indorsement, 
obtained  a  legal  right  to  collect  and  appropriate  the  contents  to  his 
own  exclusive  use, — not,  it  is  true,  by  a  suit  in  his  own  name,  but  by 
using  the  name  of  Hough  for  that  purpose.  To  this  Hough  consented ; 
but  the  right  would  have  been  the  same,  had  there  been  no  consent. 
Having  transferred  the  note  for  value,  his  consent  to  the  use  of  his 
name,  on  proper  indemnity  against  costs,  results  by  implication;  and, 
as  a  necessary  consequence,  he  is  rendered  incapable  of  impairing  that 
right  by  discharge,  release,  or  other  act.  .  .  . 

The  judgment  of  the  county  court  is  therefore  affirmed.1 

4  Cyc.  93-94   (47-48);   16  Cyc.  994   (45);  996    (61). 


b.  In  equity. 

CARTEK  et  al.  v.  UNITED  INS.  CO. 
1  JOHNSON'S  CHANCERY   (N.  Y.),  463.— 1815. 

Bill  in  equity  by  plaintiffs  as  assignees  of  an  insurance  policy.  De- 
murrer to  bill  on  the  ground  that  the  plaintiffs  had  an  adequate 
remedy  at  law. 

The  policy  was  issued  to  Titus  &  Gibbs  on  500  barrels  of  flour  from 
Newport  to  St.  Jago  de  Cuba  on  board  the  Spanish  brig  Patriota,  which 
was  captured  by  a  Carthagena  privateer.  Titus  &  Gibbs  assigned  the 
policy  to  the  plaintiffs  in  trust  for  creditors.  Defendants  refused  to 
pay  the  loss. 

THE  CHANCELLOR.  The  demand  is  properly  cognizable  at  law, 
and  there  is  no  good  reason  for  coming  into  this  court  to  recover  on 
the  contract  of  insurance.  The  plaintiffs  are-  entitled  to  make  use  of 

i  "The  general  principle  deducible  from  the  cases  from  the  ordinary  prac- 
tice is  that  when  one  person  has  an  equitable  right  or  claim  against  another, 
which  he  can  obtain  only  by  a  suit  in  the  name  of  a  third  person,  he  may 
use  the  name  of  that  person  in  an  action  to  enforce  his  right.  And  such  third 
person  cannot  control  the  suit,  nor  will  his  admission,  subsequent  to  the  time 
he  ceased  to  have  an  interest,  be  evidence  to  defeat  it.  Eastman  v.  Wright, 
6  Pick.  322;  Jones  v.  Witter,  13  Mass.  304;  Hackett  v.  Martin,  8  Greenl.  77; 
Matthews  v.  Houghton,  1  Fairf.  420;  Frear  v.  Evertson,  20  Johns.  142.  But 
the  holder  must  furnish  to  the  plaintiff  on  the  record  ample  indemnity  against 
costs,  if  required."— Parker,  C.  J.,  in  Webb  v.  Steele,  13  N.  H.  230,  236.  See 
also  Halloran  v.  Whitcomb,  43  Vt.  306;  Fay  v.  Guynon,  131  Mass.  31;  Dazey 
v.  Mills,  5  Gilm.  (111.)  67. 


ASSIGNMENT  OF   CONTRACT.  515 

the  names  of  Gibbs  &  Titus,  the  original  assured,  in  the  suit  at  law ; 
and  the  nominal  plaintiffs  would  not  be  permitted  to  defeat  or  preju- 
dice the  right  of  action.  It  may  be  said  here,  as  was  said  by  the 
chancellor  in  the  analogous  case  of  Dhegetoft  v.  The  London  Assur- 
ance Company  (Mosely,  83),  that,  at  this  rate,  all  policies  of  insurance 
would  be  tried  in  this  court.  In  that  case  the  policy  stood  in  the  name 
of  a  nominal  trustee ;  but  'that  was  not  deemed  sufficient  to  change  the 
jurisdiction ;  and  the  demurrer  to  the  bill  was  allowed,  and  the  decree 
was  afterwards  affirmed,  in  Parliament.  3  Bro.  P.  C.  525.  The  bill 
in  this  case  states  no  special  ground  for  equitable  relief;  nor  is  there 
any  discovery  sought  which  requires  an  answer. 

Bill  dismissed  with  costs.1 
4  Cyc.  95   (58-59)  ;  W.  P.  279   (70). 


FIELD  v.  THE  MAYOR  &c.  OP  NEW  YORK  et  al. 
2  SELDEN    (6  N.  Y.),  179.— 1852. 

Bill  in  equity.  Bill  dismissed  by  trial  court.  Decree  reversed  in 
Supreme  Court.  Defendants  appeal. 

Defendant  Bell  had  certain  contracts  with  defendant  corporation 
for  printing  to  be  done  by  him  for  the  city.  On  March  14,  1842,  he 
assigned  to  G.  all  bills  that  might  become  due  to  him  for  job  printing, 
paper,  or  stationery  done  or  furnished  the  defendant  corporation,  to 
the  amount  of  $1500,  after  two  other  assignments  should  be  paid,  viz., 
one  for  $1500  to  L.,  and  one  of  $300  to  C.  Afterward  on  April  28, 
1842,  G.  assigned  the  claim  to  plaintiff.  Plaintiff  gave  the  city  notice 
of  the  claim  on  April  30,  1842. 

Bell  did  work  for  the  city  after  the  assignment,  and  after  the  notice, 
but  the  city  paid  the  amount  due  for  it  to  Bell.  Bell  was  insolvent. 

The  report  of  the  referee  showed  that  there  became  due  to  Bell  after 
March  14,  1842,  and  after  providing  for  the  claims  of  L.  and  C.  far 
more  than  enough  to  satisfy  plaintiff's  claim. 

WELLS,  J.  By  the  assignment  from  Bell  to  Garread,  of  March  14, 
1842,  it  was  intended  to  transfer  to  and  vest  in  the  latter,  the  right 
and  interest  of  the  former  in  and  to  all  the  bills  which  might  thereafter 
become  due  to  him  from  the  corporation  of  the  city  of  New  York,  for 
job  printing,  paper,  or  stationery,  done  or  furnished  by  Bell  either  be- 

i  "We  have  lately  decided,  after  full  consideration  of  the  authorities,  that 
an  assignee  of  a  chose  in  action  on  which  a  complete  and  adequate  remedy 
exists  at  law  cannot,  merely  because  his  interest  is  an  equitable  one.  bring 
a  suit  in  equity  for  the  recovery  of  the  demand.  Hayward  v.  Andrews,  106 
U.  S.  672.  He  must  bring  an  action  at  law  in  the  name  of  the  assignor  to 
his  own  use." — Mr.  Justice  Bradley,  in  New  York  &c.  Co.  v.  Memphis  Water 
Co.,  107  U.  S.  205,  214.  See  also  Walker  v.  Brooks,  125  Mass.  241. 


516  OPERATION    OF    CONTRACT. 

fore  or  after  the  date  of  the  assignment,  to  the  amount  of  $1500 ;  sub- 
ject to  the  two  prior  assignments,  to  Lloyd  &  Hopkins,  and  to  Coit. 
By  the  assignment  from  Garread  to  the  respondent  of  April  28th, 
and  the  release  from  the  former  to  the  latter,  of  Decembber  27,  1842, 
the  latter  acquired  all  the  right  and  interest  of  the  former  in  the  first 
assignment. 

The  case  shows,  that  at  the  time  of  the  commencement  of  the  suit 
in  the  court  of  chancery,  bills  of  the  description  mentioned  had  become 
due  from  the  corporation  to  Bell,  to  an  amount  more  than  sufficient  to 
satisfy  all  three  of  the  assignments. 

These  bills  appear  to  have  accrued,  and  most  of  the  services  and 
materials  upon  which  they  arose  appear  to  have  been  rendered  and 
delivered,  after  the  date  of  the  assignment  from  Bell  to  Garread. 

One  of  the  questions  presented  by  this  appeal  is  whether  the  court 
of  chancery  had  jurisdiction  to  decree  payment  by  the  corporation 
of  the  city  of  New  York  to  the  respondent  of  his  claim.  That  it  had 
such  jurisdiction  seems  to  be  in  accordance  with  reason  and  the  theory 
of  equity  jurisprudence. 

1.  The  assignment  of  Bell  to  Garread  was  valid  and  operative  as 
an  agreement,  by  which  Garread  and  his  assigns  became  entitled  to  re- 
ceive payment  of  the  bills  in  question,  when  the  same  should  become 
due,  to  the  amount  indicated  in  the  assignment  subject  to  the  two  prior 
assignments.  It  did  not  operate  as  an  assignment  in  prcesenti  of  the 
choses  in  action,  because  they  were  not  in  existence,  but  remained  in 
possibility  merely.  A  possibility,  however,  which  the  parties  to  the 
agreement  expected  would,  and  which  afterwards  did  in  fact  ripen  into 
an  actual  reality ;  upon  which,  by  force  of  the  agreement,  an  equitable 
title  to  the  benefit  of  the  bills  thus  mature  and  due,  became  vested  in 
the  respondent  as  assignee  of  Garread.  Story's  Eq.  Jur.  §§  1040, 
1040  b,  1055;  Mitchell  v.  Winslow,  2  Story's  Eep.  630;  Langton  v. 
Horton,  1  Hare,  549. 

It  is  contended  by  the  counsel  for  the  appellants,  that  the  assign- 
ment of  Bell  to  Garread  did  not  pass  any  interest  which  was  the  subject 
of  an  assignment,  for  the  reason  that  there  was  no  contract  at  the  time 
between  Bell  and  the  corporation  of  the  city  by  which  the  latter  was 
under  any  binding  obligation  to  furnish  the  former  with  job  printing 
or  to  purchase  of  him  paper  or  stationery;  and  that  therefore  the  in- 
terest was  of  too  uncertain  and  fleeting  a  character  to  pass  by  assign- 
ment. There  was  indeed  no  present,  actual,  potential  existence  of  the 
thing  to  which  the  assignment  or  grant  related,  and  therefore  it  could 
not  and  did  not  operate  eo  instanti  to  pass  the  claim  which  was  ex- 
pected thereafter  to  accrue  to  Bell  against  the  corporation ;  but  it  did 
nevertheless  create  an  equity,  which  would  seize  upon  those  claims 
as  they  should  arise,  and  would  continue  so  to  operate  until  the  object 
of  the  agreement  was  accomplished.  On  this  principle  an  assignment 


ASSIGNMENT  OF   CONTRACT.  517 

of  freight  to  be  earned  in  future,  will  be  upheld  and  enforced  against 
the  party  from  whom  it  becomes  due.  Story's  Eq.  Jur.  §  1055,  and 
authorities  there  cited;  Langton  v.  Horton,  and  Mitchell  v.  Winalow, 
supra;  Story  on  Bailments,  §  294.  Whatever  doubts  may  have  existed 
heretofore  on  this  subject,  the  better  opinion,  I  think,  now  is,  that 
courts  of  equity  will  support  assignments,  not  only  of  choses  in  action, 
but  of  contingent  interests  and  expectations  and  of  things  which 
have  no  present,  actual  existence,  but  rest  in  possibility  only,  provided 
the  agreements  are  fairly  entered  into,  and  it  would  not  be  against 
public  policy  to  uphold  them.  Authorities  may  be  found  which  seem 
to  incline  the  other  way,  but  which  upon  examination  will  be  found 
to  have  been  overruled,  or  to  have  turned  upon  the  question  of  public 
policy. 

2.  A  bill  in  equity  was  the  proper  remedy  for  the  respondent  in 
this  case  for  the  following  reasons : 

(1)  The  nature  of  the  claim  is  one  peculiarly  of  equitable  cog- 
nizance.    It  was  an  equity  only  in  relation  to  things  not  yet  in  posses- 
sion, or  in  being,  in  the  nature  of  a  lien,  which  must  be  enforced 
through  judicial  process  before  it  could  be  enjoyed,  and  must  therefore 
of  necessity  be  adjudicated  in  a  court  of  equity.     If  the  claims  of  Bell 
against  the  city  had  accrued  and  been  in  being  at  the  time  of  the 
assignment,  and  the  assignment  had  been  of  any  specific  entire  claim, 
and  perhaps  if  it  had  been  of  all  claims  then  due  from  the  city  to 
Bell,  the  remedy  of  Garread,  his  assignee,  might,  and  perhaps  in 
general  must,  have  been  at  law.     But  all  the  cases  where  the  contract 
has  been  in  relation  to  things  not  in  existence  at  the  time,  and  which 
were  in  expectancy  and  possibility  merely,  show  that  their  adjudication 
belongs  exclusively  to  a  court  of  equity. 

(2)  But  it  seems  to  me  that  in  this  case,  independently  of  the  pre- 
ceding considerations,  there  were  insuperable  difficulties  in  the  way  of 
sustaining  an  action  at  law.     Such  action  must  necessarily  have  been 
brought  in  the  name  of  Bell,  who  had  no  interest  until  after  all  three 
of  the  assignments  should  be  satisfied,  of  which  the  one  to  Garread 
was  the  last  in  the  order  of  time,  and  was  not  to  be  satisfied  until  the 
others  were  provided  for.     I  am  aware  that,  as  a  general  rule,  the 
assignee  of  a  chose  in  action  may  use  the  name  of  the  assignor  in  an 
action  at  law  to  recover  the  amount.     But  it  seems  to  me  that  the  rule 
should  be  confined  to  cases  where  the  whole  of  an  entire  demand  is 
assigned  to  one  person  or  party.     Suppose  A  has  an  entire  demand  of 
$1000  against  B,  and  assigns  to  C  $100,  to  D  $100,  and  to  E  $100,  out 
of  the  $1000.     Which  of  the  three  assignees  shall  institute  an  action 
against  the  debtor  ?     Suppose  we  say  C  shall  have  the  right,  how  much 
shall  he  recover?     Shall  it  be  the  $1000?    Clearly  it  must  be  that,  or 
the  residue  will  be  gone,  because  the  demand  cannot  be  split  and  several 
actions  sustained  for  the  several  parts  assigned.     But  C  has  no  right, 


518  OPERATION  OF  CONTRACT. 

nor  is  he  bound  to  litigate  in  relation  to  the  parts  assigned  to  D  and  E, 
or  that  part  not  assigned  at  all.  Here  would  be  four  parties,  having 
separate  and  distinct  interests,  one  having  as  good  right  to  commence 
an  action,  to  discontinue  it,  and  to  direct  in  relation  to  it,  as  the  other ; 
and  in  case  of  disagreement,  who  is  to  decide  ?  In  the  case  at  bar, 
the  plaintiff  had  no  right  to  sue  in  Bell's  name  for  what  was  to  be 
paid  under  the  two  first  assignments,  nor  for  what  would  be  going  to 
Bell  after  all  three  were  paid;  and  he  could  not  carve  out  just  $1500 
and  the  interest  upon  it,  from  the  demands  due  from  the  city  to  Bell 
without  splitting  entire  demands,  which  cannot  be  done.  Smith  T. 
Jones,  15  John.  229;  Guernsey  v.  Carver,  8  Wend.  492;  Stevens 
v.  Lockwood,  13  Id.  644;  Story's  Eq.  Jur.  §  1250.  .  .  . 

The  notice  of  the  respondent's  claims  in  this  case,  as  appears  from 
the  evidence,  was  served  upon  the  comptroller,  while  in  his  office,  en- 
gaged in  the  duties  thereof,  and  was  beyond  all  doubt  sufficient.  An- 
gell  and  Ames  on  Corporations,  247. 

Upon  all  the  points  raised  upon  the  argument,  therefore,  I  am  of  the 
opinion  that  the  judgment  of  the  Supreme  Court  ought  to  be  affirmed. 

Judgment  affirmed. 

4  Cyc.  18  (31)  ;  27-29  (51-54)  ;  14  L.  R.  A.  126;  12  H.  L.  R.  139;  5  Mich. 
L.  R/115. 


c.  By  statute. 

ALLEN  v.  BROWN. 

44  NEW  YORK,  228.— 1870. 

Action  by  plaintiff,  as  assignee,  as  for  money  had  and  received  to 
the  use  of  plaintiff's  assignors.  Judgment  for  plaintiff  affirmed  at 
General  Term.  Defendant  appeals. 

Defendant  collected  certain  claims  for  the  assignors,  but  refused  to 
account  for  the  proceeds.  The  assignors  assigned  all  their  interests  to 
the  plaintiff,  but  no  consideration  was  paid  by  plaintiff. 

HUNT,  C.  The  appellant  insists  that  the  assignment  from  Cook, 
Clark,  and  Gary  to  the  plaintiff,  conveyed  no  title  upon  which  this 
suit  could  be  brought.  This  point  is  based  upon  the  evidence  given  by 
Mr.  Cook,  when  he  testifies,  "Allen  paid  me  nothing,  and  I  agreed  with 
him  that  I  would  take  care  of  the  case,  and  if  he  got  beat  it  should 
not  trouble  or  cost  him  anything." 

I  am  of  the  opinion  that  the  assignment  is  sufficient  to  sustain  this 
action. 

The  Code  abolishes  the  distinction  between  actions  at  law  and  suits 
in  equity,  and  between  the  forms  of  such  actions.  Section  69  [3339]. 
It  is  also  provided,  in  section  111  [449],  that  every  action  must  be 
prosecuted  in  the  name  of  the  real  party  in  interest,  except  as  other- 


ASSIGNMENT   OF    CONTRACT.  519 

wise  provided  in  section  113  [449].  The  latter  section  provides  that 
an  executor,  administrator,  trustee  of  an  express  trust,  may  sue  in  his 
own  name.  These  provisions  pretended  to  abolish  the  common  law 
rule,  which  prohibits  an  action  at  law  otherwise  than  in  the  name  of 
the  original  obligee  or  covenantee,  although  he  had  transferred  all 
his  interest  in  the  bond  or  covenant  to  another.  It  accomplishes  fully 
that  object,  although  others  than  the  assignee  may  have  an  ultimate 
beneficial  interest  in  the  recovery.  In  a  case  like  the  present,  the  whole 
title  passes  to  the  assignee,  and  he  is  legally  the  real  party  in  interest, 
although  others  may  have  a  claim  upon  him  for  a  portion  of  the  pro- 
ceeds. The  specific  claim,  and  all  of  it,  belongs  to  him.  Even  if  he 
be  liable  to  another  as  a  debtor  upon  his  contract  for  the  collection  he 
may  thus  make,  it  does  not  alter  the  case.  The  title  to  the  specific 
claim  is  his.  Durgin  v.  Ireland,  4  Kernan,  322 ;  Williams  v.  Brown, 
2  Keyes,  486,  and  cases  cited;  Paddon  v.  Williams,  1.  Robt.  R.  340; 
S.  C.  2  Ab.  R.  N.  S.  88.  ... 

The  judgment  should  be  affirmed  with  costs. 

[Leonard,  C.,  also  read  for  the  affirmance.]  All  for  affirmance, 
except  Gray,  C.,  not  sitting. 

Judgment  affirmed  with  costs. 
4  Cyc.  100  (74-75). 


d.  Requisites  of  assignment. 

SHAW,  C.  J.,  IN  PALMER  v.  MERRILL. 

6  GUSHING    (MASS.),  282.— 1850. 

According  to  the  modern  decisions,  courts  of  law  recognize  the  as- 
signment of  a  chose  in  action,  so  far  as  to  vest  an  equitable  interest 
in  the  assignee,  and  authorize  him  to  bring  an  action  in  the  name  of 
the  assignor  and  recover  a  judgment  for  his  own  benefit.  But  in  order 
to  constitute  such  an  assignment,  two  things  must  concur :  First,  the 
party  holding  the  chose  in  action  must,  by  some  significant  act,  express 
his  intention  that  the  assignee  shall  have  the  debt  or  right  in  question, 
and,  according  to  the  nature  and  circumstances  of  the  case,  deliver 
to  the  assignee,  or  to  some  person  for  his  use,  the  security  if  there  be 
one,  bond,  deed,  note,  or  written  agreement,  upon  which  the  debt  or 
chose  in  action  arises ;  and,  secondly,  the  transfer  shall  be  of  the  whole 
and  entire  debt  or  obligation,  in  which  the  chose  in  action  consists, 
and,  as  far  as  practicable,  place  the  assignee  in  the  condition  of  the 
assignor,  so  as  to  enable  the  assignee  to  recover  the  full  debt  due,  and 
to  give  a  good  and  valid  discharge  to  the  party  liable.  The  transfer 
of  a  chose  in  action  bears  an  analogy  in  some  respect  to  the  transfer 
of  personal  property;  there  can  be  no  actual  manual  tradition  of  a 
chose  in  action,  as  there  must  be  of  personal  property  to  constitute  a 


520  OPERATION   OF   CONTRACT. 

lien;  but  there  must  be  that  which  is  similar,  a  delivery  of  the  note, 
certificate,  or  other  document,  if  there  is  any,  which  constitutes  the 
chose  in  action,  to  the  assignee,  with  full  power  to  exercise  every 
species  of  dominion  over  it,  and  a  renunciation  of  any  power  over  it 
on  the  part  of  the  assignor.  The  intention  is,  as  far  as  the  nature  of 
the  case  will  admit,  to  substitute  the  assignee  in  place  of  the  assignor 
as  owner. 


BURNETT  v.  GWYNNE. 

2  ABBOTT'S  PRACTICE  REPORTS,  79.— 1855. 
(New  York  Common  Pleas.) 

Action  by  the  plaintiff  as  assignee,  upon  an  account  for  work  and 
materials  furnished  for  the  defendant.  On  the  cross-examination  of 
the  assignor,  the  defendant  put  to  him  the  following  question :  "What 
consideration  did  you  get  of  the  plaintiff  for  the  account?"  This 
question  was  objected  to  by  the  plaintiff's  counsel,  but  the  justice 
overruled  the  objection,  and  the  plaintiff  excepted. 

WOODRUFF,  J.  We  think  that  where  the  object  is  to  prove  that  the 
alleged  assignment  to  the  plaintiff  is  a  mere  sham,  and  that  although 
an  assignment  in  form  has  been  executed,  it  was  executed  under  an 
arrangement  that  recovery  should  be  for  the  benefit  of  the  alleged 
assignor,  and  that  the  form  of  an  assignment  was  gone  through  with 
for  the  mere  purpose  of  securing  a  recovery  by  means  of  the  assignor's 
own  testimony,  while  he  was  to  receive  and  enjoy  the  fruits  of  the 
recovery,  then  proof  that  there  was  no  consideration  for  the  assign- 
ment, may,  in  connection  with  other  evidence  tending  to  those  con- 
clusions, be  competent ; 1  but  the  mere  fact  that  there  was  no  con- 
sideration does  not  alone  amount  to  anything.  A  man  may  sell  a 
claim  for  one  dollar  or  for  fifty  dollars ;  he  may  give  it  away  without 
consideration,  and  the  assignment  would  be  good.  Standing  alone, 
therefore,  as  the  proposed  evidence  did,  the  question  was  immaterial, 
and  we  think  furnishes  no  ground  for  reversal,  when  justice  is  done, 
whatever  may  be  the  answer  to  the  question.  We  think  the  judgment 
should  be  affirmed.  .  .  .2 

1  But  for  recovery  under  the  statute  see  Allen  v.  Brown,  ante,  p.  158. 

2  Upon  the  question  as  to  consideration  and  assignment,  see  Consideration 
and  the  assignment  of  choses  in  action,  by  Edward  Jenks,  16  Law  Quar.  Rev. 
241 ;  and  the  rejoinder,  Assignment  of  ehoses  in  action,  by  Sir  Wm.  Anson, 
17  Law  Quar.  Rev.  90. 


ASSIGNMENT   OF   CONTRACT.  521 

TALLMAN  v.  HOEY,  APPELLANT. 

89  NEW  YORK,  537.— 1882. 

Appeal  from  judgment  of  the  General  Term  of  the  Court  -of  Com- 
mon Pleas  in  and  for  the  city  and  county  of  New  York,  entered  upon 
an  order  made  February  7th,  1881,  which  affirmed  judgment  in  favor 
of  plaintiff,  entered  upon  a  verdict,  and  affirmed  an  order  denying  a 
motion  for  a  new  trial. 

This  action  was  brought  to  recover  a  balance  of  the  purchase-price 
of  certain  premises  conveyed  by  plaintiff  to  defendant. 

Defendant  admitted  that  the  balance  claimed  was  unpaid,  but  set 
up  as  a  counter-claim  an  indebtedness  of  plaintiff  to  one  Lynch,  a 
real  estate  broker,  for  commissions  in  effecting  a  sale  of  the  premises, 
and  an  assignment  of  the  claim  to  defendant.  On  the  trial  defendant 
gave  in  evidence  the  following  instrument: 

EXHIBIT  I. 
"J.  B.  TALLMAN: 

"Please  pay  to  Mr.  John  Hoey,  or  bearer,  $850,  being  amount  of  commis- 
sions due  me  on  sale  of  624  Fifth  Avenue. 

"M.  A.  J.  LYNCH. 
"New  York,  January  18,  1872." 

It  did  not  appear  that  defendant  was  indebted  to  Lynch  at  the  time 
of  the  delivery  of  said  instrument  to  him,  or  that  he  paid  or  parted 
with  anything  on  receipt  thereof. 

FINCH,  J.  The  instrument  which  is  the  subject  of  this  litigation 
is  described  by  the  plaintiff  as  a  bill  of  exchange,  and  claimed  by  the 
defendant  to  operate  as  an  equitable  assignment  of  the  commissions 
alleged  to  have  been  earned  by  Lynch  and  due  from  the  plaintiff.  If  a 
bill  of  exchange,  Tallman  could  not  be  made  liable  for  want  of  ac- 
ceptance in  writing.  If  the  holder  can  enforce  it  at  all,  it  must  be 
upon  the  ground  of  an  equitable  assignment.  But  the  circumstance 
which  justifies  and  induces  that  equitable  construction  which  treats  as 
an  assignment  what  is  not  strictly  and  legally  such,  is  the  existence  of  a 
valuable  consideration  for  the  imperfect  transfer.  Brill  v.  Tuttle,  81 
N.  Y.  457.  It  proceeds  upon  a  necessity  demanded  by  the  justice 
of  the  case,  and  to  obviate  an  injury  or  a  wrong  which  would  other- 
wise occur.  Where  the  holder  has  parted  with  nothing,  and  so  loses 
nothing  by  the  application  of  ordinary  legal  rules,  no  pressure  of  justice 
requires  the  intervention  and  the  help  of  an  equitable  doctrine.  And 
so  it  follows  that,  conceding  the  order  to  have  been  drawn  on  a  particu- 
lar fund  ( Att'y-Gen'l  v.  Continental  Life  Ins.  Co.,  71  N.  Y.  325 ;  27 
Am.  Eep.  55),  yet  the  presence  of  a  valuable  consideration  upon  which 
the  order,  or  direction  to  pay,  was  founded,  becomes  the  essential  and 
necessary  element  of  an  equitable  assignment.  That  element  is  wanting 


522  OPERATION   OF   CONTRACT. 

in  the  present  case.  It  is  claimed,  however,  to  be  supplied  by  a  legal 
presumption.  It  is  undoubtedly  true  that  where  an  actual  assignment 
exists  it  is  presumed,  in  the  absence  of  proof  of  the  facts,  to  have  been 
made  upon  adequate  consideration.  Beldon  v.  Meeker,  47  N.  Y.  311. 
But  here  no  actual  assignment  was  ever  executed.  The  equitable  rule 
which  transforms  a  mere  order  into  an  assignment  is  brought  into  play 
by  a  just  necessity,  existing  and  established,  and  not  by  a  mere  possi- 
bility or  presumption.  But  in  the  case  at  bar  the  facts  proven  repel 
any  such  presumption.  Not  only  did  both  Lynch  and  Hoey,  when 
upon  the  witness  stand,  fail  to  assert  any  consideration  passing  be- 
tween them  for  the  order  on  Tallman,  but  Lynch  tells  us  substantially 
the  contrary.  He  says  that  if  the  order  was  not  paid  he  expected  to 
get  his  commissions  of  Tallman,  and  afterward  did  settle  with  him 
for  them  as  the  real  owner  to  whom  they  were  due.  These  facts  in- 
dicate that  the  order  was  without  actual  consideration;  that  it  was 
held  by  Hoey  merely  for  collection  as  the  agent  and  on  behalf  of  Lynch, 
or  at  most  was  an  unexecuted  and  imperfect  gift.  In  neither  event 
could  the  doctrine  of  equitable  assignment  apply.  We  discover  no 
ground  upon  which  the  counter-claim  pleaded  can  rest,  and  the  plain- 
tiff's cause  of  action  for  the  balance  of  purchase-money  being  conceded, 
a  recover)-  for  that  was  properly  allowed. 

The  judgment  should  be  affirmed  with  costs. 

All  concur. 

Judgment  affirmed.1 

4  Cyc.  31   (65). 

i  "The  difficulty  in  this  case  consists  rather  in  ascertaining  the  true  con- 
struction to  be  put  upon  the  order  than  the  legal  principles  applicable  to  the 
case.  There  can  be  no  doubt  as  to  the  rule  that  when,  for  a  valuable  con- 
sideration from  the  payee,  an  order  is  drawn  upon  a  third  party  and  made 
payable  out  of  a  particular  fund,  then  due  or  to  become  due  from  him  to 
the  drawer,  the  delivery  of  the  order  to  the  payee  operates  as  an  assignment 
pro  tanto  of  the  fund,  and  the  drawee  is  bound,  after  notice  of  such  assign- 
ment, to  apply  the  fund,  as  it  accrues,  to  the  payment  of  the  order  and  to  no 
other  purpose,  and  the  payee  may,  by  action,  compel  such  application.  It  is 
equally  well  established  that  if  a  draft  be  drawn  generally  upon  the  drawee, 
to  be  paid  by  him  in  the  first  instance,  on  the  credit  of  the  drawer  and  with- 
out regard  to  the  source  from  which  the  money  used  for  its  payment  is  ob- 
tained, the  designation  by  the  drawer  of  a  particular  fund,  out  of  which  the 
drawee  is  to  subsequently  reimburse  himself  for  such  payment,  or  a  particu- 
lar account  to  which  it  is  to  be  charged,  will  not  convert  the  draft  into  an 
assignment  of  the  fund,  and  the  payee  of  the  draft  can  have  no  action  thereon 
against  the  drawee  unless  he  duly  accepts.  In  all  cases,  therefore,  in  which 
a  particular  fund,  to  accrue  in  futuro  is  designated  in  the  draft,  and  the  lan- 
guage is  ambiguous,  the  turning  point  is  whether  it  was  the  intention  of 
the  parties  that  the  payment  should  be  made  only  out  of  the  designated  fund, 
when  or  as  it  should  accrue,  or  whether  the  direction  to  the  drawee  to  pay  was 
intended  to  be  absolute,  and  the  fund  was  mentioned  only  as  a  source  of  re- 


ASSIGNMENT  OF   CONTRACT.  623 

HAYNES,  C.,  IN  GRAHAM  PAPER  CO.  v.  PEMBROKE  et  al. 

124  CALIFORNIA,  117.— 1899. 

To  complete  the  assignment  of  an  account  as  against  the  debtor, 
it  is  universally  conceded  that  the  debtor  must  have  notice,  as  other- 
wise his  debt  will  be  discharged  by  payment  to  the  assignor;  but 
whether  the  prior  assignee  must  give  notice  to  the  debtor  in  order 
to  protect  himself  against  a  subsequent  assignee  is  a  question  upon 
which  there  is  a  conflict  in  the  authorities. 

"It  is  a  well-established  rule  in  England  that,  as  between  successive 
assignees  of  a  chose  in  action,  he  will  have  the  preference  who  first 
gives  notice  to  the  debtor,  even  if  he  be  a  subsequent  assignee,  pro- 
vided at  the  time  of  taking  it  he  had  no  notice  of  the  prior  assign- 
ment/' (2  Am.  &  Eng.  Ency.  of  Law,  3d  ed.,  p.  1077.)  The  reason 
of  this  rule  is  stated  by  Sir  Thomas  Plumer,  M.  R.,  in  Dearie  v. 
Hall,  3  Russ.  1,  thus:  "In  Ryall  v.  Rowles,  1  Ves.,  Sen.  348,  the 
judges  held  that  in  case  of  a  chose  in  action  you  must  do  everything 
toward  having  possession  which  the  subject  admits ;  you  must  do  that 
which  is  tantamount  to  obtaining  possession,  by  placing  every  person 
who  has  an  equitable  or  legal  interest  in  the  matter  under  an  obli- 
gation to  treat  it  as  your  property.  For  this  purpose  you  must  give 
notice  to  the  legal  holder  of  the  fund;  in  the  case  of  a  debt,  for 
instance,  notice  to  the  debtor  is  for  many  purposes  tantamount  to 
possession.  If  you  omit  to  give  that  notice,  you  are  guilty  of  the 
same  degree  and  species  of  neglect  as  he  who  leaves  a  personal 
chattel,  to  which  he  has  acquired  title,  in  the  actual  possession 

imbursement  or  an  instruction  as  to  book-keeping." — Brill  v.  Tuttle  81  N.  Y. 
454. 

In  Heermans  v.  Ellsworth,  64  N.  Y.  159,  the  action  was  by  plaintiff,  as  trus- 
tee of  Fellows,  to  recover  a  balance  of  account  for  moneys  loaned  by  Fellows 
to  defendant.  Defense,  payment  to  Fellows.  The  plaintiff  gave  evidence  tend- 
ing to  show  that  before  the  payment  to  Fellows,  defendant  had  notice  of  the 
trust.  Defendant  testified  he  had  no  notice.  The  court  held:  "There  was 
no  error  in  the  charge  of  the  judge  upon  the  trial,  that  the  burden  of  proof 
was  upon  the  plaintiff,  upon  the  question  of  notice,  and  that  it  was  incum- 
bent upon  him  to  establish  the  fact  of  notice.  ...  At  common  law  an  action 
to  recover  upon  an  instrument  not  negotiable,  was  necessarily  brought  in  the 
name  of  the  original  owner  or  payee,  and  if  payment  was  pleaded  it  was  not 
enough  that  the  replication  denied  the  payment,  without  averring  both  the 
assignment  and  notice  of  the  transfer  before  payment.  19  J.  R.  95;  1  Hill, 
[552].  Unless  this  was  done  the  pleading  was  insufficient  and  the  proof 
could  not  be  given.  Proof  of  payment  to  the  creditor  established  a  complete 
defense,  and  when  this  is  made  out  it  belongs  to  the  other  side  to  answer  or 
avoid  it  by  evidence  of  the  assignment  of  the  demand  and  notice  thereof  to 
the  debtor.  As  he  alleges  that  the  payment  was  not  made  to  the  proper  per- 
son, he  is  bound  to  establish  it."  See'4  Cyc.  34  (77) ;  W.  P.  282  (75). 


524  OPERATION   OF   CONTRACT. 

and  under  the  absolute  control  of  another  person."  The  English 
rule  has  been  followed  by  the  federal  courts  in  this  country.  [The 
court  here  cites,  Judson  v.  Corcoran,  17  How.  612;  Spain  v.  Brent, 

1  Wall.  604,  624;  Laclede  Bank  v.  Schuler,  120  U.  S.  511;  and 
states  Methven  v.  Staten  Island,  etc.,  Co.,  66  Fed.  Eep.  113.] 

This  proposition  is  also  sustained  in  2  Story's  Equity  Jurispru- 
dence, section  1035  a,  and  in  note  4  (p.  339),  Foster  v.  Cockerell,  9 
Bligh,  332,  375,  376,  is  quoted  at  considerable  length,  stating  what 
appears  to  us  satisfactory  reasons  in  its  support. 

In  2  Pomeroy's  Equity  Jurisprudence,  section  695,  the  same  doc- 
trine is  stated,  and  at  §  698  the  learned  author  added :  "Even  where 
the  rule  concerning  notice  to  the  debtor  or  trustee  has  not  been 
adopted,  an  assignee  who  had  otherwise  the  priority  may  lose  it 
through  his  laches,  as  against  a  subsequent  purchaser  in  good  faith 
and  for  value  who  has  been  injured  by  the  negligence.  .  .  .  The 
questions  as  to  priority  of  right  may  arise  between  the  assignee  and 
a  judgment  creditor  of  the  assignor  or  a  subsequent  purchaser  from 
the  assignor.  There  is  a  clear  distinction  between  these  two  claim- 
ants, since  a  judgment  creditor  only  succeeds  to  the  rights  of  his 
debtor,  while  a  purchaser  may  acquire  higher  rights."  (See,  also, 

2  Pomeroy's  Equity  Jurisprudence,   §    707.)     In  2   American   and 
English  Encyclopedia  of  Law,  page  1077,  notes  3  and  4,  Iowa,  Mis- 
souri, Vermont,  and  Virginia  are  mentioned  as  supporting  the  Eng- 
lish rule,  and  New  Jersey,  New  York,  and  Texas  as  rejecting  it. 
To  the  former  list  may  be  added  Connecticut.     See  Bishop  v.  Hoi- 
comb,  10  Conn.  444 ;  Foster  v.  Mix,  20  Conn.  395. 

Appellant  cites  a  large  number  of  the  New  York  cases  in  support 
of  its  contention,  and  it  must  be  conceded  that  they  sustain  the  gen- 
eral proposition  that  the  prior  assignee  has  the  better  right,  though 
he  has  not  notified  the  debtor.  We  think,  however,  that  the  doc- 
trine announced  by  the  English  courts,  and  followed  by  our  federal 
courts  and  the  state  courts  above  mentioned,  is  based  upon  the  better 
reason  and  sustained  by  the  weight  of  authority.  Notice  to  the  debtor 
not  only  protects  the  assignee  against  payment  to  the  assignor,  but 
against  payment  to  the  subsequent  assignee,  since  the  debtor,  with 
notice  of  the  prior  assignment,  would  be  no  more  protected  by  a 
payment  to  a  subsequent  assignee  than  he  would  by  paying  to  the 
assignor;  and,  besides,  an  intending  purchaser  of  the  accounts  from 
the  assignor  would  have  it  in  his  power  to  ascertain  from  the  debtors, 
by  inquiry,  whether  any  prior  assignment  existed,  and  would  thus  be 
furnished  with  the  only  reasonable  protection  possible  against  fraud 
on  the  part  of  the  assignor. 

4  Cyc.  78  (82-84)  ;  W.  P.  281   (73). 


ASSIGNMENT   OF   CONTRACT.  525 

MUIE  v.  SCHENCK  &  EOBINSON. 

3  HILL    (N.   Y.),  228.— 1842. 

The  bond  in  question,  and  a  mortgage  of  the  same  date,  were 
executed  by  the  defendants  to  the  plaintiff.  The  first  three  install- 
ments were  paid  to  the  plaintiff,  who,  on  the  13th  of  November, 

1839,  assigned  and  delivered  the  bond  to  Ira  Doty,  as  collateral  se- 
curity for  the  payment  of  a  note  of  $318.85.     On  the  9th  of  March, 

1840,  the  plaintiff  executed  to  Sedgewick  Austin  an  absolute  assign- 
ment of  the  mortgage  "and  the  bond  therein  referred  to,"  in  pay- 
ment of  certain  notes  held  by  Austin  against  the  plaintiff,  which 
were  thereupon  delivered  up  to  the  latter.     Austin  gave  immediate 
notice  of  the  assignment  to  the  defendants,  who  promised  to  pay 
him.     Accordingly,  in  September,  1840,  the  defendants  paid  Austin 
the  fourth  installment  ($342),  and  on  the  6th  of  September,  1841, 
they  paid  the  balance;  whereupon  he  acknowledged  satisfaction  of 
the   mortgage.     Intermediate   these  two  payments,   viz.   in  October, 
1840,  Doty  gave  notice  to  the  defendants  that  the  bond  had  been 
assigned  to  him  before  the  assignment  to  Austin;  and  forbade  any 
further  payments  to  the  latter.     This  action  was  brought  for  the 
benefit  of  Doty,  who  insisted  that  he  was  entitled  to  recover  the  last 
installment  with  interest. 

COWEN,  J.  The  question  is,  whether  the  defendants  were  right 
in  preferring  Austin,  and  making  the  first  payment  to  him  instead 
of  Doty.  Doty  had  the  first  assignment  from  the  obligee,  and,  as 
between  him  and  Austin  was  entitled  to  the  money.  In  a  conflict 
of  equitable  claims,  the  rule  is  the  same  at  law  as  in  equity,  qui  prior 
est  tempore,  potior  est  jure.  There  was  no  need  of  notice  to  Austin 
for  the  purpose  of  securing  a  preference  as  against  him;  and  Austin 
might  have  been  compelled  at  the  election  of  Doty  to  pay  over  to 
him  the  last  installment  received  from  the  defendants.  But  before 
that  installment  was  paid,  he  chose  to  fix  the  defendants  by  giving 
notice  of  his  right  to  them,  and  forbidding  the  paying  of  any  more 
to  Austin.  The  payments  were  correctly  made  to  the  latter,  till 
notice.  The  payment  afterwards,  was  in  the  defendants'  own  wrong. 
The  notice,  when  it  came,  afforded  them  a  complete  protection,  and 
had  the  further  effect  to  render  what  was  before  an  inchoate  right 
in  Doty,  perfect  from  the  beginning.  As  Austin  had  never  any  right 
to  receive,  the  defendants  had  now  no  right  to  pay.  No  one  would 
doubt  that  the  first  assignment  divested  the  right  of  the  obligee, 
though  the  legal  interest  remained  in  him.  Could  he  transfer  to 
Austin  a  greater  right  than  his  own?  His  legal  interest  was  not 


526  OPERATION   OF   CONTRACT. 

assignable;  and  he  had  parted  with  all  his  equitable  right.     Does  it 
not  follow  that  nothing  remained  for  Austin  ?  *  .  .  . 


e.  By  the  law  merchant:  negotiability. 

SHAW  v.  RAILROAD  CO. 
101  UNITED  STATES,  557.— 1879. 

Replevin  by  Merchants'  National  Bank  of  St.  Louis  against  Shaw 
&  Esrey,  of  Philadelphia,  to  recover  possession  of  certain  cotton 
marked  "W.  D.  I."  One  hundred  and  forty-one  bales  thereof  having 
been  taken  possession  of  by  the  marshal,  were  returned  to  the  de- 
fendants upon  their  entering  into  the  proper  bond.  Judgment  for 
plaintiff  for  "the  value  of  goods  eloigned."  Defendants  bring  error. 

Norvel  &  Co.,  of  St.. Louis,  drew  a  draft  on  M.  Kuhn  &  Brother, 
of  Philadelphia,  attached  thereto  as  collateral  security  an  original 
bill  of  lading  for  one  hundred  and  seventy  bales  of  cotton  shipped  to 
Philadelphia,  and  sold  the  draft,  with  the  bill  of  lading  attached,  to 
plaintiff.  The  duplicate  bill  of  lading  they  sent  to  Kuhn  &  Brother. 
Plaintiff  forwarded  the  draft,  with  bill  of  lading  attached,  to  the 
Bank  of  North  America,  of  Philadelphia,  for  presentation  and  ac- 
ceptance. The  Bank  of  North  America  presented  the  draft  to  Kuhn 
&  Brother,  who  accepted  the  draft,  but  secretly  detached  the  original 
bill  of  lading  and  substituted  the  duplicate.  Kuhn  &  Brother  then 
indorsed  the  original  bill  of  lading  to  Miller  &  Brother,  who,  through 
a  broker,  and  with  the  consent  of  Kuhn  &  Brother,  sold  the  cotton 
in  controversy  by  sample  to  defendants.  The  original  bill  of  lading 
was  deposited  with  the  Railroad  Company,  and  the  cotton,  on  its 
arrival,  was  delivered  to  defendants.  Kuhn  &  Brother  subsequently 
failed,  their  accepted  draft  was  protested,  and  the  fact  that  the  plain- 
tiff held  the  duplicate  bill  of  lading  was  then  discovered. 

Defendants  contend  that  the  bill  of  lading  was  negotiable  in  the 
ordinary  sense  of  that  word;  that  Miller  &  Brother  purchased  it  for 
value  in  the  usual  course  of  business  and  thereby  acquired  a  valid 
title  to  the  cotton,  which  was  not  impaired  by  proof  of  Kuhn  and 
Brother's  fraud.  The  jury  found,  (1)  that  plaintiff's  agent  was  not 
negligent  in  parting  with  possession  of  the  bill  of  lading,  and  (2) 
that  Miller  &  Brother  knew  facts  from  which  they  had  reason  to 
believe  that  the  bill  of  lading  was  held  to  secure  payment  of  an  out- 
standing draft. 

i  "It  is  well  settled  in  this  State  that  an  assignment  of  a  thing  in  action 
passes  the  whole  title  to  the  assignee,  as  between  him  and  a  subsequent 
assignee.  Notice  is  only  necessary  as  to  the  debtor." — Greentree  v.  Rosen- 
stock,  61  N.  Y.  583. 


ASSIGNMENT   OF    CONTRACT.  527 

ME.  JUSTICE  STRONG.  The  defendants  below,  now  plaintiffs  in 
error,  bought  the  cotton  from  Miller  &  Brother  by  sample,  through 
a  cotton  broker.  No  bill  of  lading  or  other  written  evidence  of  title 
in  their  vendors  was  exhibited  to  them.  Hence,  they  can  have  no 
other  or  better  title  than  their  vendors  had. 

The  inquiry,  therefore,  is,  what  title  had  Miller  &  Brother  as 
against  the  bank,  which  confessedly  was  the  owner,  and  which  is  still 
the  owner  unless  it  has  lost  its  ownership  by  the  fraudulent  act  of 
Kulm  &  Brother.  The  cotton  was  represented  by  the  bill  of  lading 
given  to  Norvel  &  Co.,  at  St.  Louis,  and  by  them  indorsed  to  the 
bank,  to  secure  the  payment  of  an  accompanying  discounted  time- 
draft.  That  indorsement  vested  in  the  bank  the  title  to  the  cotton, 
as  well  as  to  the  contract.  While  it  there  continued,  and  during  the 
transit  of  the  cotton  from  St.  Louis  to  Philadelphia,  the  indorsed  bill 
of  lading  was  stolen  by  one  of  the  firm  of  Kuhn  &  Brother,  and  by 
them  indorsed  over  to  Miller  &  Brother,  for  an  advance  of  $8500. 
The  jury  has  found,  however,  that  there  was  no  negligence  of  the 
bank,  or  of  its  agents,  in  parting  with  possession  of  the  bill  of  lad- 
ing, and  that  Miller  &  Brother  knew  facts  from  which  they  had  reason 
to  believe  it  was  held  to  secure  the  payment  of  an  outstanding  draft; 
in  other  words,  that  Kuhn  &  Brother  were  not  the  lawful  owners  of 
it,  and  had  no  right  to  dispose  of  it. 

It  is  therefore  to  be  determined  whether  Miller  &  Brother,  by  tak- 
ing the  bill  of  lading  from  Kuhn  &  Brother  under  these  circum- 
stances, acquired  thereby  a  good  title  to  the  cotton  as  against  the 
bank. 

In  considering  this  question,  it  does  not  appear  to  us  necessary 
to  inquire  whether  the  effect  of  the  bill  of  lading  in  the  hands  of 
Miller  &  Brother  is  to  be  determined  by  the  law  of  Missouri,  where 
the  bill  was  given,  or  by  the  law  of  Pennsylvania,  where  the  cotton 
was  delivered.  The  statutes  of  both  States  enact  that  bills  of  lading 
shall  be  negotiable  by  indorsement  and  delivery.  The  statute  of 
Pennsylvania  declares  simply,  they  "shall  be  negotiable  and  may  be 
transferred  by  indorsement  and  delivery";  while  that  of  Missouri 
enacts  that  "they  shall  be  negotiable  by  written  indorsement  thereon 
and  delivery,  in  the  same  manner  as  bills  of  exchange  and  promis- 
sory notes."  There  is  no  material  difference  between  these  provisions. 
Both  statutes  prescribe  the  manner  of  negotiation;  i.  e.  by  indorse- 
ment and  delivery.  Neither  undertakes  to  define  the  effect  of  such 
a  transfer. 

We  must,  therefore,  look  outside  of  the  statutes  to  learn  what  they 
mean  by  declaring  such  instruments  negotiable.  What  is  negotiabil- 
ity? It  is  a  technical  term  derived  from  the  usage  of  merchants 
and  bankers,  in  transferring,  primarily,  bills  of  exchange,  and,  after- 
wards, promissory  notes.  At  common  law  no  contract  was  assignable, 


528  OPERATION    OF   CONTRACT. 

so  as  to  give  to  an  assignee  a  right  to  enforce  it  by  suit  in  his  own 
name.  To  this  rule  bills  of  exchange  and  promissory  notes,  payable 
to  order  or  bearer,  have  been  admitted  exceptions,  made  such  by  the 
adoption  of  the  law  merchant.  They  may  be  transferred  by  indorse- 
ment and  delivery,  and  such  a  transfer  is  called  negotiation.  It  is 
a  mercantile  business  transaction,  and  the  capability  of  being  thus 
transferred,  so  as  to  give  to  the  indorsee  a  right  to  sue  on  the  con- 
tract in  his  own  name,  is  what  constitutes  negotiability.  The  term 
"negotiable"  expresses,  at  least  primarily,  this  mode  and  effect  of  a 
transfer. 

In  regard  to  bills  and  notes,  certain  other  consequences  generally, 
though  not  always,  follow.  Such  as  a  liability  of  the  indorser,  if 
demand  be  duly  made  of  the  acceptor  or  maker,  and  seasonable  notice 
of  his  default  be  given.  So  if  the  indorsement  be  made  for  value 
to  a  bona  fide  holder,  before  the  maturity  of  the  bill  or  note,  in  due 
course  of  business,  the  maker  or  acceptor  cannot  set  up  against  the 
indorsee  any  defense  which  might  have  been  set  up  against  the  payee, 
had  the  bill  or  note  remained  in  his  hands. 

So,  also,  if  a  note  or  bill  of  exchange  be  indorsed  in  blank,  if  pay- 
able to  order,  or  if  it  be  payable  to  bearer,  and  therefore  negotiable 
by  delivery  alone,  and  then  be  lost  or  stolen,  a  bona  fide  purchaser 
for  value  paid  acquires  title  to  it,  even  as  against  the  true  owner. 
This  is  an  exception  from  the  ordinary  rule  respecting  personal  prop- 
erty. But  none  of  these  consequences  are  necessary  attendants  or 
constituents  of  negotiability,  or  negotiation.  That  may  exist  without 
them.  A  bill  or  note  past  due  is  negotiable,  if  it  be  payable  to  order, 
or  bearer,  but  its  indorsement  or  delivery  does  not  cut  off  the  defenses 
of  the  maker  or  acceptor  against  it,  nor  create  such  a  contract  as 
results  from  an  indorsement  before  maturity,  and  it  does  not  give 
to  the  purchaser  of  a  lost  or  stolen  bill  the  rights  of  the  real  owner. 

It  does  not  necessarily  follow,  therefore,  that  because  a  statute  has 
made  bills  of  lading  negotiable  by  indorsement  and  delivery,  all  these 
consequences  of  an  indorsement  and  delivery  of  bills  and  notes  before 
maturity  ensue  or  are  intended  to  result  from  such  negotiation. 

Bills  of  exchange  and  promissory  notes  are  exceptional  in  their 
character.  They  are  representatives  of  money,  circulating  in  the  com- 
mercial world  as  evidence  of  money,  "of  which  any  person  in  lawful 
possession  may  avail  himself  to  pay  debts  or  make  purchases  or  make 
remittances  of  money  from  one  country  to  another,  or  to  remote 
places  in  the  same  country.  Hence,  as  said  by  Story,  J.,  it  has  be- 
come a  general  rule  of  the  commercial  world  to  hold  bills  of  exchange, 
as  in  some  sort,  sacred  instruments  in  favor  of  bona  fide  holders  for 
a  valuable  consideration  without  notice."  Without  such  a  holding 
they  could  not  perform  their  peculiar  functions.  It  is  for  this  reason 
it  is  held  that  if  a  bill  or  note,  indorsed  in  blank  or  payable  to  bearer, 


ASSIGNMENT   OF   CONTRACT.  529 

be  lost  or  stolen,  and  be  purchased  from  the  finder  or  thief,  without 
any  knowledge  of  want  of  ownership  in  the  vendor,  the  bona  fide 
purchaser  may  hold  it  against  the  true  owner.  He  may  hold  it 
though  he  took  it  negligently,  and  when  there  were  suspicious  cir- 
cumstances attending  the  transfer.  Nothing  short  of  actual  or  con- 
structive notice  that  the  instrument  is  not  the  property  of  the  person 
who  offers  to  sell  it;  that  is,  nothing  short  of  mala  fides  will  defeat 
his  right.  The  rule  is  the  same  as  that  which  protects  the  bona  fide 
indorser  of  a  bill  or  note  purchased  for  value  from  the  true  owner. 
The  purchaser  is  not  bound  to  look  beyond  the  instrument.  Good- 
man v.  Harvey,  4  Ad.  &  E.  870 ;  Goodman  v.  Simonds,  20  How.  343 ; 
Murray  v.  Lardner,  2  Wall.  110;  Matthews  v.  Poythress,  4  Ga,  287. 
The  rule  was  first  applied  to  the  case  of  a  lost  bank-note  (Miller  v. 
Race,  1  Burr.  452)  and  put  upon  the  ground  that  the  interests  of 
trade,  the  usual  course  of  business,  and  the  fact  that  bank-notes  pass 
from  hand  to  hand  as  coin,  require  it.  It  was  subsequently  held 
applicable  to  merchants'  drafts,  and  in  Peacock  v.  Ehodes  (2  Doug. 
633)  to  bills  and  notes,  as  coming  within  the  same  reason. 

The  reason  can  have  no  application  to  the  case  of  a  lost  or  stolen 
bill  of  lading.  The  function  of  that  instrument  is  entirely  different 
from  that  of  a  bill  or  note.  It  is  not  a  representative  of  money,  used 
for  transmission  of  money,  or  for  the  payment  of  debts  or  for  pur- 
chases. It  does  not  pass  from  hand  to  hand  as  bank-notes  or  coin. 
It  is  a  contract  for  the  performance  of  a  certain  duty.  True,  it  is  a 
symbol  of  ownership  of  the  goods  covered  by  it, — a  representative  of 
those  goods.  But  if  the  goods  themselves  be  lost  or  stolen,  no  sale 
of  them  by  the  finder  or  thief,  thovrh  to  a  bona  fide  purchaser  for 
value,  will  divest  the  ownership  of  the  person  who  lost  them,  or  from 
whom  they  were  stolen.  Why  then  should  the  sale  of  the  symbol  or 
mere  representative  of  the  goods  have  such  an  effect?  It  may  be 
that  the  true  owner  by  his  negligence  or  carelessness  may  have  put 
it  in  the  power  of  a  finder  or  thief  to  occupy  ostensibly  the  position 
of  a  true  owner,  and  his  carelessness  may  estop  him  from  asserting 
his  right  against  a  purchaser  who  has  been  misled  to  his  hurt  by  that 
carelessness.  But  the  present  is  no  such  case.  It  is  established  by 
the  verdict  of  the  jury  that  the  bank  did  not  lose  its  possession  of  the 
bill  of  lading  negligently.  There  is  no  estoppel,  therefore,  against 
the  bank's  right. 

Bills  of  lading  are  regarded  as  so  much  cotton,  grain,  iron,  or  other 
articles  of  merchandise.  The  merchandise  is  very  often  sold  or 
pledged  by  the  transfer  of  the  bills  which  cover  it.  They  are,  in 
commerce,  a  very  different  thing  from  bills  of  exchange  and  promis- 
sory notes,  answering  a  different  purpose  and  performing  different 
functions.  It  cannot  be,  therefore,  that  the  statute  which  made  them 
negotiable  by  indorsement  and  delivery,  or  negotiable  in  the  same 


530  OPERATION  OF  CONTRACT. 

manner  as  bills  of  exchange  and  promissory  notes  are  negotiable,  in- 
tended to  change  totally  their  character,  put  them  in  all  respects  on 
the  footing  of  instruments  which  are  the  representatives  of  money, 
and  charge  the  negotiation  of  them  with  all  the  consequences  which 
usually  attend  or  follow  the  negotiation  of  bills  and  notes.  Some  of 
these  consequences  would  be  very  strange  if  not  impossible.  Such 
as  liability  of  indorsers,  the  duty  of  demand  ad  diem,  notice  of  non- 
delivery by  the  carrier,  etc.,  or  the  loss  of  the  owner's  property  by 
the  fraudulent  assignment  of  a  thief.  If  these  were  intended,  surely 
the  statute  would  have  said  something  more  than  merely  make  them 
negotiable  by  indorsement.  No  statute  is  to  be  construed  as  altering 
the  common  law,  farther  than  its  words  import.  It  is  not  to  be  con- 
strued as  making  any  innovation  upon  the  common  law  which  it 
does  not  fairly  express.  Especially  is  so  great  an  innovation  as 
would  be  placing  bills  of  lading  on  the  same  footing  in  all  respects 
with  bills  of  exchange  not  to  be  inferred  from  words  that  can  be 
fully  satisfied  without  it.  The  law  has  most  carefully  protected  the 
ownership  of  personal  property,  other  than  money,  against  misap- 
propriation by  others  than  the  owner,  even  when  it  is  out  of  his 
possession.  This  protection  would  be  largely  withdrawn  if  the  mis- 
appropriation of  its  symbol  or  representative  could  avail  to  defeat 
the  ownership,  even  when  the  person  who  claims  under  a  misappro- 
priation had  reason  to  believe  that  the  person  from  whom  he  took 
the  property  had  no  right  to  it. 

We  think,  therefore,  that  the  rule  asserted  in  Goodman  v.  Harvey, 
Goodman  v.  Simonds,  Murray  v.  Lardner  (supra},  and  in  Phelan  v. 
Moss  (67  Pa.  St.  59),  is  not  applicable  to  a  stolen  bill  of  lading.  At 
least  the  purchaser  of  such  a  bill,  with  reason  to  believe  that  his 
vendor  was  not  the  owner  of  the  bill,  or  that  it  was  held  to  secure 
the  payment  of  an  outstanding  draft,  is  not  a  bona  fide  purchaser, 
and  he  is  not  entitled  to  hold  the  merchandise  covered  by  the  bill 
against  its  true  owner.  In  the  present  case  there  was  more  than 
mere  negligence  on  the  part  of  Miller  &  Brother,  more  than  mere 
reason  for  suspicion.  There  was  reason  to  believe  Kuhn  &  Brother 
had  no  right  to  negotiate  the  bill.  This  falls  very  little,  if  any, 
short  of  knowledge.  It  may  fairly  be  assumed  that  one  who  has 
reason  to  believe  a  fact  exists,  knows  it  exists.  Certainly,  if  he  be  a 
reasonable  being. 

This  disposes  of  the  principal  objections  urged  against  the  charge 
given  to  the  jury.  They  are  not  sustained.  The  other  assignments 
of  error  are  of  little  importance.  We  cannot  say  there  was  no  evi- 
dence in  the  case  to  justify  a  submission  to  the  jury  of  the  question 
whether  Miller  &  Brother  knew  any  fact  or  facts  from  which  they 
had  reason  to  believe  that  the  bill  of  lading  was  held  to  secure  pay- 
ment of  an  outstanding  draft.  It  does  not  appear  that  we  have 


ASSIGNMENT   OF    CONTRACT.  531 

before  us  all  the  evidence  that  was  given,  but  if  we  have,  there  is 
enough  to  warrant  a  submission  of  that  question. 

The  exceptions  to  the  admission  of  testimony,  and  to  the  cross- 
examination  of  Andrew  H.  Miller,  are  not  of  sufficient  importance, 
even  if  they  could  be  sustained,  to  justify  our  reversing  the  judgment. 
Nor  are  we  convinced  that  they  exhibit  any  error. 

There  was  undoubtedly  a  mistake  in  entering  the  verdict.  It  was 
a  mistake  of  the  clerk  in  using  a  superfluous  word.  The  jury  found 
a  general  verdict  for  the  plaintiff.  But  they  found  the  value  of 
the  goods  "eloigned"  to  have  been  $7015.97.  The  word  "eloigned" 
was  inadvertently  used,  and  it  might  have  been  stricken  out.  It 
should  have  been,  and  it  may  be  here.  The  judgment  was  entered 
properly.  As  the  verdict  was  amendable  in  the  court  below,  we  will 
regard  the  amendment  as  made.  It  would  be  quite  inadmissible  to 
send  the  case  back  for  another  trial  because  of  such  a  verbal  mistake. 

Judgment  affirmed.1 

6  Cyc.  424   (24,  27-28)  ;  W.  P.  302   (6). 


PARKER,  J.,  IN  GOSHEN  NATIONAL  BANK  v.  BINGHAM. 
118  NEW  YORK,  349.— 1890. 

It  is  too  well  settled  by  authority,  both  in  England  and  in  this 
country,  to  permit  of  questioning,  that  the  purchaser  of  a  draft,  or 
check,  who  obtains  title  without  an  endorsement  by  the  payee,  holds 
it  subject  to  all  equities  and  defences  existing  between  the  original 
parties,  even  though  he  has  paid  full  consideration,  without  notice 
of  the  existence  of  such  equities  and  defences.  Harrop  v.  Fisher,  30 
L.  J.  (C.  L.,  N.  S.),  283 ;  Whistler  v.  Forster,  14  C.  B.  (N.  S.)  246; 
Savage  v.  King,  17  Me.  301;  Clark  v.  Callison,  7  111.  263;  Haskell 
v.  Mitchell,  53  Me.  468;  Clark  v.  Whitaker,  50  N.  H.  474;  Calder 
v.  Billington,  15  Me.  398;  Lancaster  Nat.  Bank  v.  Taylor,  100  Mass. 
18;  Gilbert  v.  Sharp,  2  Lans.  412;  Hedges  v.  Sealy,  9  Barb.  214-218; 
Franklin  Bank  v.  Raymond,  3  Wend.  69;  Raynor  v.  Hoagland,  7 
J.  &  S.  11;  Muller  v.  Pondir,  55  N.  Y.  325;  Freund  v.  Importers' 
&  Traders'  Bank,  76  N.  Y.  352 ;  Trust  Co.  v.  Nat.  Bank,  101  U.  S. 
68 ;  Osgood  v.  Artt,  17  Fed.  Eep.  575. 

The  reasoning  on  which  this  doctrine  is  founded  may  be  briefly 
stated  as  follows:  The  general  rule  is  that  no  one  can  transfer  a 
better  title  than  he  possesses.2  An  exception  arises  out  of  the  rule 

1  "The  term  'negotiable,'  in  its  enlarged  signification,  applies  to  any  written 
security  which  may  be  transferred  by  indorsement  or  delivery,  so  as  to  vest  in 
the  indorsee  the  legal  title,  so  as  to  enable  him  to  maintain  a  suit  thereon  in 
his  own  name."— Scott,  J.,  in  Odell  v.  Gray,  15  Mo.  337,  342. 

2  See,  for  example,  Alexander  v.  Brogley,  ante  p.  276. 


532  OPERATION  OF  CONTRACT. 

of  the  law  merchant,  as  to  negotiable  instruments.  It  is  founded  on 
the  commercial  policy  of  sustaining  the  credit  of  commercial  paper. 
Being  treated  as  currency  in  commercial  transactions,  such  instru- 
ments are  subject  to  the  same  rule  as  money.  If  transferred  by 
endorsement,  for  value,  in  good  faith  and  before  maturity,  they  be- 
come available  in  the  hands  of  the  holder,  notwithstanding  the  exist- 
ence of  equities  and  defences,  which  would  have  rendered  them  un- 
available in  the  hands  of  a  prior  holder. 

This  rule  is  only  applicable  to  negotiable  instruments  which  are 
negotiated  according  to  the  law  merchant. 

When,  as  in  this  case,  such  an  instrument  is  transferred  but  with- 
out an  endorsement,  it  is  treated  as  a  chose  in  action  assigned  to  the 
purchaser.  The  assignee  acquires  all  the  title  of  the  assignor,  and 
may  maintain  an  action  thereon  in  his  own  name.  And,  like  other 
choses  in  action,  it  is  subject  to  all  the  equities  and  defences  existing 
in  favor  of  the  maker  or  acceptor  against  the  previous  holder. 

All  concur,  except  Haight,  J.,  not  sitting. 

Judgments  accordingly. 

7  Cyc.  791-792    (17-30). 


Assignment  of  contractual  rights  and  liabilities  by  operation  of  law. 

(i.)   Assignment  of  obligations  upon  the  transfer  of  interests  in  lands, 
a.  Covenants  affecting  leasehold  interests. 

Assignment  by  lessee. 
GORDON  v.  GEORGE. 

12  INDIANA,  408.— 1859. 

Appeal  from  the  Madison  Court  of  Common  Pleas. 

HANNA,  J.  Sarah  George,  the  appellee,  gave  a  written  lease  to 
one  Black,  stipulating  therein  that  Black  should  have  the  use  of  a 
parcel  of  land  for  five  years;  in  consideration  of  which  Black  was  to 
clear  the  land  and  make  it  ready  for  the  plow,  and  leave  the  premises 
in  good  repair.  It  was  further  agreed  that  Black  should  build  a 
cabin  and  smoke-house,  and  dig  a  well  on  the  premises,  for  which 
Sarah  George  was  to  pay  twenty-five  dollars  and  thirty-seven  cents. 
Before  clearing  the  land  or  building  the  cabin,  etc.,  Black  assigned 
the  lease,  by  indorsement,  to  the  said  James  Gordon,  appellant. 

Gordon  sued  before  a  justice,  alleging  that  he  had  built  the  house 
and  smoke-house  and  dug  the  well;  that  the  time  had  expired,  and 
the  lessor  refused  to  pay  for  said  house,  etc. 

The  plaintiff  recovered  a  judgment  before  the  justice  for  forty-two 


ASSIGNMENT   OF   CONTRACT.  533 

dollars.  On  appeal  to  the  Common  Pleas,  the  defendant  had  a  ver- 
dict and  judgment  for  twelve  dollars. 

The  defendant,  among  other  things,  set  up,  by  way  .of  counter- 
claim, that  the  plaintiff  had  not  cleared  the  ground  according  to  the 
contract,  etc. 

The  plaintiff  asked  the  court  to  instruct  the  jury,  that,  "if  the 
jury  find  the  matters  of  counter-claim  of  the  defendant  exceed  the 
amount  which  the  jury  may  find  due  the  plaintiff,  the  jury  cannot 
find  against  the  plaintiff  such  excess,"  which  was  refused.  Upon  this 
ruling  of  the  court,  the  only  point  made,  by  brief  of  counsel,  is 
predicated. 

By  the  statute  (2  E.  S.  p.  120)  plaintiff  may  dismiss  his  action; 
but  by  §  365,  "In  any  case,  where  a  set-off  or  counter-claim  has  been 
presented,  which,  in  another  action,  would  entitle  the  defendant  to 
a  judgment  against  the  plaintiff,  the  defendant  shall  have  the  right 
of  proceeding  to  the  trial  of  his  claim,  without  notice,  although  the 
plaintiff  may  have  dismissed  his  action,  or  failed  to  appear." 

So  in  Vassear  v.  Livingston  (3  Kern.  252)  it  is  said  that,  "a 
counter-claim  must  contain  the  substance  necessary  to  sustain  an 
action  on  behalf  of  the  defendant  against  the  plaintiff,  if  the  plain- 
tiff had  not  sued  the  defendant." 

In  Howland  v.  Coffin  (9  Pick.  52)  it  was  held  by  the  Supreme 
Court  of  Massachusetts,  "that  the  assignee  of  the  lessee  is  liable  to 
the  assignee  of  the  lessor  in  an  action  of  debt  for  the  time  he  holds; 
for  though  there  is  no  privity  of  contract,  there  is  a  privity  of  estate 
which  creates  a  debt  for  the  rent."  See  authorities  cited. 

In  another  case  between  the  same  parties,  it  is  said  (12  Pick.  125), 
"the  defendant  took  the  term  subject  to  all  the  advantages  and  dis- 
advantages attached  to  it  by  the  terms  of  the  lease.  The  covenant 
for  the  payment  of  the  rent  ran  with  the  land,  and  by  the  assign- 
ment of  the  term  became  binding  on  the  defendant."  See  Farmers' 
Bank  v.  The  Mutual  Ins.  Soc.,  4  Leigh  (Va.),  69;  Taylor's  Landlord 
and  Tenant,  76;  Provost  v.  Calder,  2  Wend.  517;  23  Id.  506;  21  Id. 
32;  Vernon  v.  Smith,  5  Barn,  and  Adol.  1. 

It  resolves  itself  into  the  question,  then,  under  the  above,  and  § 
59,  p.  41,  of  the  same  statute,  and  the  authorities  cited,  whether  the 
plaintiff  was  liable  to  the  defendant  for  the  non-performance  of  the 
contract  of  his  assignor.  We  think,  under  the  circumstances  of  this 
case,  he  was.  He  became  the  assignee  of  the  whole  interest  of  Black, 
before  any  part  of  the  contract  was  performed.  By  receiving  an 
assignment  of  the  lease,  and  taking  possession  of  the  land  under  it, 
he  surely  became  liable  to  perform  the  stipulations  of  that  lease,  so 
far  as  they  had  reference  to  improvements  upon  said  land,  if  no 
others,  of  which  we  do  not  decide,  as  it  is  not  necessary  to  do  so. 


534  OPERATION   OF   CONTRACT. 

The  ruling  of  the  court  upon  the  instruction  was  correct 
Per  Curiam.     The  judgment  is  affirmed,  with  10  per  cent  damages 
and  costs. 

24  Cyc.  918    (91-99,  1-3);   962    (72-73);    980    (20);   14  L.  R.  A    151-   W 
P.  299    (95). 


Assignment  by  lessor. 
FISHER  v.  PEERING. 

60  ILLINOIS,    114.— 1871. 

MR.  JUSTICE  WALKER.  It  appears,  from  an  examination  of  the 
authorities,  that  at  the  ancient  common  law  a  lease  was  not  assign- 
able so  as  to  invest  the  assignee  with  the  legal  title  to  the  rent.  Such 
instruments  were,  in  that  respect,  on  a  footing  with  other  agree- 
ments and  choses  in  action.  But  the  32  Hen.  VIII.,  ch.  34,  §  1, 
declared  that  the  assignee  of  the  reversion  should  become  invested 
with  the  rents.  But  notwithstanding  this  enactment,  the  courts  held 
that  the  assignee  of  the  reversion  could  not  sue  for  and  recover  the 
rent  unless  the  tenant  should  attorn,  when  the  holder  of  the  reversion 
might  recover  subsequently  accruing  rent  in  an  action  of  debt.  Marie 
v.  Flake,  3  Salk.  118;  Robins  v.  Cox,  1  Levinz,  22;  Ards  v.  Watkin, 
2  Croke's  Eliz.  637;  Knolles'  Case,  1  Dyer,  5  b;  Allen  v.  Bryan,  5 
Barn.  &  Cress.  512,  and  the  note. 

In  Williams  v.  Hayward  (1  Ellis  &  Ellis,  1040),  after  reviewing 
the  old  decisions  on  this  question,  it  was,  in  substance,  held  that,  under 
the  32  Hen.  VIII.,  an  assignee  of  the  rent,  without  the  reversion, 
could  recover  when  there  was  an  attornment,  and  that  such  an  as- 
signee could,  under  the  4  of  Anne,  recover  without  an  attornment. 

The  courts  seem  to  have  proceeded  upon  the  ground  that  there 
could  be  no  privity  of  contract  unless  the  tenant  should  attorn  to 
the  assignee  of  the  reversion;  that,  whilst  the  assignment  of  the  re- 
version created  a  privity  of  estate  between  the  assignee  and  the  tenant, 
privity  of  contract  could  only  arise  by  an  agreement  between  them. 
Some  confusion  seems  to  have  got  into  the  books  from  calling  the 
purchaser  of  the  reversion  an  assignee  of  the  lease,  by  its  passing 
by  the  conveyance  as  appurtenant  to  the  estate.  But  where  the  tenant 
attorned  to  the  assignee  of  the  reversion  the  assignment  became  com- 
plete, and  then  there  existed  both  privity  of  estate  and  of  contract 
between  the  assignee  and  the  tenant,  and  by  reason  of  the  privity 
of  contract  the  assignee  might  sue  in  debt,  and  recover  subsequently 
accruing,  but  not  rent  in  arrear  at  the  time  he  acquired  the  reversion. 

To  give  the  assignee  of  the  reversion  a  more  complete  remedy,  the 
4  and  5  Anne,  ch.  16,  §  9,  was  adopted,  dispensing  with  the  necessity 


ASSIGNMENT    OF    CONTRACT.  535 

of  an  attornment  which  the  courts  had  held  to  be  necessary  under 
the  32  Hen.  VIII.,  to  create  a  privity  of  contract.  But  this  latter 
act  has  never  been  in  force  in  this  State,  and  hence  the  decisions  of 
the  British  courts,  made  under  it,  are  not  applicable  In  many  States 
of  the  Union  this  latter  act  has  been  adopted,  and  the  decisions  of 
their  courts  conform,  of  course,  to  its  provisions.  But  we  having 
adopted  the  common  law  of  England,  so  far  as  the  same  is  applicable 
and  of  a  general  nature,  and  all  statutes  or  acts  of  the  British 
Parliament  made  in  aid  of,  and  to  supply  defects  of,  the  common 
law,  prior  to  the  fourth  year  of  James  the  First,  except  certain 
enumerated  statutes,  and  which  are  of  a  general  nature  and  not  local 
to  that  kingdom,  they  are  declared  to  be  the  rule  of  decision,  and 
shall  be  considered  of  full  force  until  repealed  by  legislative  author- 
ity. Gross'  Comp.  1869,  416.  It  then  follows  that  the  32  Hen. 
VIII.,  ch.  34,  §  1,  is  in  force  in  this  State,  as  it  is  applicable  to  our 
condition,  and  is  unrepealed.  And  we  must  hold,  that  the  construc- 
tion given  to  that  act  by  the  British  courts  was  intended  also  to  be 
adopted. 

The  facts  in  this  case  show  such  a  privity  of  contract  as  brings 
it  fully  within  the  rule  announced  in  the  above  cases.  Appellee  paid 
to  appellant  several  instalments  of  rent  falling  due  under  the  lease 
after  it  was  assigned  to  him.  By  paying  the  rent,  the  lessee  fully 
recognized  the  appellant  as  his  landlord,  and  created  the  necessary 
privity  of  contract  to  maintain  the  action. 

The  case  of  Chapman  v.  McGrew  (20  111.  101)  announces  a  con- 
trary doctrine.  In  that  case  this  question  was  presented,  and  not- 
withstanding the  lessee  had  fully  recognized  the  assignee  of  the  lease 
as  his  landlord,  it  was  held  that  the  lessor  of  the  premises  might 
maintain  an  action  to  recover  the  rent.  In  that  case,  the  fact  that 
the  lessee  had  attorned  to  the  assignee  was  given  no  weight,  and 
the  fact  that  such  privity  was  thereby  created  as  authorized  the  as- 
signee of  the  lease  to  sue  for,  and  recover  the  rent,  was  overlooked. 
In  that,  the  decision  was  wrong.  The  right  of  action  could  not  be 
in  both  the  lessor  and  his  assignee,  and  the  privity  thus  created 
gave  it  to  the  latter. 

The  subsequent  case  of  Dixon  v.  BuelL  (21  111.  203)  only  holds 
that  such  an  assignee,  whether  he  holds  the  legal  or  equitable  title 
to  the  lease,  may  have  a  claim  for  rent  growing  out  of  the  lease, 
probated  and  allowed  against  the  estate  of  the  lessee.  That  case  has 
no  bearing  on  the  case  at  bar. 

The  judgment  of  the  court  below  is  reversed  and  the  cause  re- 
manded. Judgment  reversed.1 

24  Cyc.  928-930    (72-95). 

iThe  remedy  has  since  been  extended  to  the  grantee  without  attornment. 
111.  E.  S.  ch.  80,  §  14.  Cf.  Crawford  v.  Chapman,  17  Ohio  St.  449. 


536  OPERATION   OF   CONTRACT. 

6.  Covenants  affecting  freehold  interests. 

SHABER  v.  ST.  PAUL  WATER  CO. 

30  MINNESOTA,   179.— 1883. 

Action  for  breach  of  covenant  Demurrer  to  complaint  overruled. 
Defendant  appeals. 

BERRY,  J.  In  January,  1869,  John  R.  Irvine  and  Nancy  Irvine 
owned  certain  land  (in  the  city  of  St.  Paul)  through  which  ran 
Phalen  Creek,  affording  a  valuable  mill  privilege  thereon.  Leonard 
Schiegel,  as  the  lessee  of  the  Irvines,  had  constructed  a  dam  and  race 
upon  the  land,  by  which  the  mill  privilege  was  utilized  in  the  run- 
ning of  a  flour  mill,  which  he  had  also  erected  thereon  and  was 
operating.  By  sundry  subsequent  conveyances  the  land,  with  the 
race,  dam,  mill,  and  privilege,  came  to  Henry  Shaber,  the  plaintiff's 
intestate,  and  the  same  are  now  part  of  his  estate.  The  defendant 
corporation,  the  St.  Paul  Water  Company,  was  formed  to  supply  the 
city  of  St.  Paul  with  water.  In  January,  1869,  the  company,  in 
carrying  out  this  purpose  of  its  creation,  was  about  to  tap  Lake 
Phalen  and  lay  pipes  by  which  to  divert  and  draw  off  the  water 
thereof.  Phalen  Creek  flows  from  Lake  Phalen,  which  is  the  last 
and  lowest  of  a  chain  or  series  of  lakes,  constituting  a  local  water 
system.  The  Irvines  and  Schiegel  objected  to  the  proposed  diversion 
of  water,  refused  to  permit  it,  and  threatened  to  enjoin  it,  because, 
unless  provision  was  made  for  bringing  into  Lake  Phalen,  from  other 
sources  and  by  artificial  means,  as  much  water  over  and  above  what 
naturally  flowed  into  the  same  as  the  company  should  at  any  time 
draw  out,  the  level  of  the  lake  would  be  lowered,  the  quantity  of 
the  water  flowing  into  the  creek  diminished,  and  the  mill  privilege 
impaired  and  destroyed. 

To  remove  the  opposition,  and  to  induce  them  to  refrain  from 
enjoining  its  proceedings,  the  company  entered  into  a  written  agree- 
ment, by  which,  "for  a  good  and  valuable  consideration,"  it  cove- 
nanted and  agreed  with  the  Irvines  and  Schiegel,  "their  heirs  and 
assigns,  severally  and  separately,"  that  it  would  make  certain  specified 
"improvements,"  such  as  dams,  gates,  canals,  and  channels,  all  within 
one  year  from  the  8th  day  of  February,  1869;  that  it  would  at  all 
times  thereafter  keep  and  maintain  the  same  in  a  "good,  strong,  and 
substantial  manner,"  and  that  it  would  do  and  refrain  from  doing 
certain  other  things,  all  having  reference  to  maintaining  the  supply 
of  water  in  the  creek;  and  further,  that  the  volume  of  water  flowing 
out  of  Lake  Phalen  through  Phalen  Creek  should  never  at  any  time 
be  diminished  or  rendered  less  available  for  the  purpose  of  the  water- 
power  mill  privilege  before  mentioned,  by  any  work  or  operation  of 


ASSIGNMENT   OF   CONTRACT.  537 

the  company,  than  it  had  been  before  it  commenced  its  operations; 
that  it  would  never  draw  or  take  out  of  the  lake  at  any  time  any 
more  water  than  such  quantity  as  it  should  introduce  into  the  same 
by  its  said  improvements  and  by  artificial  means  over  and  above  the 
quantity  which  naturally  flowed  into  the  same;  and  that  it  would, 
by  its  said  improvements  and  by  artificial  means,  introduce  and  lead 
into  the  lake  at  all  times  as  large  a  volume  of  water  as  it  should  draw 
out,  in  addition  to  what  flowed  into  the  lake  through  natural  chan- 
nels. The  plaintiff  alleges  that  defendant  has  failed  to  make  the 
specified  "improvements/'  and  that  it  has  broken  its  covenants  in 
reference  to  maintaining  the  stage  and  quantity  of  water  in  the 
creek,  and  that,  in  consequence  of  said  failure  and  breaches,  the  flow 
of  water  in  the  creek  has  been  diminished  by  the  drawing  and  divert- 
ing of  water  by  defendant  from  Lake  Phalen,  and  thereby  the  said 
Shaber,  in  his  lifetime,  and  his  estate  since  his  decease,  has  been 
greatly  damaged  (as  particularly  set  forth)  in  respect  to  the  mill, 
water  privilege,  and  the  use  and  operation  of  the  same,  and  that 
he  and  his  estate  have  been  subjected  to  great  expense  and  loss  on 
account  thereof.  This  appeal  is  taken  from  an  order  overruling  de- 
fendant's general  demurrer  to  the  complaint. 

Our  examination  of  the  case  has  brought  us  to  the  conclusion  that 
the  appeal  presents  a  single  question,  viz.:  Whether  any  of  the 
covenants  entered  into  by  defendant  run  with  the  land  of  the  cove- 
nantees  to  Shaber  and  his  estate  ?  This  is  a  pure  common  law  ques- 
tion, to  be  decided  upon  the  authorities. 

We  think  the  following  propositions  embody  the  rules  of  law  ap- 
plicable to  the  case,  and  that  they  are  supported  by  the  authorities 
cited:  A  covenant  runs  with  land  when  either  the  liability  to  per- 
form it,  i.  e.  its  burden,  or  the  right  to  take  advantage  of  it,  i.  e.  its 
benefit,  passes  to  the  assignee  of  the  land.  Savage  v;  Mason,  3  Gush. 
500 ;  1  Smith's  Lead.  Gas.  120. 

To  enable  a  convenant  to  run  with  land  so  as  to  give  the  assignee 
its  benefit,  the  covenantee  must  be  the  owner  of  the  land  to  which 
the  covenant  relates ;  but  the  covenantor  may  be  either  a  person  in 
privity  of  estate  with  the  covenantee,  or  a  stranger;  while,  with 
reference  to  the  subject  of  the  covenant,  it  is  sufficient  that  it  be 
for  something  to  be  done,  or  refrained  from,  about,  touching,  con- 
cerning, or  affecting  the  covenantee's  land  (though  not  upon  it),  if 
the  thing  covenanted  for  be  for  the  benefit  of  the  same,  or  tend  to 
increase  its  value  in  the  hands  of  the  holder.  Spencer's  Case  and 
notes,  Eng.  &  Amer. ;  1  Smith  Lead.  Gas.  (7th  Am.  ed.)  115,  where 
all  the  learning  upon  the  subject  appears  to  be  collected ;  Pakenham's 
Case,  42  Edw.  III.  3,  abstracted  in  1  B.  &  G.  410,  415;  Anson  on 
Contracts,  220;  Pollock  on  Contracts,  ?19;  Eawle  on  Covenants,  334, 
and  notes;  Norman  v.  Wells,  17  Wend.  136;  Norfleet  v.  Cromwell, 


538  OPERATION    OF    CONTRACT. 

70  N.  C.  634;  1  Smith  Lead.  Gas.  122,  124,  139,  140,  175,  177, 
181,  183;  Allen  v.  Culver,  3  Denio,  284;  Van  Rensselaer  v.  Smith, 
27  Barb.  104,  146;  National  Bank  v.  Segur,  39  N.  J.  Law,  173. 

The  case  at  bar  is  controlled  by  these  principles.  The  Irvines — 
the  covenantees — were  the  owners  of  the  land  to  which  the  defend- 
ant's covenants  related;  that  is  to  say,  they  owned  the  mill  site  upon 
which  was  the  water  privilege  which  it  was  the  object  and  purpose  of 
the  covenants  to  preserve  and  protect;  and  the  covenants  were  for 
something  to  be  done,  and  to  be  refrained  from,  about,  touching,  con- 
cerning, and  affecting  the  covenantee's  land,  for  the  benefit  thereof, 
and  tending  to  increase  its  value  in  the  hands  of  the  holder.  The 
covenants  were  of  a  character  to  run  with  the  land,  so  as  to  enable 
the  assignee  of  the  covenantees  to  take  advantage  of  them.  When  it 
is  considered  what  it  was  that  the  water  company  proposed  to  do, 
and  for  what  purpose  the  covenants  were  made,  it  would  be  astonish- 
ing if  this  were  not  the  case.  The  diverting  the  water  of  Lake 
Phalen,  without  provision  for  counteracting  it,  would  be  a  perpetual 
injury  to  the  land  of  the  covenantees.  No  protection  against  such 
an  injury  would  be  adequate  unless  it  was  also  perpetual.  That  noth- 
ing less  could  have  been  fairly  intended  by  the  parties  to  the  cove- 
nants is  apparent  from  the  allegations  of  the  complaint. 

It  is  insisted  by  defendant  that  the  breach  of  the  covenants  was 
complete  before  plaintiff  had  acquired  any  interest  in  the  property 
to  which  they  related;  that  it  had  become  a  right  of  action,  and  did 
not  pass  to  the  plaintiff.  If  the  covenants  to  make  the  specified 
improvements  within  a  year  from  February  8,  1869,  were  all  the 
covenants  entered  into,  this  point  might  possibly  be  well  taken.  But 
such  is  not  the  case.  These  improvements  are  not  only  to  be  made, 
but  at  all  times  thereafter  to  be  kept  and  maintained  in  a  "good, 
strong,  and  substantial  manner/'  and  the  volume  of  water  flowing 
out  of  Lake  Phalen  through  the  creek  is  to  be  maintained  undimin- 
ished  by  any  of  the  operations  of  the  defendant,  with  other  covenants 
of  similar  import.  These  are,  therefore,  continuing  covenants,  and 
for  that  reason,  and  because  they  run  with  the  land,  the  damages  from 
their  breach  accrue  to  him  who  holds  the  property  when  the  breach 
occurs — or,  in  other  words,  to  the  person  injured — and  to  him  the 
right  of  action  therefor  necessarily  belongs.  Jeter  v.  Glenn,  9  Rich. 
(S.  C.)  Law,  374.  In  this  respect  they  are  analogous  to  covenants 
for  quiet  enjoyment  and  warrant)',  which  inure  to  the  protection  of 
the  owner  for  the  time  being  of  the  estate  which  they  are  intended 
to  assure.  Rawle  on  Covenants,  352,  and  citations.  The  covenants 
relating  to  the  making  of  the  specified  "improvements"  provide  for 
the  means  by  which  a  certain  result  is  to  be  accomplished,  while 
these  continuing  covenants  provide  for  the  result  itself.  The  latter 
are,  therefore,  the  most  important,  because  they  go  to  the  substance 


ASSIGNMENT  OF   CONTRACT.  539 

rather  than  the  form  in  which  the  result  in  view  is  to  be  accomplished. 
If  the  continuing  covenants  are  kept,  the  damages  for  the  breach  of 
the  others  would  be  comparatively,  if  not  altogether,  nominal.  For 
these  reasons  we  are  of  opinion  that  the  complaint  states  a  cause 
of  action,  and  that  the  demurrer  was,  therefore,  properly  overruled. 
We  have  not  overlooked  the  case  of  Kimball  v.  Bryant  (25  Minn. 
496),  though  we  have  not  before  adverted  to  it,  as  it  was  not  cited 
or  alluded  to  upon  the  argument.  But  it  seems  to  us  that  the  prin- 
ciple of  the  decision  there  made  may  have  an  important  bearing  upon 
the  case  at  bar,  and  in  support  of  the  conclusions  to  which  we  have 
arrived. 

Order  affirmed.1 
11  Cyc.   1080-1082   (82-84);   W.  P.  299    (95);  300   (1). 


INHABITANTS  OF  MIDDLEFIELD  v.  CHUECH  MILLS 
KNITTING  CO. 

160  MASSACHUSETTS,  267.— 1894. 

Contract,  to  recover  expenses  incurred  in  repairing  a  bridge  which 
defendant  was  bound  to  repair.  Demurrer  by  defendant  sustained. 
Plaintiff  appeals. 

The  declaration  alleged  that  the  owners  of  land  on  a  stream  wish- 
ing to  raise  the  stream  into  a  pond  for  water-power  changed  and 
raised  the  highway  and  built  a  new  bridge  and  approaches  under  an 
arrangement  with  plaintiff  whereby  the  owners  covenanted  for  them- 
selves and  successors  to  keep  the  same  in  repair;  that  the  owners  had 
for  many  years  kept  the  same  in  repair ;  that  defendant  was  now  the 
owner  of  said  land,  pond,  and  water-power,  and  had  succeeded  to  said 
prior  owners'  rights  and  obligations,  but  had  failed  and  refused  to 
keep  the  bridge  in  repair;  that  plaintiff  had  of  necessity  repaired 
the  same,  but  defendant  had  refused  to  repay  plaintiff  the  cost  thereof. 

HOLMES,  J.  This  is  an  action  to  recover  the  amount  of  damages 
which  the  plaintiff  has  been  compelled  to  pay  in  consequence  of  a 
breach  of  a  duty  alleged  to  rest  primarily  on  the  defendant.  The 

i  In  Mott  v.  Oppenheimer  (135  N.  Y.  312),  it  is  held  that  a  covenant  by 
one  landowner  for  himself,  his  heirs,  or  assigns,  to  pay  for  one-half  a  party 
wall  erected  by  an  adjoining  owner  whenever  he  or  they  should  make  use  of  it, 
coupled  with  a  further  provision  that  the  agreement  should  be  construed  as 
covenants  running  with  the  land,  imposes  a  "burden  on  the  land  of  the  cove- 
nantor and  a  benefit  on  the  land  of  the  covenantee  which  run  with  the  land 
of  each  into  the  hands  of  grantees.  Where  there  is  no  express  stipulation 
that  the  covenant  to  pay  for  a  party  wall  shall  run  with  the  land,  it  will  be 
construed  as  a  personal  covenant.  Cole  v.  Hughes,  54  N.  Y.  444;  Scott  v. 
McMillan,  76  N.  Y.  144;  Bloch  v.  Isham,  28  Ind.  37.  But  the  covenant  w> 
pay  for  future  repairs  runs  with  the  land.  Hart  v.  Lyon,  90  N.  Y.  663. 


540  OPERATION    OF    COMKACT. 

declaration  is  not  in  covenant,  to  speak  in  terms  of  the  old  forms 
of  action,  but  in  assumpsit,  on  the  principle  of  Lowell  v.  Spaulding 
(4  Cush.  277),  Woburn  v.  Henshaw  (101  Mass.  193),  and  other  cases 
of  that  class.  The  mode  in  which  the  defendant's  duty  originated, 
whether  by  prescription  (Eegina  v.  Bucknall,  2  Ld.  Raym.  804;  Bac. 
Abr.  Highways  [E.]  ;  Angell  &  D.  Highways,  §  255),  or  by  grant 
or  covenant  having  the  effect  of  a  grant  (Bronson  v.  Coffin,  108  Mass. 
175;  Norcross  v.  James,  140  Mass.  188,  190;  Ladd  v.  Boston,  151 
Mass.  585,  588),  or  otherwise  (Perley  v.  Chandler,  6  Mass.  454, 
457,  458;  Lowell  v.  Proprietors  of  Locks  and  Canals,  104  Mass. 
18),  is  one  step  more  remote  than  when  the  declaration  is  on  the 
covenant  directly.  However  it  might  be  in  the  latter  case,  we  are  of 
opinion  that  the  duty  is  sufficiently  alleged  for  the  purposes  of  the 
case  at  bar.  See  Bernard  v.  Cafferty,  11  Gray  10,  11;  form  of 
declaration  for  obstructing  way,  Pub.  Sts.,  c.  167,  §  94. 

It  is  true  that,  in  order  to  overrule  the  demurrer,  we  have  to  assume 
the  possibility  that  the  defendant  might  be  bound  as  assign  and  ten- 
ant of  a  quasi  servient  estate  to  perform  an  active  duty  created  by 
its  predecessor  in  title;  but  in  view  of  the  foregoing  and  other  de- 
cisions, we  are  not  prepared  to  deny  that  it  might  be  bound  in  law 
or  in  equity  so  far  as  to  make  it  liable  to  indemnify  the  plaintiff  to 
the  extent  of  simple  damages.  It  is  true  that,  in  general,  active 
duties  cannot  be  attached  to  land,  and  that  affirmative  covenants  only 
bind  the  covenantor,  his  heirs,  executors,  and  administrators.  But 
there  are  some  exceptions,  and  most  conspicuous  among  them  is  the 
obligation  to  repair  fences  and  highways.  We  do  not  deem  it  ad- 
visable to  discuss  the  law  in  detail  until  the  facts  shall  appear  more 
exactly  than  they  do  at  present.  If  such  a  duty  can  be  attached  to 
land,  then,  although  ordinarily  the  corresponding  right  could  not 
exist  in  gross,  yet  in  the  case  of  a  way  which  a  town  is  bound  to  keep 
in  repair  for  the  benefit  of  the  public,  the  town  is  the  natural  and 
convenient  protector  of  the  obligation,  and,  being  immortal  and  locally 
fixed,  may  enforce  a  covenant  originally  made  to  it  without  being 
shown  to  be  strictly  the  owner  of  the  highway  as  a  quasi  dominant 
estate,  just  as,  conversely,  a  local  corporation  was  bound  to  the  terre- 
tenant  to  perform  active  services  in  Pakenham's  case,  Y.  B.  42,  Edw. 
III.,  3,  pi.  14. 

Demurrer  overruled. 

11  Cyc.   1080-1082   (82-84);   1090   (12). 


ASSIGNMENT  OF  CONTEACT.  541 

(it.)  Assignment  of  contractual  obligation  upon  marriage. 

PLAINER  v.  PATCHIN. 

19   WISCONSIN,   333.— 1865. 

Action  against  Patchin  and  wife  on  a  promissory  note  executed  by 
the  latter  dum  sola.  Demurrer  by  wife  that  complaint  shows  a  former 
action  pending  against  her.  Answer  by  Patchin  that  the  wife  still 
retains  and  possesses  all  her  separate  property.  Motion  for  judg- 
ment, on  the  ground  that  demurrer  and  answer  were  frivolous,  denied. 
Plaintiff  appeals. 

DIXON,  C.  J.  .  .  .  The  wife  being  a  necessary  party  to  the  action 
to  enforce  the  liability  of  the  husband,  and  it  appearing  on  the  face 
of  the  complaint  that  there  is  a  former  action  pending  against  her, 
her  demurrer  was  well  taken,  and  the  motion  for  judgment  for  the 
frivolousness  of  the  demurrer  and  answer  properly  denied. 

We  see  nothing  in  the  answer  of  the  husband  which  merits  serious 
consideration.  It  is  obviously  frivolous.  The  statute  for  the  pro- 
tection of  the  rights  of  married  women,  whilst  it  greatly  enlarges 
the  privileges  of  the  wife,  does  not  restrict  the  liability  of  the  husband. 
He  must  pay  the  same  as  before,  and  if  he  does  not,  the  creditors  of 
the  wife  can  sue  and  make  him  pay  if  he  is  able.  In  this  particular 
the  modern  husband  is  twice  happy.  First,  he  is  happy  as  the  quiet 
spectator  of  his  wife's  enjoyment  of  her  property;  and  again  he  is 
happy  in  paying  her  debts,  or,  if  he  refuses,  in  being  sued  and  com- 
pelled to  pay. 

Order  affirmed.1 

21  Cyc.  1212   (70-74);  1215  (3). 


HOWAETH  v.  WARMSER,  et  al. 

58  ILLINOIS,  48.— 1871. 

Action  against  Warmser  and  wife  on  a  promissory  note  given  by 
the  wife  dum  sola.  Judgment  against  defendants.  Warmser  appeals. 

LAWRENCE,  C.  J.  We  held  in  Connor  v.  Berry  (46  111.  370)  and 
McMurtry  v.  Webster  (48  111.  123)  that  the  husband  was  still,  as  at 
common  law,  liable  for  the  debts  of  his  wife,  contracted  before  mar- 
riage, notwithstanding  the  act  of  1861,  because  that  act  still  left  to 

i  Changed  by  Ch.  155,  L.  1872;  1  S.  &  B.  Ann.  St.  of  Wis.  sec.  2346.  See 
generally,  Rtimson's  Am.  St.  Law,  §  6402.  "As  between  the  creditor  of  the 
wife  dum  sola  and  the  husband,  the  common  law  liability  of  the  husband  has 
not  been  changed  by  the  legislation  above  referred  to." — Alexander  v.  Morgan, 
31  Ohio  St.  546  (1877). 


542  OPERATION    OF    CONTRACT. 

the  husband  the  wife's  earnings.  Since  those  decisions  were  made, 
the  legislature,  by  the  act  of  1869,  has  taken  from  the  husband  all 
control  over  the  earnings  of  his  wife,  and  thus  swept  away  the  last 
vestige  of  the  reasons  upon  which  the  common  law  rule  rested.  The 
rule  itself  must  now  cease.  Legislative  action  has  virtually  abolished 
it,  by  taking  away  its  foundations  and  rendering  its  enforcement 
unjust. 

The  judgment  must  be  reversed  and  the  cause  remanded. 

Judgment  reversed. 

21  Cyc.  1215  (3). 


(in.)  Assignment  of  contractual  obligation  by  death. 

DICKINSON  v.  CALAHAN'S  ADM'RS. 

19  PENNSYLVANIA  STATE,  227.— 1852. 

Assumpsit  and  covenant  for  lumber  delivered  by  the  administrators 
of  Calahan  to  the  executors  of  Dickinson  to  apply  on  a  contract  made 
between  Calahan  and  Dickinson.  Defense,  breach  of  contract  in  not 
delivering  the  full  amount  called  for  by  such  contract.  Verdict  for 
plaintiffs  for  full  amount  of  claim. 

LOWRIE,  J.  It  seems  to  us  very  doubtful  whether  the  oral  con- 
tract could  be  rightly  proved  by  the  evidence  that  was  submitted  to 
the  jury.  But  admit  that  it  could.  The  one  party,  a  lumber  manu- 
facturer, agreed  to  sell  to  the  other,  a  lumber  merchant,  all  the  lum- 
ber to  be  sawed  at  his  mill  during  five  years,  and  that  the  quantity 
should  be  equal  on  an  average  to  300,000  feet  in  a  year,  without  stip- 
ulating for  any  given  quantity  in  any  one  year,  and  the  lumber  was 
to  be  paid  for  as  delivered.  Before  the  five  years  had  expired,  both 
parties  died;  and  now  the  representatives  of  the  vendee  seek  to  hold 
those  of  the  vendor  bound  to  perform  the  contract,  and  to  set  off 
damages  for  the  breach  of  it  against  a  claim  for  part  of  the  lumber 
delivered. 

It  will  be  seen  that,  in  thus  stating  the  question,  we  set  aside  the 
alleged  breach  in  the  lifetime  of  Calahan;  and  we  do  this  because 
the  court  properly  instructed  the  jury  that,  under  such  a  contract, 
Calahan  was  guilty  of  no  breach  in  not  manufacturing  the  full  average 
quantity  in  his  lifetime,  and  left  it  to  them  to  say  whether  in  his 
lifetime  he  had  committed  any  other  manner  of  breach.  The  point 
in  controversy  may  be  stated  thus:  Where  a  lumber  manufacturer 
contracts  with  a  lumber  merchant  to  sell  him  a  certain  quantity  of 
lumber,  to  be  made  at  his  mill  during  five  years,  for  which  he  is  to  be 
paid  as  the  lumber  is  delivered,  and  he  dies  before  the  time  has 
elapsed,  are  his  administrators  bound  to  fulfil  the  contract  for  the 
remainder  of  the  time? 


ASSIGNMENT   OF    CONTRACT.  543 

No  one  can  trace  up  this  branch  of  the  law  very  far  without  be- 
coming entangled  in  a  thicket,  from  which  he  will  have  difficulty  in 
extricating  himself.  Very  much  of  the  embarrassment  arises  from 
the  fact  that  the  liability  of  executors  and  administrators  has  been 
often  made  to  depend  more  upon  the  forms  of  action  than  upon  the 
essential  relations  of  the  parties,  as  will  be  seen  by  reference  to  the 
books.  Platt  on  Covenants,  453;  2  Wms.  Executors,  1060;  and 
Viner's  Ab.,  titles  "Covenants,"  D.  E.,  and  "Executors,"  H.  a.; 
Touchstone,  178.  The  simplicity  and  symmetry  of  the  law  would 
certainly  be  greatly  increased,  and  its  justice  better  appreciated  if  in 
all  cases  where  the  law  undertakes  the  administration  of  estates,  as 
in  cases  of  insolvency,  bankruptcy,  lunacy,  and  death,  the  rules  of 
distribution  were  the  same. 

The  contract  in  this  case  established  a  defined  relation,  a  relation 
depending  for  its  origin  and  extent  upon  the  intention  of  the  parties. 
The  question  is,  do  the  administrators  of  a  deceased  party  succeed 
to  that  relation  after  the  death  of  the  party,  or  was  it  dissolved  by 
that  event?  On  this  question  the  books  give  us  an  uncertain  light. 
In  Hyde  v.  Windsor  (Cro.  Eliz.  552)  it  is  said  that  an  agreement 
to  be  performed  by  the  person  of  the  testator,  and  which  his  executor 
cannot  perform,  does  not  survive.  But  here  the  uncertainty  remains, 
for  the  acts  which  an  executor  cannot  perform  are  undefined.  It 
recognizes  the  principle,  however,  that  an  executor  does  not  fully 
succeed  to  the  contract  relations  of  his  testator. 

The  case  of  Eobson  v.  Drummond  (2  Barn.  &  Adol.  303,  22  Eng. 
C.  L.  Eep.  81)  is  more  specific;  for  in  that  case  it  was  held  that  an 
agreement  by  a  coachmaker  to  furnish  a  carriage  for  five  years  and 
keep  it  in  repair,  was  personal  and  could  not  be  assigned,  and  execu- 
tors and  administrators  are  assigns  in  law  (Hob.  9  b.  Cro.  Eliz.  757; 
Latch.  261;  "Wentw.  Executors  100);  that  being  a  general  term, 
applying  to  almost  all  owners  of  property  or  claims,  whether  their 
title  be  derived  by  act  of  law  or  of  the  parties.  And  it  is  no  objection 
that  one  may  take  as  executor  or  administrator  in  certain  cases  where 
the  English  laws  of  maintenance  and  forms  of  action  would  not  allow 
him  to  take  as  assignee  in  fact,  for  those  laws  do  not  extend  to  such 
a  case,  and  they  have  no  application  here. 

In  Quick  v.  Ludburrow  (3  Bulst.  29)  it  is  said  that  executors  are 
bound  to  perform  their  testator's  contract  to  build  a  house,  but  the 
contrary  is  said  in  Wentw.  Executors,  124,  Vin.  Ab.  "Covenant," 
E.,  pi.  12,  to  have  been  declared  in  Hyde  v.  Windsor,  though  we 
do  not  find  it  in  the  regular  reports  of  the  case.  5  Co.  24;  Cro. 
Eliza.  552.  But  these  are  both  mere  dicta.  The  same  principle  is 
repeated  in  Touchstone,  178,  yet  even  there  a  lessee's  agreement  to 
repair  is  not  so  construed ;  and  in  Latch.  Eep.  261,  the  liability  of 
executors  on  a  contract  to  build  is  for  a  breach  in  the  testator's  life- 


544  OPERATION    OF    CONTRACT. 

time.  In  Cooke  v.  Colcraft  (2  Bl.  Rep.  856),  a  covenant  not  to  ex- 
ercise a  particular  trade  was  held  to  establish  a  mere  personal  rela- 
tion and  not  to  bind  executors;  and  the  contrary  is  held  in  Hill  T. 
Hawes,  Vin.  Ab.,  title  "Executors,"  Y.  pi.  4.  And  so  executors  and 
administrators  stand  on  the  same  footing  with  assignees  in  fact  with 
regard  to  apprentices ;  and  contracts  of  this  nature  are  held  not  to  pass 
to  either,  because  they  constitute  a  mere  personal  relation,  and  are, 
therefore,  not  transferable;  2  Stra.  1266;  4  Ser.  &  R.  109;  1  Mass. 
172;  19  Johns.  113;  1  Rob.  519;  12  Mod.  553,  650;  5  Co.  97. 

The  case  most  nearly  resembling  this  is  Wentworth  v.  Cock  (10  Ad. 
&  El.  42,  37  Eng.  C.  L.  R.  33),  where  a  contract  to  deliver  a  certain 
quantity  of  slate,  at  stated  periods,  was  held  to  bind  the  executors. 
This  case  was  decided  without  deliberation,  and  with  but  little  argu- 
ment on  the  part  of  the  executors.  The  plaintiff  relied  on  the  case 
of  Walker  v.  Hull  (1  Lev.  177),  where  executors  were  held  bound 
to  supply  the  place  of  the  testator  in  teaching  an  apprentice  his 
trade.  But  that  case  had  long  ago  been  denied  in  England  (2  Stra. 
1266),  and  is  rejected  here.  Commonwealth  v.  King,  4  Ser.  &  R.  109. 
This  last  case  treats  the  contract  as  a  mere  personal  one,  that  is 
dissolved  by  death,  and  regards  as  absurd  the  doctrine  in  Wadsworth 
v.  Guy  (1  Keb.  820,  and  1  Sid.  216),  that  the  executors  are  bound  to 
maintain  the  apprentice,  while  he  is  discharged  from  duty. 

But  the  authority  principally  relied  on  by  the  counsel  in  Went- 
worth v.  Cock,  is  the  Roman  law,  Code  Just.  8,  38,  15,  and  the  com- 
mentary on  it  in  1  Pothier  on  Oblig.  639.  Yet  there  are  few  sub- 
jects in  the  Roman  law  wherein  its  unlikeness  to  ours  is  more  marked 
than  in  the  matter  of  succession  to  personal  estate,  and  therefore  its 
example  herein  is  almost  sure  to  mislead.  The  difference  is  suffi- 
ciently indicated,  when  we  notice  that  the  Roman  executor  was  in  all 
cases  either  the  testamentary  of  the  legal  hei'r,  and  if  he  accepted  the 
estate  he  was  considered  as  standing  exactly  in  the  place  of  the  dece- 
dent, and  was  of  course  bound  for  all  his  legal  liabilities,  including 
even  many  sorts  of  offenses,  whether  the  estate  was  sufficient  or  not. 
He  was  bound  as  heir  and  by  reason  of  the  estate  given  to  him,  and  not 
as  one  appointed  to  settle  up  the  estate.  If  the  heir  was  unwilling 
to  accept  the  estate  upon  these  terms,  it  became  vacant,  and  the 
praetor  appointed  curators  to  administer  for  the  benefit  of  all. 
It  would  seem  strange  that  such  curators  should  be  bound  to  carry 
on  the  business  of  the  deceased,  where  they  are  appointed  to  settle 
it  up ;  yet  how  it  really  was  does  not  appear.  Dig.  427.  Our  statute 
recognizes  the  duty  of  the  executor  and  administrator  to  pay  all  debts 
owing  by  the  deceased  at  the  time  of  his  death,  and  this  is  the  com- 
mon principle.  In  another  clause  it  makes  the  executor  and  admin- 
istrator liable  to  be  sued  in  any  action,  except  for  libels  and  slanders 
and  wrongs  done  to  the  person,  which  might  have  been  maintained 


ASSIGNMENT   OF    CONTRACT.  545 

against  the  decedent  if  he  had  lived.  But  this  furnishes  us  no  aid  in 
this  case,  and  was  not  intended  to.  Its  purpose  is  to  enlarge  and 
define  the  rights  of  action,  which,  existing  against  the  individual, 
should  survive  against  his  estate.  Not  contract  relations  and  duties, 
but  remedies  for  injuries  already  done,  are  declared  to  survive.  If 
the  decedent  committed  no  breach  of  contract,  he  was  liable  to  no 
action  when  he  died,  and  this  law  cannot  apply. 

We  are  then  without  any  well-defined  rule  of  law  directly  ap- 
plicable to  this  case,  and  are  therefore  under  the  necessity  of  deducing 
the  rule  for  ourselves.  The  elements  from  which  this  deduction  is  to 
be  made  are  the  contract  itself,  the  ordinary  principles  and  experience 
of  human  conduct,  the  decisions  in  analogous  cases,  and  the  nature 
of  the  office  of  administrator. 

We  repeat  the  question:  Does  such  a  contract  establish  anything 
more  than  a  personal  relation  between  the  parties?  This  is  a  mere 
question  of  construction,  depending  upon  the  intention  of  the  parties 
(Hob.  9;  Yelv.  9;  Cro.  Jac.  282;  1  Bing.  225;  8  Eng.  C.  L.  R. 
307)  unless  the  intention  be  such  as  the  law  will  not  enforce.  Is  it 
probable  that  either  party  intended  to  bind  his  executors  or  admin- 
istrators to  such  a  relation?  The  contract  does  not  say  so,  and  we 
think  it  did  not  mean  it;  for  it  would  involve  the  intention  that  the 
administrators  of  one  shall  be  lumber  merchants  and  those  of  the 
other  sawyers.  The  character  of  the  contract  demands  not  such  a 
construction ;  for  each  delivery  under  it  is  necessarily  of  complete  and 
independent  articles,  and  each  delivery  was  to  be  at  once  a  finished 
work  on  each  side.  There  may  be  cases  when  it  is  necessary  that  the 
executor  or  administrator  shall  complete  a  work  already  begun  by  the 
decedent,  and  then  they  may  recover  in  their  representative  charac- 
ter. 1  Crompt.  &  Mees.  403;  3  Mees.  &  W.  350;  2  Id.  190;  3  W.  & 
Ser.  72.  But  here  every  act  of  both  parties  was  complete  in  itself. 
From  the  contract  itself,  and  from  the  ordinary  principles  of  human 
conduct,  we  infer  that  neither  party  intended  the  relation  to  survive. 

A  contrary  view  is  incompatible,  in  the  present  case,  with  the  office 
of  administrator;  for  it  would  require  him  to  have  the  possession  of 
the  saw-mill  in  order  to  fulfill  the  contract ;  and  yet  administrators 
have  nothing  to  do  with  the  real  estate,  unless  the  personal  estate  is 
insufficient  to  pay  the  debts,  and  therefore  they  cannot  perform.  It 
is  incompatible  with  the  general  duties  of  administrators,  in  that  it 
would  require  them  to  carry  on  the  business  left  by  the  decedent, 
instead  of  promptly  settling  it  up;  it  would  require  him  to  satisfy 
claims  of  this  character  within  a  year,  or  begin  to  do  so,  while  the 
law  forbids  him  to  do  so  except  at  his  own  risk;  and  it  might  hang 
up  the  estate  to  a  very  protracted  period.  We  are  therefore  forbidden 
to  infer  such  an  intention,  and  possibly  to  enforce  it  even  if  it 
appeared. 


546  OPERATION    OF    CONTRACT. 

The  inference  is  further  forbidden  by  the  spirit  of  analogous  cases. 
It  would  seem  absurd  to  say  that  the  administrator  of  a  physician, 
or  author,  or  musician  could  be  compelled  to  perform  their  professional 
engagements,  no  matter  how  the  contract  might  be  expressed.  The 
idea  is'  ludicrous.  Yet  it  has  been  supposed  that  an  administrator 
might  take  the  place  of  his  intestate  in  teaching  an  apprentice  to  be 
a  surgeon,  or  saddler,  or  shoemaker,  or  mariner,  or  husbandman,  or 
in  demanding  services  from  an  ordinary  laborer;  but  the  idea  was 
rejected  by  the  court.  On  what  ground  ?  Most  certainly  not  that  no 
one  else  could  be  got  to  take  the  place  of  the  decedent;  but  on  the 
ground  that  no  such  substitution  was  intended  by  the  contract,  to- 
gether perhaps  with  the  feeling  of  the  incompatibility  of  such  a 
substitution  with  the  duties  imposed  by  law  upon  administrators. 
The  law  trusts  people  to  settle  up  estates  on  account  of  their  honesty 
and  general  business  capacity,  and  not  for  any  peculiar  scientific 
or  artistic  skill,  and  the  State  does  not  hold  itself  bound  to  furnish 
such  abilities.  Some  people  may  suppose  that  it  requires  no  great 
skill  to  manufacture  boards,  if  one  has  the  material  and  machinery; 
but  still  we  cannot  suppose  that  the  deceased  was  contracting  for  any 
kind  of  skill  in  his  administrators.  For  these  reasons  the  court  be- 
low was  right  in  declaring  in  substance,  that  the  administrators  were 
liable  only  for  breaches  committed  by  the  intestate  in  his  lifetime, 
and  the  same  principle  applies  to  the  death  of  either  party.  These 
views  set  aside  some  of  the  exceptions  as  entirely  unimportant,  and  in 
the  others  we  discover  no  error,  and  no  principle  that  calls  for  any 
special  remarks. 

Judgment  affirmed.1 

9  Cyc.  632-633  (96-99,  1)  ;  26  Cyc.  985-986  (14-21)  ;  23  L.  R.  A.  707;  W. 
P.  543  (28). 

1  In  Chamberlain  v.  Dunlop,  126  N.  Y.  45,  the  court  said:  "The  presump- 
tion is  that  the  party  making  a  contract  intends  to  bind  his  executors  and 
administrators,  unless  the  contract  is  of  that  nature  which  calls  for  some  per- 
sonal quality  of  the  testator,  or  the  words  of  the  contract  are  such  that  it  is 
plain  no  presumption  of  the  kind  can  be  indulged  in.  Tremeere  v.  Morison, 
1  Bing.  [N.  c.]  89;  Reid  v.  Tenterden,  4  Tyrwhitt,  111;  Kernochan  v.  Mur- 
ray, 111  N.  Y.  306.)  Where  a  party  has  entered  into  a  contract  to  purchase 
real  estate  and  dies  before  it  is  conveyed  to  him  and  before  he  has  paid  for  it, 
his  heir  or  devisee  is  entitled  to  have  his  executor  pay  for  the  realty  out  of  the 
personal  estate.  (Broome  v.  Monck,  10  Ves.  596,  611;  re-argued,  619:  Livings- 
ton v.  Newkirk,  3  Jo.  Ch.  312;  Wright  v.  Holbrook,  32  N.  Y.  587;  1  Sugden  on 
Pow.  [8th  Am.  ed.]  293;  3  Red.  on  Wills  [2  ed.]  302,  §  11.)  The  ex- 
ecutor is  not  permitted  to  violate  the  contract  of  his  testator  after  the  latter's 
death.  (Wentworth  v.  Cock,  10  Ad.  &  El.  42;  Siboni  v.  Kirkman,  1  M.  &  W. 
419;  remarks  of  Parke,  B.)  In  Quick  v.  Ludburrow  (3  Bulst.  30),  Lord  Coke 
said  that  if  a  man  be  bound  to  build  a  house  for  another  before  such  a  time  and 
he  which  is  bound  dies  before  the  time,  his  executors  are  bound  to  perform  this. 
To  same  effect,  Tilney  v.  Norris  (1  Ld.  Raym.  553)  ;  Tremeere  v.  Morison  and 


ASSIGNMENT   OF    CONTRACT.  547 

LACY  v.  GETMAN,  as  Executrix. 
119  NEW  YORK,   109.— 1890. 

FINCH,  J.  .  .  .  The  facts  are  few  and  undisputed  on  this  ap- 
peal. The  plaintiff,  Lacy,  contracted  orally  with  defendant's  testator, 
McMahan,  to  work  for  the  latter  upon  his  farm,  doing  its  appro- 
priate and  ordinary  work  for  a  period  of  one  year  at  a  compensation 
of  $200.  Lacy  entered  upon  the  service  in  March,  doing  from  day 
to  day  the  work  of  the  farm  under  the  direction  of  its  owner,  until 
about  the  middle  of  July,  when  McMahan  died.  By  his  will  he 
made  the  defendant  executrix,  hut  devised  and  bequeathed  to  his 
widow  a  life  estate  in  the  farm,  and  the  use  and  control  of  all  his 
personal  property  whatsoever  in  the  house  and  on  the  farm, 
during  the  term  of  her  natural  life.  Lacy  knew  in  a  general  way  the 
terms  of  the  will.  He  testifies  that  he  knew  that  it  gave  to  the 
widow  the  use  of  the  farm,  and  that  she  talked  with  him  about  the 
personal  property.  It  is  admitted  that  the  executrix  did  not  hire 
or  employ  him,  but  he  continued  on  to  the  close  of  the  year,  doing  the 
farm  work  under  the  direction  of  the  widow  until  the  end  of  his  full 
year.  He  sued  the  executrix  upon  his  contract  with  the  testator,  and 
has  recovered  the  full  amount  of  his  year's  wages.  From  that  de- 
cision the  executrix  appeals,  claiming  that  the  judgment  should  have 
been  limited  to  the  proportionate  amount  earned  at  the  death  of  Mc- 
Mahan, and  that  the  death  of  the  master  dissolved  the  contract. 

It  is  obvious  at  once  that  an  element  has  come  into  the  case  as  now 
presented,  which  was  not  there  when  the  General  Term  first  held 
that  the  contract  survived.  It  now  appears  that  the  executrix  could 
not  have  performed  her  side  of  the  contract  at  all  after  the  death 
of  McMahan,  by  force  of  her  official  authority,  because  she  had 
neither  the  possession  of  the  farm  nor  personal  property  upon  it, 
and  no  right  to  such  possession  during  the  life  of  the  widow.  She 
had  no  power  t»  put  her  servant  upon  the  land,  or  employ  him  about 
it,  and  in  her  representative  character  she  had  not  the  slightest  interest 
in  his  service,  and  could  derive  no  possible  benefit  from  it.  The 
plaintiffs  labor,  after  the  death  of  McMahan,  was  necessarily  on  the 
farm  of  the  widow,  by  her  consent,  for  her  benefit,  and  under  her 
direction  and  control,  and  equitably  and  justly  should  be  a  charge 

Reid  v.  Tenterden  (supra).  If  the  testator  devise  his  land  to  other  parties,  the 
executor  still  remains  liable  on  the  covenant  of  his  testator.  If  the  devisees  do 
not  permit  the  executor  to  build,  the  covenant  is  broken,  and  it  is  the  act  of  the 
devisor  in  devising  his  property  thus  that  prevents  the  executor  from  ful- 
filling. If  the  land  descended  to  the  heir,  then  the  covenant  still  remains  in 
force;  and  if  it  should  be  that  the  executor  could  not  force  the  heir  to  permit 
the  building,  still  the  estate  is  liable  on  the  covenant,  and  the  executor  must 
pay  the  damages  if  he  have  assets." 


548  OPERATION  OF  CONTRACT. 

against  her  alone.  The  test  of  power  to  perform,  on  the  part  of  the 
personal  representative  of  the  deceased  fails  in  the  emergency  pre- 
sented by  the  facts,  except  possibly  upon  proof  of  the  consent  of  the 
widow. 

We  have  then  the  peculiar  case  of  a  contract  made  to  work  for 
McMahan  and  under  his  direction  and  control,  which  could  not  be 
performed  because  of  his  death,  transmuted  into  a  contract  to  work 
for  Mrs.  Getman  upon  a  farm  which  she  did  not  possess  and  had  no 
right  to  enter,  and  performed  by  working  for  the  widow  and  under 
her  direction  and  control  alone,  and  this  because  of  the  supposed  rule 
that  the  contract  survived  the  death  of  the  master  and  remained 
binding  upon  his  personal  representatives. 

It  is  true  that  some  interest  in  the  personal  property  on  the  farm 
is  claimed  to  have  vested  in  the  executrix,  notwithstanding  the  terms 
of  the  will,  and  the  inventory  filed  by  her  is  appealed  to,  and  the 
necessity  of  a  resort  to  the  personal  property  with  which  to  pay  debts. 
There  is  no  proof  that  the  testator  owed  any  debts,  and  the  inventory 
covers  nothing  as  to  which  Lacy's  labor  was  requisite  or  necessary, 
except  possibly  some  corn  on  the  ground  valued  at  $18.  All  the 
grain  inventoried  was  in  the  barn,  needing  only  to  be  threshed,  and 
must  be  assumed  to  have  been  there  when  testator  died;  and  the 
other  property  consisted  of  farm  tools  and  a  cow  and  horse,  to  the 
use  of  which  the  widow  was  entitled  and  which,  if  sold  to  pay  pos- 
sible debts,  would  have  left  the  servant  without  means  of  doing  his 
work  and  with  nothing  to  do  unless  for  the  widow.  So  that  the 
bald  question  is  presented  whether  the  contract  survived  the  testator's 
death  and  bound  his  executrix,  who  was  without  power  or  authority 
of  her  own  to  perform,  and  had  no  interest  in  performance. 

It  seems  to  be  conceded  that  the  death  of  the  servant  dissolves  the 
contract.  Wolfe  v.  Howes,  20  N.  Y.  197;  Spaulding  v.  Eosa,  71 
N.  Y.  40;  Devlin  v.  Mayor,  etc.,  63  N.  Y.  14;  Fahy  v.  North,  19 
Barb.  341;  Clark  v.  Gilbert,  32  Barb.  576;  Seymour  v.  Cagger,  13 
Hun,  29;  Boast  v.  Firth,  L.  R.  (4  C.  P.)  1.  "  Almost  all  of  these 
cases  were  marked  by  the  circumstance  that  the  services  belonged  to 
the  class  of  skilled  labor.  In  such  instances  the  impossibility  of  a 
substituted  service  by  the  representative  of  the  servant  is  very  ap- 
parent. The  master  has  selected  the  servant  by  reason  of  his  per- 
sonal qualifications,  and  ought  not,  when  he  dies,  to  abide  the  choice 
of  another  or  accept  a  service  which  he  does  not  want.  While  these 
cases  possess,  with  a  single  exception,  that  characteristic,  I  do  not 
think  they  depend  upon  it.  Fahy  v.  North  was  a  contract  for  farm 
labor,  ended  by  the  sickness  of  the  servant,  and  quite  uniformly  the 
general  rule  stated  is  that  the  servant's  agreement  to  render  personal 
services  is  dissolved  by  his  death.  There  happens  a  total  inability  to 
perform;  it  is  without  the  servant's  fault,  and  so  further  perform- 


ASSIGNMENT   OF   CONTRACT.  549 

ance  is  excused  and  the  contract  is  apportioned.  If  in  this  case 
Lacy  had  died  on  that  day  in  July,  his  representative  could  not  have 
performed  his  contract.  McMahan,  surviving,  would  have  been  free 
to  say  that  he  bargained  for  Lacy's  services,  and  not  for  those  of 
another  selected  and  chosen  by  strangers,  and  either  the  contract 
would  be  broken  or  else  dissolved.  I  have  no  doubt  that  it  must  be 
deemed  dissolved,  and  that  the  death  of  the  servant,  bound  to  render 
personal  services  under  a  personal  control,  ends  the  contract,  and 
irrespective  of  the  inquiry  whether  those  services  involve  skilled  or 
common  labor.  For  even  as  it  respects  the  latter,  the  servant's  char- 
acter, habits,  capacity,  industry,  and  temper,  all  enter  into  and  affect 
the  contract  which  the  master  makes,  and  are  material  and  essential 
where  the  service  rendered  is  to  be  personal  and  subject  to  the  daily 
direction  and  choice  and  control  of  the  master.  He  was  willing  to 
hire  Lacy  for  a  year,  but  Lacy's  personal  representative,  or  a  laborer 
tendered  by  him,  he  might  not  want  at  all  and  at  least  not  for  a 
fixed  period,  preventing  a  discharge.  And  so  it  must  be  conceded 
that  the  death  of  the  servant,  employed  to  render  personal  services 
under  the  master's  daily  direction,  dissolves  the  contract.  Babcock  v. 
Goodrich,  3  How.  Pr.  (N.  S.)  53. 

But  if  that  be  so,  on  what  principle  shall  the  master  be  differently 
and  more  closely  bound?  And  why  shall  not  his  death  also  dissolve 
the  contract?  There  is  no  logic  and  no  justice  in  a  contrary  rule. 
The  same  reasoning  which  relieves  the  servant's  estate  relieves  also  the 
master's,  for  the  relation  constituted  is  personal  on  both  sides 
and  contemplates  no  substitution.  If  the  master  selects  the  servant, 
the  servant  chooses  the  master.  It  is  not  every  one  to  whom  he 
will  bind  himself  for  a  year,  knowing  that  he  must  be  obedient  and 
render  the  services  required.  Submission  to  the  master's  will  is  the 
law  of  the  contract  which  he  meditates  making.  He  knows  that  a 
promise  by  the  servant  to  obey  the  lawful  and  reasonable  orders  of 
his  master  within  the  scope  of  his  contract  is  implied  by  law,  and 
a  breach  of  this  promise  in  a  material  matter  justifies  the  master  dis- 
charging him.  King  v.  St.  John,  Devizes,  9  B.  &  C.  896.  One  does 
not  put  himself  in  such  relation  for  a  fixed  period  without  some  choice 
as  to  whom  he  will  serve.  The  master's  habits,  character,  and  temper 
enter  into  the  consideration  of  the  servant  before  he  binds  himself 
to  the  service,  just  as  his  own  personal  characteristics  materially  affect 
the  choice  of  the  master.  The  service,  the  choice,  the  contract  are 
personal  upon  both  sides,  and  more  or  less  dependent  upon  the  in- 
dividuality of  the  contracting  parties,  and  the  rule  applicable  to  one 
should  be  the  rule  which  governs  the  other. 

If  now  to  such  a  case — that  is,  to  the  simple  and  normal  relation 
of  master  and  servant,  involving  daily  obedience  on  one  side  and  con- 
stant direction  on  the  other — we  apply  the  suggested  test  of  possibility 


550  OPERATION  OF  CONTRACT. 

of  performance  in  substantial  accord  with  the  contract,  the  result 
is  not  different.  It  is  said  that  if  the  master  dies  his  representatives 
have  only  to  pay,  and  any  one  may  do  that.  But  under  the  contract 
that  is  by  no  means  all  that  remains  to  be  done.  They  must  take 
the  place  of  the  master  in  ordering  and  directing  the  work  of  the 
farm,  and  requiring  the  stipulated  obedience.  That  may  prove  to 
effect  a  radical  change  in  the  situation  of  the  servant,  as  it  seems  to 
have  done  in  the  present  case,  leading  the  plaintiff  to  the  verge  of  re- 
fusing to  work  further  for  either  widow  or  executrix,  whose  views 
apparently  jangled.  The  new  master  cannot  perform  the  employer's 
side  of  the  contract  as  the  deceased  would  have  performed  it,  and  may 
vary  so  far  from  incapacity  or  fitful  temper  or  selfish  greed,  as  to 
make  the  situation  of  the  servant  materially  and  seriously  different 
from  that  which  he  contemplated  and  for  which  he  contracted. 

We  are,  therefore,  of  opinion  that  in  the  case  at  the  bar  the  con- 
tract of  service  was  dissolved  by  the  death  of  McMahan,  and  his 
estate  was  only  liable  for  the  services  rendered  to  the  date  of  his  death. 
The  judgment  should  be  reversed  and  a  new  trial  granted  with  costs 
to  abide  the  event.  All  concur.  Judgment  reversed. 


CHAPTER  III. 

JOINT  OBLIGATIONS. 

Joint  promises. 

(t.)  Joint  promisors. 

BRAGG  v.  WETZELL. 

5  BLACKFORD   (IND.),  95.— 1839. 

BLACKFORD,  J.  This  was  an  action  of  debt  for  money  lent,  brought 
by  Zacheus  Wetzell  against  Wilson  Bragg.  The  suit  originated  be- 
fore a  justice  of  the  peace.  The  justice  gave  judgment  for  the 
plaintiff,  and  the  defendant  appealed. 

In  the  Circuit  Court,  the  defendant  moved  to  dismiss  the  cause,  on 
the  ground  that  one  Smith  ought  to  have  been  joined  as  a  defendant 
in  the  suit.  The  motion  was  overruled.  The  cause  was  submitted 
to  the  court,  and  a  judgment  rendered  for  the  plaintiff. 

The  writ  was  issued  against  Bragg  alone.  The  declaration  is  as 
follows : 

"The  plaintiff  complains  of  Wilson  Bragg  and  Seneca  Smith,  partners,  trad- 
ing under  the  firm  of  Bragg  &  Smith,  of  a  plea  that  they  render  unto  him 
$100,  which  to  him  they  owe,  and  from  him  unjustly  detain;  for  that  whereas 
the  defendants,  heretofore,  to  wit,  on  the  27th  of  June,  1837,  at,  etc.,  were 
justly  indebted  to  the  plaintiff  in  the  sum  of  $100,  for  so  much  money  lent 
to  the  defendants  by  the  plaintiff,  and  at  their  special  instance  and  request; 
yet  the  defendants,  though  often  requested,  have  not,  nor  has  either  of  them, 
paid  the  said  sum  of  money,  or  any  part  thereof,  to  the  plaintiff,  but  to  pay 
"the  same  and  every  part  thereof,  the  defendants  have  at  all  times  refused, 
and  still  do  refuse,  to  the  damage,"  etc. 

The  plaintiff  here  shows  by  his  declaration,  that  Smith,  who  is 
not  sued,  is  a  joint  party  to  the  contract  with  the  defendant,  and 
that  Smith  is  living.  It  is  impossible,  under  these  circumstances, 
that  the  plaintiff  can  recover.  It  is  true,  that  since  the  case  of 
Rice  v.  Shute  (5  Burrow,  2611),  the  facts  that  there  is  a  joint  con- 
tractor not  sued,  and  that  he  is  alive,  are  generally  required  to  be 
pleaded  in  abatement;  but  that  rule  has  no  application  to  cases  like 
the  one  before  us.  Here  the  plaintiff,  in  his  declaration,  admits 
those  facts,  and  shows  that  he  has  no  right  to  sue  the  defendant 
alone.  The  suit  should  have  been  dismissed.  The  non-joinder 
in  such  a  case  as  this,  may  be  taken  advantage  of  on  a  motion  in 

551 


552  OPERATION  OF  CONTRACT. 

arrest  of  judgment.  Saund.  291  b,  note  4.  Or  it  may  be  assigned 
for  error.  Chitty's  Plead.  53. 

The  judgment  is  reversed  and  the  proceedings  subsequent  to  the 
motion  to  dismiss  the  cause  'set  aside,  with  costs.  Cause  remanded, 
etc.1 

9  Cyc.  653   (23);  654-655   (34-39);  706-707   (37-43). 


HALE  v.  SPAULDING  et  al 

145  MASSACHUSETTS,  482.— 1888. 

Contract  upon  an  instrument  under  seal  by  which  the  defendants, 
six  in  number,  agreed  to  pay  the  plaintiff,  on  demand,  six-sevenths 
of  any  loss  which  he  might  suffer  as  indorser  of  a  certain  note. 

iln  City  of  Philadelphia  v.  Reeves  and  Cabot,  48  Pa.  St.  472,  the  court 
said :  "It  is  a  general  presumption  of  law,  when  two  or  more  persons  under- 
take an  obligation,  that  they  undertake  jointly.  Words  of  severance  are 
necessary  to  overcome  this  primary  presumption.  In  all  written  contracts, 
therefore,  whether  the  liability  incurred  is  joint  or  several,  or  joint  and  sev- 
eral, is  to  be  determined  by  looking  at  the  words  of  the  instruments  and  at 
them  alone.  The  subject-matter  of  the  contract,  and  the  interests  of  the  par- 
ties assuming  a  liability,  have  nothing  to  do  with  the  question.  It  may  be 
otherwise  with  respect  to  the  rights  of  the  covenantees,  where  there  are  more 
than  one.  There  are  not  wanting  cases  in  which  it  has  been  held  that  when 
the  interests  of  the  covenantees  are  several,  they  may  sue  severally,  though 
the  terms  of  the  covenant  upon  which  they  sue  are  strictly  joint.  Even  this, 
however,  has  been  doubted.  But,  however,  it  may  be  with  the  rights  of  cove- 
nantees, it  is  a  settled  rule  that  whether  the  liability  of  covenantors  is  joint, 
or  several,  or  both,  depends  exclusively  upon  the  words  of  the  covenant.  And 
the  language  of  severalty  or  joinder  is  the  test.  The  covenant  is  always 
joint,  unless  declared  to  be  otherwise.  Enys  v.  Donnithorne,  2  Burrows,  1190; 
Philips  v.  Bonsall,  2  Binn.  138."  But  contracts  which  would  be  joint  by  the 
common  law  are,  in  many  States,  required  by  statute  to  be  construed  as  joint 
and  several.  Stimson's  Am.  St.  L.,  §  4113. 

In  Cowley  v.  Patch,  120  Mass.  137,  the  court  said:  "In  order  to  maintain 
an  action  on  a  joint  contract,  whether  the  action  is  brought  against  one  or 
both  of  the  joint  contractors,  it  is  necessary  to  prove  the  liability  of  both ;  for 
if  one  only  is,  or  ever  was,  liable  there  is  not  a  joint,  but  only  a  several  li- 
ability, and  a  variance  from  the  cause  of  action  declared  on.  For  example,  if 
one  joint  contractor  is  sued  alone,  and  does  not  plead  in  abatement  the  non- 
joinder of  the  otner,  and  judgment  is  rendered  against  the  one  sued,  it  merges 
the  cause  of  action  against  him,  and  (unless  otherwise  provided  by  statute) 
as  the  two  are  no  longer  jointly  liable,  prevents  a  subsequent  recovery  against 
the  other  joint  contractor.  Ward  v.  Johnson,  13  Mass.  148;  King  v.  Hoare, 
13  M.  &  W.  494;  Mason  v.  Eldred,  6  Wall.  231.  So  if,  in  such  an  action,  the 
judgment  is  for  the  defendant,  upon  the  ground  that  there  is  no  joint  liability, 
it  is  a  bar  to  a  subsequent  action  against  the  other  contractor  upon  the  joint 
contract.  Phillips  v.  Ward,  2  II.  &  C.  717." 

A  joint  demand  cannot  be  set  off  against  a  separate  demand. — Elliott  V. 
Bell,  37  W.  Va.  834. 


JOINT   OBLIGATIONS.  553 

Defendant  Saltmarsh  filed  an  answer  alleging  that,  since  the  ex- 
ecution of  the  instrument  sued  on,  plaintiff  had  executed  and  delivered 
the  following  instrument,  under  seal,  to  one  of  the  joint  obligors: 

"Received  of  -L.  V.  Spaulding  $1060.84,  in  full  satisfaction  for 
his  liability  on  the  document,"  etc.  (describing  it). 

It  appeared  in  evidence  that  plaintiff  had  settled  with  each  of 
the  defendants,  except  Saltmarsh,  for  their  proportionate  part  of 
the  liability,  and  executed  the  paper  to  Spaulding.  Plaintiff  offered 
to  prove  that  there  was  no  intention  to  release  Saltmarsh,  but  the 
court  held  the  offer  immaterial,  and  directed  a  verdict  for  defendant. 

C.  ALLEN,  J.  The  words  "in  full  satisfaction  for  his  liability" 
import  a  release  and  discharge  to  Spaulding,  and,  the  instrument 
being  under  seal,  it  amounts  to  a  technical  release.  The  plaintiff 
does  not  controvert  the  general  rule,  that  a  release  to  one  joint 
obligor  releases  all.  Wi'ggin  v.  Tudor,  23  Pick.  434,  444;  Goodnow 
v.  Smith,  18  Pick.  414;  Pond  v.  Williams,  1  Gray,  630,  636.  But 
this  result  is  avoided  when  the  instrument  is  so  drawn  as  to  show 
a  contrary  intention.  1  Lindl.  Part.  433;  2  Chit.  Con.  (llth  Am. 
ed.)  1154  et  seq.;  Ex  parte  Good,  5  Ch.  D.  46,  55.  The  difficulty 
with  the  plaintiff's  case  is,  that  there  is  nothing  in  the  instrument 
before  us  to  show  such  contrary  intention.  Usually  a  reservation 
of  rights  against  other  parties  is  inserted  for  that  purpose;  or  the 
instrument  is  put  in  the  form  of  a  covenant  not  to  sue.  See  Ken- 
worthy  v.  Sawyer,  125  Mass.  28;  Willis  v.  De  Castro,  4  C.  B.  (N.  S.) 
216;  North  v.  Wakefield,  13  Q.  B.  536,  541.  Parol  evidence  to 
show  the  actual  intention  is  incompetent.  Tuckerman  v.  Newhall, 
17  Mass.  580,  585.  The  instrument  given  in  this  case  was  a  mere 
receipt  under  seal  of  money  form  one  of  several  joint  obligors,  in 
full  satisfaction  of  his  liability  on  the  document  signed  by  himself 
and  others.  There  i's  nothing  to  get  hold  of  to  show  an  intent  to  re- 
serve rights  against  the  others.  He  might  already  have  discharged 
each  of  them  by  a  similar  release. 

Exceptions  overruled.1 

9  Cyc.  654  (31)  ;  22  H.  L.  R.  458;  8  C.  L.  R.  591;  12  C.  L.  R.  753;  Willis- 
ton,  Releases  and  covenants  not  to  sue  joint,  or  joint  and  several  debtors, 
25  H.  L.  R.  203. 

i  Nothing  short  of  a  technical  release  under  seal  will  operate  to  discharge 
a  joint  obligor.  Rowley  v.  Stoddard,  7  Johns.  210;  Catskill  Bank  v.  Mes- 
senger, 9  Cow.  38 ;  Crane  v.  Ailing,  15  N.  J.  L.  423 ;  Kidder  v.  Kidder,  33  Pa. 
St.  268,  post,  p.  707.  Though  if  the  release  be  upon  payment  in  full  by  one 
of  the  joint  obligors,  the  result  would  seem  to  be  otherwise.  Goss  v.  Ellison, 
136  Mass.  503.  The  rule  has  been  modified  by  statute  in  some  States.  Stim- 
son's  Am.  St.  L.,  §  5013. 

"A  covenant  not  to  sue  a  sole  debtor  may  be  pleaded  as  a  general  release 
in  bar,  to  avoid  circuity  of  action.  But  if  he  be  one  of  two  or  more  debtors, 
such  covenant  cannot  be  pleaded  in  bar,  and  if  he  should  be  sued  contrary  to 


554  OPERATION   OF    CONTRACT. 

HAIGHT,  J.,  IN  GILBERT  v.  FINCH,  et  al. 

173  NEW  YORK,  465.— 1903. 

In  considering  the  effect  of  the  release  we  shall  assume  that  the 
defendants  were  joint  tort  feasors  with  the  Maine  incorporators,  and 
that  the  release,  under  seal,  of  a  claim  given  to  one  joint  tort 
feasor  operates  as  a  release  of  all.  (Barrett  v.  Third  Ave.  R.  R.  Co., 
45  N".  Y.  628,  635,  and  cases  there  cited.)  This  rule  is  founded  upon 
the  theory  that  a  party  is  entitled  to  but  one  satisfaction  for  the  in- 
jury sustained  by  him.  The  claim  of  the  plaintiff,  as  we  have  seen, 
was  for  thirty-five  thousand  dollars ;  the  settlement  was  for  twenty-five 
thousand  dollars,  leaving  ten  thousand  dollars  of  the  original  claim 
unpaid  and  unsatisfied.  The  instrument  given  to  the  Maine  in- 
corporators upon  the  settlement  of  the  plaintiff's  suit  against  them 
released  and  discharged  them  from  all  further  claims  or  demands, 
so  far  as  the  plaintiff  was  concerned,  but  it  was  expressly  provided 

the  terms  of  it,  he  must  pursue  his  remedy  by  an  action  upon  the  covenant." 
— Wells,  J.,  in  McAllester  v.  Sprague,  34  Me.  296,  298. 

A  judgment  rendered  against  one  of  several  joint  debtors  in  an  action 
against  him  alone  is  a  bar  to  an  action  against  the  others.  Mason  v.  Eldred, 
6  Wall.  231;  Candee  v.  Smith,  93  N.  Y.  349;  Heckemann  v.  Young,  134  N.  Y. 
170.  See  Stimson's  Am.  St.  L.,  §  5015,  for  statutory  modifications. 

The  death  of  one  of  several  joint  debtors  extinguishes  the  liability  as  to 
him  and  the  survivors  alone  are  liable.  Yorks  v.  Peck,  14  Barb.  (N.  Y.)  644; 
Foster  v.  Hooper,  2  Mass.  572.  Contra:  Eldred  v.  Bank,  71  Ind.  543;  and 
the  common  law  rule  has  now  been  generally  modified  by  statute.  Stimson's 
Am.  St.  L.,  §  4113. 

Revival  of  debt  which  has  been  barred  by  the  statute  of  limitations, — In 
Shoemaker  v.  Benedict,  11  N.  Y.  176,  the  court  said:  "The  only  question 
then  is,  whether  the  joint  contract  creates  an  agency  in  one  of  several  joint 
debtors  to  continue  a  debt  or  renew  a  debt  already  barred  against  all,  and 
prevent  the  statute  of  limitations  from  attaching  by  a  new  promise,  express 
or  implied.  .  .  .  The  cases  in  England,  and  in  this  State  prior  to  Van  Keuren 
v.  Parmelee  [2  Comst.  523],  have  followed  the  case  of  Whitcomb  v.  Whiting 
[Doug.  652],  and  held  that  such  agency  did  exist.  .  .  .  The  decision  of  the 
court  in  Van  Keuren  v.  Parmelee,  without  reference  to  the  reasoning  of  the 
judge,  by  whom  the  opinion  was  delivered,  necessarily  decides  or  recognizes  as 
law:  1st.  That  the  action  is  substantially,  though  not  in  form,  upon  the 
new  promise,  and  that  such  promise  is  not  a  mere  continuation  of  the  original 
promise,  but  a  new  contract  springing  out  of  and  supported  by  the  original 
consideration;  2d.  That  to  continue  or  renew  the  debt,  there  must  be  an 
express  promise  to  pay  or  an  acknowledgment  of  the  existence  of  the  debt, 
with  the  admission  or  recognition  of  an  existing  liability  to  pay  it  from 
which  a  new  promise  may  be  inferred;  3d.  That  such  an  acknowledgment  or 
promise,  to  take  a  debt  out  of  the  statute,  must  be  made  by  the  party  to 
be  charged  or  by  some  person  authorized  by  him;  and  4th.  That  there  is  no 
mutual  agency  between  joint  debtors  by  reason  of  the  joint  contract,  which 
will  authorize  one  to  act  for  and  bind  the  others  in  a  manner  to  vary  or 
extend  their  liability."  See  25  Cyc.  1356  (48-55). 


JOINT   OBLIGATIONS.  555 

in  the  instrument  that  it  should  not  affect  any  cause  of  action  on 
behalf  of  the  receiver  against  any  other  person.  The  purpose  of 
this  reservation  is  very  evident.  The  receiver,  doubtless,  intended 
to  pursue  the  defendants  for  the  balance  of  the  claim.  The  in- 
strument, therefore,  does  not  purport,  neither  was  it  intended,  to  be 
a  full  and  complete  settlement  of  the  plaintiff's  entire  claim.  Res- 
ervations of  this  character  in  releases  are  not  uncommon,  and  their 
effect  has  been  the  subject  of  frequent  adjudications  by  the  courts.  It 
is  quite  true  that  the  courts  of  our  sister  States  have  reached  different 
conclusions  upon  the  question,  and  that  a  sharp  conflict  exists  in  the 
courts  of  our  own  State,  as,  for  instance,  Matthews  v.  Chicopee  Mfg. 
Co.  (3  Robt.  712)  ;  Commercial  Nat.  Bank  v.  Taylor  (64  Hun,  499), 
on  one  side,  and  Mitchell  v.  Allen  (25  Hun,  543)  ;  Belong  v.  Curtis 
(35  Hun,  94),  and  Brogan  v.  Hanan  (55  App.  Div.  92)  upon  the 
other  side. 

In  England  the  modern  authorities  appear  to  be  quite  uniform 
upon  the  question.  They  are  to  the  effect  that,  as  between  joint 
debtors  and  joint  tort  feasors,  a  release  given  to  one  releases  all; 
but  if  the  instrument  contains  a  reservation  of  a  right  to  sue  the 
other  joint  debtor  or  tort  feasors,  it  is  not  a  release,  but  in  effect  is 
a  covenant  not  to  sue  the  person  released,  and  a  covenant  not  to 
sue  does  not  release  a  joint  debtor  or  a  joint  tort  feasor. 

In  the  case  of  Duck  v.  Mayeu  (L.  R.  [2  Q.  B.  1892]  511)  the 
question  was  as  to  whether  the  plaintiff  had  released  a  joint  tort 
feasor.  He  had  accepted  from  one  a  sum  of  money,  but  without 
prejudice  to  his  claim  against  the  other.  Smith,  L.  J.,  in  delivering 
the  opinion  of  the  court,  said  with  reference  thereto:  "In  determin- 
ing whether  the  document  be  a  release  or  a  covenant  not  to  sue,  the 
intention  of  the  parties  was  to  be  carried  out,  and,  if  it  were  clear 
that  the  right  against  a  joint  debtor  was  intended  to  be  preserved, 
inasmuch  as  such  right  would  not  be  preserved  if  the  document  were 
held  to  be  a  release,  the  proper  construction,  where  this  was  sought 
to  be  done,  was  that  it  was  a  covenant  not  to  sue,  and  not  a  release. 
In  the  case  of  Bateson  v.  Gosling,  at  Nisi  Prius,  the  same  canon 
of  construction  was  applied,  and  it  was  held  that,  the  release  being, 
as  it  was,  limited  by  a  proviso  reserving  rights  against  the  surety, 
it  must  be  taken  that  it  was  a  covenant  not  to  sue,  and  not  a  release ; 
and  this  ruling  was  unanimously  upheld  by  the  Court  of  Common 
Pleas,  as  reported  in  Law  Rep.  7  C.  P.,  p.  9." 

In  Brice  v.  Barker  (4  Ellis  &  Bl.  760  [E.  C.  L.  R.  vol.  82])  Cole- 
ridge, J.,  says :  "With  regard  to  the  first  question,  two  modes  of  con- 
struction are  for  consideration.  One,  that,  according  to  the  earlier 
authorities,  the  primary  intention  of  releasing  the  debt  is  to  be  carried 
out,  and  the  subsequent  provision  for  reserving  remedies  against  co- 
obligors  and  co-contractors  should  be  rejected  as  inconsistent  with  the 


556  OPERATION  OF  CONTEACT. 

intention  to  release  and  destroy  the  debt  evinced  by  the  general 
words  of  the  release,  and  as  something  which  the  law  will  not  allow, 
as  being  repugnant  to  such  release  and  extinguishment  of  the  debt. 
The  other,  that,  according  to  the  modern  authorities,  we  are  to  mould 
and  limit  the  general  words  of  the  release  by  construing  it  to  be 
a  covenant  not  to  sue,  and  thereby  allow  the  parties  to  carry  out  the 
whole  of  their  intentions  by  preserving  the  rights  against  parties 
jointly  liable.  We  quite  agree  with  the  doctrine  laid  down  by  Lord 
Denman  in  Nicholson  v.  Revill  (4  A.  &  E.  675  [E.  G.  L.  R.  vol.  31], 
as  explained  by  Baron  Parke  in  Kearsley  v.  Cole,  16  M.  &  W.  136) 
that,  if  the  deed  is  taken  to  operate  as  a  release,  the  right  against 
a  party  jointly  liable  cannot  be  preserved;  and  we  think  that  we  are 
bound  by  modern  authorities  (see  Solly  v.  Forbes,  2  Br.  &  B.  38 
[E.  C.  L.  E.  vol.  6],  Thompson  v.  Lack,  3  Com.  B.  540  [E.  C.  L.  R. 
vol.  54],  and  Payler  v.  Homersham,  4  M.  &  S.  423  [E.  C.  L.  R.  vol. 
30] )  to  carry  out  the  whole  intention  of  the  parties  as  far  as  possible, 
by  holding  the  present  to  be  a  covenant  not  to  sue,  and  not  a  release." 
(See,  also,  Curry  v.  Armitage,  6  Weekly  Repr.  [Eng.]  516.) 

[The  court  here  states  McCrillis  v.  Hawes,  38  Me.  566;  Ellis  v. 
Esson,  50  Wis.  138 ;  Sloan  v.  Herrick,  49  Vt.  327.] 

We  have  thus  called  attention  to  the  English  authorities  and  those 
of  some  of  our  sister  States.  We  have  also  referred  to  some  of  the 
conflicting  cases  in  our  own  courts.  The  question  appears  to  have 
first  received  attention  here  in  Kirby  v.  Taylor  (6  Johns.  Ch.  250, 
253)  in  which  it  was  held  that  a  release  is  to  be  construed  according 
to  the  clear  intention  of  the  parties,  and  where  it  contains  a  reserva- 
tion, the  other  obligee  was  not  discharged. 

In  the  case  of  Irvine  v.  Milbank  (56  1ST.  Y.  635),  more  fully  reported 
in  15  Abb.  Pr.  [N.  S.]  378  the  release  was,  by  its  terms,  to  be 
without  prejudice  to  the  rights  of  the  plaintiff  as  against  the  other 
defendants.  Folger,  J.,  in  delivering  the  opinion  of  the  court,  said 
that  this  instrument  was  not  a  technical  release,  which  it  must  be  to 
operate  as  a  discharge  of  a  joint  tort  feasor. 

And  finally,  in  the  case  of  Whittemore  v.  Judd  Linseed  &  Sperm  Oil 
Co.  (124  N.  Y.  565),  the  question  was  examined  by  Brown,  J.,  and 
the  conclusion  reached  that  where  a  release  of  one  of  two  joint 
debtors  contains  an  express  provision  that  it  shall  not  affect  or  impair 
the  claim  of  the  creditor  against  the  other  debtor,  the  latter  is  not 
discharged. 

It  thus  appears  that  the  decisions  of  this  court  are  in  accord  with 
the  English  rule  and  in  harmony  with  our  statute  in  reference  to 
joint  debtors.  (Code  Civ.  Pro.  §§  1942,  1944.)  They  give  force 
and  effect  to  the  intention  of  the  parties  to  the  instrument,  which,  we 
think,  is  more  just  and  the  wiser  and  safer  rule.  Where  the  release 
contains  no  reservation  it  operates  to  discharge  all  the  joint  tort 


JOINT   OBLIGATIONS.  557 

feasors;  but  where  the  instrument  expressly  reserves  the  right  to 
pursue  the  others  it  is  not  technically  a  release  but  a  covenant  not 
to  sue,  and  they  are  not  discharged.  It  follows  that  the  release,  so 
called,  did  not  operate  to  discharge  the  defendants. 

The  order  of  the  Appellate  Division  should  be  affirmed  and  judg- 
ment absolute  ordered  in  favor  of  the  plaintiff  upon  the  stipulation, 
with  costs. 

Parker,  Ch.  J..,  Gray,  Bartlett,  Cullen,  and  Werner,  JJ.,  concur; 
O'Brien,  J.,  absent. 

Order  affirmed. 

9  Cyc.  654   (31)  ;   16  H.  L.  R.  529. 


JEFFRIES  v.  FERGUSON",  Administrator. 
87   MISSOURI,  244.— 1885. 

BLACK,  J.  C.  S.  Jeffries  and  James  N.  Inge  were  sureties  on 
a  note  given  by  Chas.  R.  Jeffries  to  one  Roberts.  Before  and  after 
judgment  on  the  note,  C.  S.  Jeffries  paid  off  the  debt,  and  then 
presented  his  demand  to  the  Probate  Court,  asking  to  have  the  one- 
half  of  the  amount  so  paid,  first  deducting  the  proceeds  of  certain 
securities,  allowed  against  the  estate  of  Inge,  the  co-surety.  The 
contention  that  plaintiff  could  only  sue  in  a  court  having  a  full  and 
complete  equity  jurisdiction  is  not  well  taken.  Courts  of  law  have 
adopted  the  equitable  doctrine  of  contribution,  and  award  relief  to 
one  surety  who  has  paid  more  than  his  share.  The  surety  paying 
the  debt  may  have  his  action  at  law  against  the  other  surety  for  any 
excess  which  he  has  paid  over  his  porportionate  share.  Van  Petten 
v.  Richardson,  68  Mo.  380.  The  plaintiff's  demand  was  allowed  by 
the  Probate  Court,  and  he  again  recovered  in  the  Circuit  Court,  to 
which  the  case  was  appealed.  We  have  examined  the  evidence  and 
are  satisfied  the  estate  received  all  credits  to  which  it  was  entitled. 

The  judgment  is  affirmed.  All  concur.1 

9  Cyc.  794    (2-3) ;   796    (11-17). 

1  "Contribution  is  not  founded  upon,  although  it  may  be  modified  by,  con- 
tract. The  right  to  it  is  as  complete  in  the  case  where  the  sureties  are  un- 
known to  each  other,  as  in  any  other.  The  law  following  equity  will  imply  a 
promise  to  contribute,  in  order  to  afford  a  remedy.  But  as  this  is  in  most 
instances  a  fiction,  in  aid  of  an  equitable  right,  it  will  never  be  tolerated 
where  the  relation  upon  which  the  equity  is  founded  is  wanting." — Gardiner, 
C.  J.,  in  Tobias  v.  Rogers,  13  N.  Y.  59,  66. 

"An  action  at  law  by  a  surety  for  contribution  must  be  against  each  of 
the  sureties  separately  for  his  proportion,  and  no  more  can  be  recovered,  even 
where  one  or  more  are  insolvent.  In  the  latter  case,  the  action  must  be 
in  equity  against  all  the  co-sureties  for  contributions,  and,  upon  proof  of  the 
insolvency  of  one  or  more  of  the  sureties,  the  payment  of  the  amount  will  be 


558  OPERATION    OF    CONTRACT. 

(u.)  Joint  promisees. 

SWEIGART  v.  BERK  et  al 

8  SERGEANT  &  RAWLE   (PENN.),  308.— 1822. 

Action  of  debt  on  a  bond.     Judgment  for  plaintiffs. 

The  bond  was  given  by  defendant  to  "the  widow  and  heirs  and  legal 
representatives  of  Peter  Berk,  deceased,"  conditioned  to  be  void  "if 
the  said  Sweigart  should  pay  to  the  said  widow  and  heirs  and  legal 
representatives  of  the  said  Peter  Berk  one  thousand  pounds,  gold 
or  silver  coin,  lawful  money  of  Pennsylvania,  at  or  immediately  after 
the  death  of  Margaret  Berk,  widow  of  the  said  Peter  Berk,  deceased, 
or  to  the  said  deceased's  heirs  or  representatives,  in  equal  shares 
alike,  with  lawful  interest  for  the  same  to  be  paid  annually  unto 
the  said  Margaret  Berk,  during  her  natural  life,"  etc. 

The  statement  of  the  cause  of  action  averred  the  death  of  Margaret 
Berk,  and  that  the  plaintiffs  were  seven  of  the  ten  children  of 
Peter  Berk,  and  each  entitled  to  one  hundred  pounds  of  the  one 
thousand  pounds  promised  by  defendant. 

TILGHMAN,  C.  J.  It  appears  by  the  plaintiffs'  own  showing,  that 
the  bond  was  given  to  ten  obligees  jointly,  all  of  whom  are  living, 
and  the  action  is  brought  by  only  seven  of  them.  I  am  at  a  loss  to 
conceive  on  what  principle  the  action  can  be  supported.  It  is  well 
settled  that  if  a  bond  be  given  to  several  obligees  they  must  all  join 
in  the  action,  unless  some  be  dead,  in  which  case  that  fact  should  be 
averred  in  the  declaration.  And  if  it  appear  on  the  face  of  the 
pleadings  that  there  are  other  obligees  living  who  have  not  joined 
in  the  action,  it  is  fatal,  on  demurrer  or  in  arrest  of  judgment.  The 
authorities  on  this  point  are  numerous,  and  will  be  found  collected 
in  1  Saund.  291  f.  The  counsel  for  the  plaintiffs  has  urged  the  in- 
convenience of  this  principle  when  applied  to  the  bond  in  suit,  where 

adjudged  among  the  solvent  parties  in  due  proportion." — Miller,  J.,  in  East- 
erly v.  Barber,  66  N.  Y.  433,  439. 

"We  have  often  held,  as  between  the  creditor  and  the  estate  of  a  deceased 
surety,  that  the  joint  obligation  of  the  latter  ended  with  his  death.  We  are 
not  yet  prepared  to  decide  that  his  several  obligation,  originating  at  the  date 
of  the  common  signature,  to  contribute  ratably  to  the  payments  compelled 
from  his  associates,  also  terminates  at  his  death.  .  .  .  The  justice  of  such  a 
rule  is  apparent.  Originating  in  equity,  it  has  been  grafted  upon  the  law 
with  the  aid  of  an  implied  promise  to  secure  the  legal  remedy.  We  see  no 
reason  to  reverse  it,  but  every  consideration  of  equity  and  justice  leads  us 
rather  to  maintain  and  enforce  it." — Finch,  J.,  in  Johnson  v.  Harvey,  84 
N.  Y.  363,  366,  367. 

"It  is  well  settled  that  one  surety  has  a  claim  against  another,  for  contri- 
bution for  any  sum  he  may  be  compelled  to  pay,  although  such  co-surety 
may  have  been  discharged  from  liability  primarily  upon  the  same  contract." 
—Peters,  J.,  in  Hill  v.  Morse,  61  Me.  541,  544. 


JOINT   OBLIGATIONS.  559 

it  appears,  by  the  condition,  that  ten  persons  have  separate  interests, 
and  it  may  be  that  some  of  them  have  received  their  shares  before 
the  commencement  of  this  suit.  There  is  very  little  weight  in  that 
argument.  The  acceptance  of  the  bond  was  the  voluntary  act  of 
the  obligees,  and  if  people  will  enter  into  contracts  which  are  at- 
tended with  difficulties,  they  have  no  right  to  expect  that  established 
principles  of  law  are  to  be  prostrated  for  their  accommodation.  But 
in  truth,  there  is  very  little  difficulty  in  the  case.  The  action  may 
be  brought  on  the  penalty  of  the  bond,  in  the  name  of  all  the 
obligees,  and  the  judgment  entered  in  such  a  manner  as  to  secure 
the  separate  interest  of  each.  The  action  may  be  supported  although 
some  of  the  obligees  have  received  their  shares,  because  the  bond  is 
forfeited  unless  they  have  all  been  paid. 

It  was  objected  that  those  who  had  been  paid  might  refuse  to  join 
in  the  action,  or  might  release  the  obligor.  But  the  court  would 
permit  those  who  are  unpaid  to  make  use  of  the  names  of  the  other 
obligees,  against  their  consent;  neither  would  their  release  be  suffered 
to  be  set  up  in  bar  of  the  action.  It  may  be  resembled  to  the  case 
of  an  assigned  chose  in  action,  where  the  action  is  brought  in  the 
name  of  the  assignor,  for  the  use  of  the  assignee;  there  the  release 
of  the  assignor  would  not  be  regarded.  A  release,  in  such  case,  would 
be  a  collusion  between  the  assignor  and  assignee  [debtor]  to  defraud 
a  third  person,  and  therefore  void.  It  is  unnecessary  to  decide 
whether  each  of  the  obligees,  in  the  present  case,  could  have  supported 
a  separate  action  for  his  separate  interest,  appearing  on  the  face  of 
the  condition.  I  will  only  say  that  such  an  action  would  be  hazard- 
ous. But  this  action  has  not  been  brought  for  the  separate  interest 
of  any  one.  Seven  of  the  obligees  have  joined  in  it.  So  that  it  is 
neither  joint  nor  several.  On  no  principle,  therefore,  can  the  action, 
be  supported.  There  were  several  other  points  discussed  in  the 
argument,  in  which  the  court  will  give  no  opinion. 

The  judgment  of  the  Court  of  Common  Pleas  must  be  reversed, 
and  restitution  awarded. 

Judgment  reversed  and  restitution  awarded.1 

9  Cyc.  655-656   (40-42);   703   (15). 

i  A  release  by  one  of  several  joint  promisees  is,  in  the  absence  of  collusion 
and  fraud,  a  bar  to  an  action  by  tbe  others.  Pierson  v.  Hooker,  3  Johns. 
(N.  Y.)  68;  People  ex  rel  Eagle  v.  Keyaer,  28  N.  Y.  228;  Myrick  v.  Dame, 
J)  Gush.  (Mass.)  248. 

Upon  the  death  of  a  joint  promisee  the  right  of  action  vests  in  the  sur- 
vivors. Crocker  v.  Beal,  1  Lowell  (U.  S.  C.  C.),  416;  Murray  v.  Mumford, 
6  Cow.  (N.  Y.)  441;  Indiana  &c.  Ry.  v.  Adamson,  114  Ind.  282;  Donnell 
v.  Manson,  109  Mass.  576. 


560  OPERATION    OF    CONTRACT. 

Joint  and  several  promises. 

(i.)  Joint  and  several  promisors. 

CUMMINGS  et  al.  v.  THE  PEOPLE,  &c. 

50  ILLINOIS,  132.— 1869. 

Action  of  debt  on  a  sheriff's  bond.     Judgment  for  plaintiff. 

The  declaration  averred  five  obligors,  but  no  process  issued  against 
one  of  them. 

MR.  CHIEF  JUSTICE  BREESE.  .  .  .  The  next  objection  is,  that  as 
the  bond  in  suit  was  a  joint  and  several  bond,  suit  should  be  brought 
against  all  the  obligors,  or  against  each  co-obligor  severally,  and  not 
against  an  intermediate  number. 

There  is  no  averment  in  the  declaration  that  Argo  was  dead  at  the 
time  of  the  commencement  of  the  suit.  The  rule  is,  if  one  of  the 
joint  obligors  be  dead,  it  is  not  necessary  to  notice  him  in  the  dec- 
laration, nor  need  the  survivors  be  declared  against  as  such,  but  they 
may  be  sued,  as  if  they  alone  were  primarily  liable.  1  Ch.  PI.  43. 
To  the  same  effect  is  Eichard's  v.  Heather,  1  Barn.  &  Aid.  29,  and 
Mott  v.  Petrie,  15  Wend.  318.  The  reason  is  obvious.  The  rule 
being  that  on  a  joint  and  several  obligation,  executed  by  more  than 
two  persons,  one  may  be  sued,  or  all,  but  not  an  intermediate  number ; 
therefore,  if  one  of  the  co-obligors  be  not  named  in  the  declaration, 
those  who  are  sued  may  plead  the  fact  in  abatement.  To  such  a  plea 
the  plaintiff  could  reply,  that  such  co-obligor  was  dead  before  the 
commencement  of  the  suit,  as  that  would  be  a  matter  in  pais. 

It  is  averred,  in  this  declaration,  that  Argo  executed  the  bond  as 
one  of  the  sureties;  but  the  defendants  in  error  say,  in  the  brief  of 
counsel,  that  he  was  dead  at  the  time  the  suit  was  commenced.  If 
this  was  so,  then  it  should  not  have  been  alleged  in  the  declaration 
that  he  executed  the  bond,  but  having  alleged  it  the  question  is 
presented,  is  not  the  declaration  defective  by  reason  of  his  non- joinder 
in  the  action,  and  cannot  advantage  be  taken  of  it  by  motion  in 
arrest  of  judgment,  or  an  error? 

The  defendants  in  error  contend  that,  though  Argo  might  be  living, 
and  should  have  been  made  a  party,  it  is  too  late  now  to  make  the 
(  objection — it  should  have  been  made  by  plea  in  abatement,  and  can- 
not be  raised  on  error. 

It  is  admitted,  if  the  defendants  in  error  had  not  alleged  in 
their  declaration  that  the  defendants  therein,  together  with  Argo, 
executed  the  bond,  the  defendants  would  have  been  required  to  plead 
his  non-joinder  in  abatement.  But  the  fact  appears  on  the  face  of 
the  declaration;  a  plea,  therefore,  was  not  necessary  to  bring  it  be- 
fore the  court.  Why  inform  the  court  by  plea  of  a  fact  which  the 


JOINT   OBLIGATIONS.  561 

plaintiff  himself  places  on  the  record?  This  defect  in  the  declara- 
tion could  have  been  reached  by  general  demurrer,  or  by  motion  in 
arrest  of  judgment,  and  can  now  be  availed  of  on  error. 

Plaintiffs,  by  their  own  showing,  inform  the  court  there  is  another 
joint  obligor,  who  has  not  been  joined  in  the  action;  it  was  patent 
of  record,  and  no  plea  was  necessary  to  bring  the  fact  before  the  court. 
1  Ch.  PL  46 ;  2  Sanders,  9,  note  10  to  the  case  of  Jefferson  v.  Morton 
et  al.;  Cobell  v.  Vaughan,  1  Id.  291,  in  note;  Whitaker  v.  Young,  2 
Cowen,  569;  Homer  v.  Moor,  cited  in  5  Burrow,  2614;  Leftwich  v. 
Berkeley,  1  Hen.  &  Munf .  61 ;  Newell  v.  Wood,  1  Munf.  555 ;  Har- 
wood  et  al.  v.  Eoberts,  5  Maine,  441. 

The  rule  is  well  settled  that  matters  in  pais  only  need  be  pleaded. 
This  is  matter  of  record. 

This  record  shows  a  joint  and  several  bond  executed  by  five  persons, 
four  of  whom  are  sued.  This  appearing  on  the  face  of  the  declara- 
tion, the  case  is  brought  within  the  principle  of  the  cases  above  cited, 
and  about  which  there  can  be  no  doubt. 

For  this  error  the  judgment  must  be  reversed. 

Judgment  reversed.1 

9  Cyc.  657-658   (52-53) ;  708   (51-52). 


BANGOK  BANK  v.  TEEAT  et  al. 

6  GREENLEAF  (6  MAINE),  207.— 1829. 

MELLEN,  C.  J.  This  is  an  action  of  assumpsit  and  the  declaration 
states  that  the  note  was  signed  by  the  defendants  and  Allen  Gilman 
jointly  and  severally;  and  that  a  judgment  had  been  recovered  on 
the  note  against  Gilman  in  a  several  action  against  him.  The  de- 
fendants have  moved  in  arrest  of  judgment  on  account  of  the 
joinder  of  them  in  the  present  suit. 

When  three  persons  by  bond,  covenant,  or  note  jointly  and  severally 
contract,  the  creditor  may  treat  the  contract  as  joint  or  several  at 
his  election,  and  may  join  all  in  the  same  action  or  sue  each  one 
severally ;  but  he  cannot,  except  in  one  case,  sue  two  of  the  three,  be- 
cause that  is  treating  the  contract  neither  as  joint  or  several.  But 
if  one  of  the  three  be  dead,  and  that  fact  be  averred  in  the  declara- 
tion, the  surviving  two  may  be  joined. 

In  the  present  case  Gilman  is  living.  The  plaintiffs  contend  that 
as  judgment  had  been  recovered  against  him,  such  judgment  entitled 
them  to  join  the  other  two  in  the  same  manner  as  though  he  was  dead. 

i  "The  rule  is  elementary  that  when  an  obligation  is  joint  as  well  as 
several,  all  must  be  proceeded  against  jointly,  or  each  severally.  There  is 
no  authority  for  suing  three  out  of  four  joint  makers." — Champlin,  J.,  in 
Fay  &  Co.  v.  Jenks  &  Co.,  78  Mich.  312. 


562  OPERATION    OF    CONTRACT. 

This  is  not  so.  When  they  sued  Gilman  alone,  they  elected  to  con- 
sider the  promise  or  contract  as  several;  and  having  obtained  judg- 
ment they  are  bound  by  such  election.  In  case  of  death,  the  act 
of  God  has  deprived  the  party  of  the  power  of  joining  all  the  con- 
tractors, but  he  may  still  consider  the  contract  as  joint,  and  sue  the 
surviving  two. 

The  plaintiffs  have  disabled  themselves  from  maintaining  this  action 
by  their  former  one.  1  Saund.  291  e.  The  objection  is  good  on 
arrest  of  judgment  where  the  fact  relied  on  by  the  defendants  appears 
on  the  record,  as  in  the  present  case. 

Judgment  arrested.1 
9   Cyc.   657-658    (52-57);    708    (51-52). 

1  In  Sessions  v.  Johnson,  95  U.  S.  347,  the  court  said :  "Even  without 
satisfaction,  a  judgment  against  one  of  two  joint  contractors  is  a  bar  to  an 
action  against  the  other,  within  the  maxim  transit  in  rem  judicatum;  the 
cause  of  action  being  changed  into  matter  of  record,  which  has  the  effect  to 
merge  the  inferior  remedy  in  the  higher.  King  v.  Hoare,  13  M.  &  W.  504. 
Judgment  in  such  a  case  is  a  bar  to  subsequent  action  against  the  other 
joint  contractor  because,  the  contract  being  merely  joint,  there  can  be  but 
one  recoVery,  and  consequently  the  plaintiff,  if  he  proceeds  against  one  only 
of  two  joint  promisors,  loses  his  security  against  the  other,  the  rule  being 
that  by  the  recovery  of  the  judgment  the  contract  is  merged,  and  a  higher 
security  substituted  for  the  debt.  Robertson  v.  Smith,  18  Johns.  (N.  Y.) 
477;  Ward  v.  Johnson,  13  Mass.  149;  Cowley  v.  Patch,  120  Id.  138;  Mason 
v.  Eldred  et  al.,  6  Wall.  231.  But  the  rule  is  otherwise  where  the  contract 
or  obligation  is  joint  and  several,  to  the  extent  that  the  promisee  or  obligee 
may  elect  to  sue  the  promisors  or  obligors  jointly  or  severally;  but  even  in 
that  case  the  rule  is  subject  to  the  limitation,  that  if  the  plaintiff  obtains  a 
joint  judgment,  he  cannot  afterwards  sue  them  separately,  for  the  reason 
that  the  contract  or  bond  is  merged  in  the  judgment;  nor  can  he  maintain 
a  joint  action  after  he  has  recovered  judgment  against  one  of  the  parties  in 
a  separate  action,  as  the  prior  judgment  is  a  waiver  of  his  right  to  pursue  a 
joint  remedy." 

But  in  People  v.  Harrison,  82  Ills.  84,  the  court  said:  "Contracts  which 
are  joint  and  several  may  be  regarded  as  furnishing  two  distinct  remedies; 
one  by  a  joint  action  against  all  the  obligors,  the  other  by  a  several  action 
against  each.  Freeman  on  Judgments,  §  335.  If  this  be  correct,  an  action 
against  all  the  obligors  on  the  joint  liability  would  not  be  a  bar  to  an  action 
against  each  one  on  the  several  liability.  As  was  held  in  Moore  v.  Rogers  [19 
Ills.  347],  where  the  contract  is  joint  and  several,  its  legal  effect  is  double, 
equivalent  to  independent  contracts  founded  upon  one  consideration,  for  per- 
formance severally  and  also  for  performance  jointly;  and  distinct  remedies 
upon  the  same  instrument,  treating  it  as  a  joint  contract  and  as  a  several 
contract,  may  be  pursued  until  satisfaction  is  fully  obtained." 


JOINT  OBLIGATIONS.  563 

MAY  v.  HANSON  et  al. 

6  CALIFORNIA,  642.— 1856. 

Action  against  Hanson  and  Fall  personally,  and  Dewey  as  admin- 
istrator on  a  joint  and  several  bond  executed  by  Hanson,  Fall,  and 
Dewey's  intestate.  Demurrer  sustained. 

MR.  CHIEF  JUSTICE  MURRAY.  The  demurrer  was  properly  sus- 
tained upon  the  second  ground,  because  the  administrator  of  Dewey 
ought  not  to  have  been  joined.  In  actions  upon  joint  and  several 
contracts  or  obligations,  an  administrator  cannot  be  joined  with  the 
survivors,  because  one  is  joined  de  bonis  testatoris  and  the  other  de 
bonis  propiis.  Humphreys  v.  Yale,  5  Cal.  173. 

It  is  said  the  demurrer  was  sustained  on  a  different  ground  in  the 
court  below.  It  makes  no  difference,  as  this  was  one  of  the  causes 
of  demurrer  assigned  below. 

Judgment  affirmed. 

9  Cyc.  657    (52);   708    (51-52). 


(it.)  Joint  or  several  promisees. 

WILLOUGHBY  v.  WILLOUGHBY. 

5  NEW  HAMPSHIRE,  244.— 1830. 

Assumpsit.  Plaintiff  nonsuited.  The  action  was  on  a  note  as 
follows : 

"HoLLis,  June  25,  1828. 

"For  value  received,  I  promise  to  pay  Washington  or  Joseph  Willoughby 
$200  on  demand,  with  interest. 

"JOHN  WILLOUGHBY." 

BY  THE  COURT.  We  are  of  opinion  that  the  note  in  this  case  is 
evidence  of  a  contract  with  W.  and  J.  Willoughby,  and  that  or  in 
the  note  must  be  understood  to  mean  and. 

Such  being  the  purport  of  the  note  upon  the  face  of  it,  this  action 
cannot  be  maintained  upon  it,  and  the  nonsuit  must  stand.  Blancken- 
hagen  and  another  v.  Blundell  (2  B  &  Aid.  417)  was  an  action  on  a 
note  which  was  described  in  the  declaration  as  payable  to  J.  P.  Darner, 
or  the  plaintiffs,  and  the  suit  was,  like  this,  brought  in  the  name  of 
the  plaintiffs  without  joining  J.  P.  Darner.  The  cause  was  decided 
in  favor  of  the  defendant  upon  a  demurrer  to  the  declaration.  But 
Bailey,  J.,  intimated  that  an  action  might  be  maintained  upon  the 
note  in  the  name  of  all  the  payees.  Judgment  on  the  nonsuit.1 

9  Cyc.  659-660   (58-60);  661    (67);  5  C.  L.  R.  245. 

i  "One  and  the  same  contract,  whether  it  be  a  simple  contract  or  a  con- 


564  OPERATION   OF   CONTRACT. 

BOGGS  v.  CTJRTIN  et  al 

10  SERGEANT  &  RAWLE   (PENN.),  211.— 1823. 

Assumpsit  for  money  paid  to  the  use  of  defendant  (plaintiff  in 
error).  Judgment  for  plaintiffs  (defendants  in  error). 

Defendant  owed  the  firm  of  Duncan  &  Foster,  and  the  plaintiffs,  J. 
&  D.  Mitchel,  and  Curtin  &  Boggs,  gave  their  joint  note  for  the 
'amount,  and  afterwards  paid  it.  Defendant  settled  with  J.  &  D. 
Mitchell,  who  gave  him  a  receipt  in  full. 

GIBSON,  J.  The  action  of  assumpsit  must  be  joint  or  several, 
accordingly  as  the  promise  on  which  it  is  founded  is  joint  or  several. 

tract  by  deed,  cannot  be  so  framed  as  to  give  the  promisees  or  covenantees 
the  right  to  sue  upon  it  both  jointly  and  separately." — Dicey  on  Parties,  pp. 
110,  111. 

"Where  a  covenant  is  in  its  terms  expressly  and  positively  joint,  the 
covenantees  must  join  in  an  action  upon  it,  although  as  between  themselves 
their  interest  is  several." — Clapp  v.  Pawtucket  Inst.  for  Saving,  15  R.  I. 
489,  494. 

"When  the  legal  interest  in  a  covenant  and  in  the  cause  of  action  thereon 
is  joint,  the  covenant  is  joint,  although  it  may,  in  its  terms,  be  several  or 
joint  and  several." — Capen  v.  Barrows,  1  Gray  (Mass.),  376,  379. 

"As  the  language  of  the  promise  is  not  expressly  joint,  but,  to  say  the 
least,  may  be  construed  to  be  joint  or  several,  it  should,  according  to  the 
authorities  cited,  be  held  several,  because  the  interest  of  the  promisees  is 
several." — Emmeluth  v.  Home  Benefit  Ass'n,  122  N.  Y.  130,  134. 

In  Keightley  v.  Watson  and  another,  3  Exch.  716,  the  covenant  read:  "The 
defendants,  for  themselves,  their  heirs,  executors,  and  administrators,  cove- 
nant with  Keightley,  his  executors,  administrators,  and  assigns;  and  as  a 
separate  covenant  with  A.  A.  Dobbs,  his  executors,  &c."  Of  this  form  Rolfe  B. 
said:  "It  appears  to  me  that  Mr.  Preston's  suggestion  was  perfectly  well 
founded,  that  the  rule  in  Slingsby's  case  [5  Co.  18  b.]  was  not  a  rule  of  law, 
but  a  mere  rule  of  construction.  From  that  case  it  appears  that,  if  a  covenant 
be  cum  quolibet  et  qualibet  eorum.  that  may  be  either  a  joint  or  several 
covenant,  and  it  will  depend  on  the  context  whether  it  is  to  be  taken  as 
joint  or  several;  but  it  cannot  be  both.  The  rule  given  in  Slingsby's  case 
is  not  very  satisfactory  to  my  mind,  namely,  with  regard  to  the  difficulty 
which  arises  as  to  the  proper  person  to  recover  damages.  If  a  party  choose 
to  enter  into  a  covenant  which  creates  such  a  difficulty  I  do  not  see  what 
the  court  has  to  do  with  it.  It  is  clear  that  parties  can  so  contract  by 
separate  deeds ;  why,  then,  should  they  not  be  able  equally  to  do  so  by  separate 
covenants  in  the  same  deed?  If  they  so  word  one  covenant  as  to  make  it  a 
joint  and  separate  covenant,  had  it  not  been  otherwise  decided,  I  confess  I 
should  have  seen  nothing  extraordinary  in  holding  that  if  they  choose  so  to 
contract  as  to  impose  upon  themselves  that  burthen,  and  state  it  to  be  both 
joint  and  several,  the  court  ought  so  to  construe  it.  But  Slingsby's  case  has 
laid  down  the  opposite  rule.  I  take  it  that  from  that  time  the  rule  has  always 
been — whether  distinctly  expressed  or  not  it  is  not  necessary  to  consider — 
but  the  rule  has  been  that  you  are  to  look  and  see  from  the  context  what 
the  parties  meant.  Applying  that  rule  here,  I  see  no  doubt  about  the  ques- 
tion. They  have  said  in  terms  that  it  is  to  be  a  separate  covenant." 


JOINT   OBLIGATIONS.  565 

Where  the  promise  is  express,  there  can  be  little  difficulty  in  deter- 
mining to  which  class  it  belongs,  as  its  nature  necessarily  appears  on 
the  face  of  the  contract  itself;  and  if  it  be  joint,  all  to  whom  it  is 
made  must,  or  at  least  may,  sue  on  it  jointly,  and  after  having  re- 
covered, settle  among  themselves  the  proportion  of  the  damages  to 
which  each  is  respectively  entitled:  as  in  the  case  put  in  the  note  to 
Cory  ton  v.  Lithebye  (2  Saund.  116  a,  note  2),  where  there  was  a 
promise  to  two,  in  consideration  of  £10  to  procure  the  re-delivery 
of  their  several  cattle  which  had  been  distrained.  But  an  implied 
promise,  being  altogether  ideal  and  raised  out  of  the  consideration 
only  by  intendment  of  law,  follows  the  nature  of  the  consideration; 
and  as  that  is  joint  or  several,  so  will  the  promise  be ;  as  in  the  case  of 
the  implied  promise  to  contribute,  which  arises  in  favor  of  sureties, 
or  persons  who  have  paid  a  debt  for  which,  along  with  others,  they 
were  jointly  liable,  and  on  which  they  cannot  sue  jointly,  but  each 
has  a  separate  action,  for  what  he  has  paid  beyond  his  aliquot  part. 
Graham  v.  Eobertson,  2  T.  R.  282;  Brand  &  Herbert  v.  Boulcott,  3 
Bos.  &  P.  235. 

Now,  in  an  action  for  money  paid,  laid  out,  and  expended,  to  the 
defendant's  use,  actual  payment  without  regard  to  the  liability  under 
which  it  was  made  is  the  consideration  of  the  assumpsit.  It  is  be- 
cause the  plaintiff  has  paid,  not  because  he  was  bound  to  pay,  that 
the  law  implies  a  promise,  the  obligation  to  pay  only  supplying  the 
place  of  a  precedent  request,  which  would  otherwise  be  necessary. 
The  criterion,  therefore,  is  not  whether  the  plaintiffs  were  jointly 
liable  to  pay  the  debt,  but  whether  they  actually  paid  it  jointly.  If 
one  has  paid  the  whole,  it  would  be  clear  that  all  could  not  sue. 
But  joint  payment  can  be  made  only  with  joint  funds ;  for  each  must 
contribute  to  the  whole,  and  as  payment  with  the  money  of  the  one 
cannot  be  payment  by  the  other,  there  must  necessarily  be  an  undi- 
vided interest  in  the  fund  out  of  which  the  money  comes;  otherwise, 
there  will  separately  be  payment  by  each,  of  particular  parts  of  the 
debt. 

Now  there  was  no  evidence  that  the  defendant's  debt  was  paid 
with  funds  held  in  common  by  the  respective  firms  of  Curtin  & 
Boggs,  and  of  J.  &  D.  Mitchel.  The  receipt  of  Duncan  &  Foster 
contains  no  assertion  of  the  fact,  nor  would  it  be  evidence  against  the 
defendant  if  it  did.  On  the  other  hand,  the  receipt  of  J.  &  D. 
Mitchel,  to  the  defendant,  for  the  part  which  they  had  advanced, 
shows  that  they  considered  it  to  have  been  their  separate  property; 
for  had  it  been  the  joint  property  of  the  two  firms  when  it  was  paid 
out,  it  would  hardly  have  been  treated  as  the  separate  property  of 
either  when  it  was  returned,  as  that  would  have  had  the  effect  of 
securing  the  one,  and  of  casting  the  risk  of  recovering  what  remained 
due  on  the  other.  Then,  under  the  pleadings,  payment  out  of  a  com- 


566  OPERATION    OF    CONTRACT. 

mon  fund  was  a  necessary  part  of  the  plaintiff's  case  and  one  which 
they  were  bound  to  prove ;  and  having  failed  to  prove  it,  the  defendant 
was  entitled  to  a  direction  that  they  had  not  made  out  a  case  on 
which  they  ought  to  recover. 

The  remaining  point  was  not  necessarily  involved  in  the  cause, 
and  need  not  have  been  stirred  if  the  court  below  had  given  the 
direction  required.  It  is  unnecessary,  therefore,  to  decide  it  here. 

Judgment  reversed. 


PART  III. 

THE  INTERPRETATION  OF  CONTRACT. 


CHAPTER  I. 

RULES  RELATING  TO  EVIDENCE. 

Proof  of  document. 

STORY  v.  LOVETT. 

I   E.  D.  SMITH    (N.  Y.  C.  P.),  153.— 1851. 

Action  for  conversion.  Judgment  for  plaintiff.  Defendant  ap- 
peals. 

Plaintiff  claimed  to  be  the  mortgagee  of  the  property  in  question. 
The  mortgage  was  produced  and  the  mortgagor  testified  that  it  had 
been  executed  by  him.  The  execution  was  in  the  presence  of  a  sub- 
scribing witness,  who  was  not  called.  Defendant  objected  to  this 
testimony. 

WOODRUFF,  J.  The  rule  that  the  execution  of  an  instrument  must 
be  proved  by  the  subscribing  witness,  if  there  be  one  living,  com- 
petent to  testify,  and  within  the  'jurisdiction  of  the  court,  is  inflexible. 
The  adverse  party  has  an  undeniable  right  to  require  him  who 
offers  the  instrument  in  evidence,  to  call  the  person  who  was  chosen  to 
attest  the  fact  of  the  execution,  that  he  may,  by  cross  examination, 
elicit  all  the  attending  circumstances.  The  oath  of  the  grantor, 
obligor,  or  mortgagor,  cannot  be  substituted.  Hollenback  v.  Fleming, 
6  Hill,  303 ;  Henry  v.  Bishop,  2  Wend.  575 ;  2  Greenl.  Ev.,  §  569. 

It  would  not  be  difficult  to  assign  other  reasons  why  the  plain- 
tiff was  not  entitled  to  recover  on  the  case  exhibited  at  the  trial,  but 
the  above  is  a  sufficient  reason  for  reversing  the  judgment. 

The  judgment  must  be  reversed.1 

17  Cyc.  431   (6-7)  ;  35  L.  R.  A.  321. 

iNow  changed  by  Statute  in  New  York,  see  N.  Y.  Code  Civ.  Proc.,  §  961  b. 
See  also  Ills.  Rev.  St.  (1908),  p.  1067. 

"The  English  rule  requires  that  the  execution  of  an  attested  writing  shall 
be  established  by  the  testimony  of  the  attesting  witness,  or,  in  case  of  his 
death,  disability,  or  absence  from  the  jurisdicton,  by  proof  of  his  hand- 

567 


568  INTERPRETATION  OF  CONTRACT. 

COLBY  v.  DEARBORN  et  al 
59  NEW  HAMPSHIRE,  326.— 1879. 

Writ  of  entry. 

CLARK,  J.  Both  parties  claim  title  to  the  demanded  premises 
under  Kimball  C.  Prescott.  The  plaintiff's  title  is  derived  from  a 
levy  founded  on  an  attachment  made  June  24,  1873.  The  defend- 
ants are  in  possession,  claiming  title  under  a  mortgage,  executed  by 
Prescott,  February  14,  1873,  and  recorded  February  20,  1873,  more 
than  four  months  prior  to  the  date  of  the  plaintiff's  attachment;  and 
therefore  if  the  mortgage  is  valid,  the  defendants  are  in  possession 
under  a  title  prior  to  the  plaintiff's.  The  plaintiff  contends  that  the 
mortgage  is  void  for  uncertainty  in  the  description  of  the  note 
secured  by  it,  the  amount  of  the  note  not  being  stated  in  the  con- 
dition of  the  mortgage.  The  consideration  of  the  mortgage  is  $400, 
and  the  condition  is  the  payment  of  a  note  of  even  date  with  the 
mortgage,  payable  in  four  months  from  date,  with  interest.  The 
court  received  parol  evidence  showing  that  the  note  intended  to  be 
secured  by  the  mortgage  was  a  note  for  $400,  bearing  the  same  date 
as  the  mortgage,  and  payable  in  four  months  from  date,  with  interest. 
This  evidence  was  rightfully  received.  Benton  v.  Sumner,  57  N. 
H.  117:  Cushman  v.  Luther,  53  N.  H.  563;  Bank  v.  Roberts,  38  N. 
H.  23 ;  Melvin  v.  Fellows,  33  N.  H.  401 ;  Boody  v.  Davis,  20  N.  H. 
140.  The  mortgage  being  valid,  there  must  be 

Judgment  for  the  defendants. 

17  Cyc.  627-628   (79-83)  ;  27  Cyc.  1058   (38,  42). 

writing.  Barnes  v.  Trompowsky,  7  T.  R.  265;  Call  v.  Dunning,  4  East,  53; 
The  King  v.  Harringworth,  4  M.  &  S.  350;  Whyman  v.  Garth,  8  Exch.  803. 
In  this  country  the  English  rule  has  been  closely  adhered  to  in  some  States, 
while  in  others  it  has  been  variously  modified  and  restricted.  Brigham  v. 
Palmer,  3  Allen,  450;  Hall  v.  Phelps,  2  Johns.  451.  It  has  been  held  in  this 
State  that  when  an  attestation  is  not  necessary  to  the  operative  effect  of 
the  instrument,  proof  of  the  handwriting  of  a  witness  who  cannot  be  pro- 
duced may  be  dispensed  with,  and  the  paper  be  received  in  evidence  upon 
proof  of  the  hand  of  the  contracting  party.  Sherman  v.  Transportation  Co., 
31  Vt.  162."— Munson,  J.,  in  Sanborn  v.  Cole,  63  Vt.  590,  593. 

"It  is  an  established  rule  of  evidence,  and  often  recognized,  that  a  deed 
more  than  thirty  years  old  may  be  given  in  evidence  without  proof  of  its 
execution  when  found  in  the  possession  of  the  party  claiming  under  it, 
and  the  possession  of  the  thing  conveyed  has  followed  the  conveyance." — 
Stockbridge  v.  West  Stockbridge,  14  Mass.  257 ;  Clark  v.  Owens,  18  N.  Y.  434. 


RULES   RELATING  TO   EVIDENCE.  569 

Evidence  as  to  fact  of  agreement. 

REYNOLDS  v.  ROBINSON  et  al. 

110  NEW  YORK,  654.— 1888. 

Action  for  damages  for  breach  of  an  alleged  contract  for  the  pur- 
chase by  plaintiff,  and  sale  by  defendants,  of  a  quantity  of  lumber. 
Judgment  for  defendants  reversed  at  General  Term.  Defendants 
appeal. 

ANDREWS,  J.  The  finding  of  the  referee,  which  is  supported  by 
evidence,  to  the  effect  that  the  contract  for  the  purchase  and  sale  of 
the  lumber  on  credit,  contained  in  the  correspondence  between  the 
parties,  proceeded  upon  a  contemporaneous  oral  understanding  that 
the  obligation  of  the  defendants  to  sell  and  deliver  was  contingent 
upon  their  obtaining  satisfactory  reports  from  the  commercial  agencies 
as  to  the  pecuniary  responsibility  of  the  plaintiff,  brings  the  case 
within  an  exception  to  the  general  rule  that  a  written  contract  can- 
not be  varied  by  parol  evidence,  or  rather  it  brings  the  case  within 
the  rule,  now  quite  well  established,  that  parol  evidence  is  admissible 
to  show  that  a  written  paper  which,  in  form,  is  a  complete  contract, 
of  which  there  has  been  a  manual  tradition,  was,  nevertheless,  not 
to  become  a  binding  contract  until  the  performance  of  some  condi- 
tion precedent  resting  in  parol.  Pym  v.  Campbell,  6  El.  &  Bl.  370; 
Wallis  v.  Littell,  11  C.  B.  (N.  S.)  368;  Wilson  v.  Powers,  131  Mass. 
539 ;  Seymour  v.  Cowing,  4  Abb.  Ct.  App.  Dec.  200 ;  Benton  v.  Mar- 
tin, 52  N.  Y.  570;  Juilliard  v.  Chaffee,  92  Id.  535,  and  cases  cited; 
Taylor  on  Ev.,  §  1038 ;  Stephen's  Dig.  Ev.,  §  927.  Upon  this  ground, 
we  think  the  evidence  of  the  parol  understanding,  and  also  that 
the  reports  of  the  agencies  were  unsatisfactory,  was  properly  admitted 
by  the  referee  and  sustained  his  report,  and  that  the  General  Term 
erred  in  reversing  his  judgment.  It  is  perhaps  needless  to  say  that 
such  a  defense  is  subject  to  suspicion,  and  that  the  rule  stated  should 
be  cautiously  applied  to  avoid  mistake  or  imposition,  and  confined 
strictly  to  cases  clearly  within  its  reason. 

The  order  of  the  General  Term  should  be  reversed,  and  the  judg- 
ment on  the  report  of  the  referee  affirmed. 

All  concur.  Order  reversed  and  judgment  affirmed.1 

17  Cyc.  642    (46)  ;  W.  P.  312    (3). 

i  Accord:  Blewitt  v.  Boortim,  142  N.  Y.  357  (sealed  instrument).  See  for 
subsequent  parol  agreement.  Brown  v.  Everhard,  52  Wis.  205;  Homer  v.  Ins. 
Co.,  67  N.  Y.  478.  That  strangers  to  the  contract  may  vary  or  contradict  it 
by  parol,  see  Kellogg  v.  Tompson,  142  Mass.  76. 


570  INTERPRETATION  OF  CONTRACT. 

Evidence  as  to  the  terms  of  the  contract. 

a.  Supplementary  and  collateral  terms. 

WOOD  v.  MORIARTY. 

15  RHODE  ISLAND,  618.— 1887. 

[Reported  herein  at  p.  465.]  ' 


THUESTON  v.  ARNOLD. 

43   IOWA,   43.— 1876. 
[Reported  herein  at  p.  580.] 


b.  Explanation  of  terms. 
GANSON  et  al.  v.  MADIGAN. 

15  WISCONSIN,   144.— 1862. 

Action  for  price  of  reaper.  Defense,  non-delivery.  Judgment  for 
defendant.  Plaintiffs  appeal. 

Defendant  ordered  of  plaintiffs  in  writing  a  reaper,  warranted  "to 
be  capable,  with  one  man  and  a  good  team,  of  cutting  and  raking 
off  and  laying  in  gavels  for  binding,  from  twelve  to  twenty  acres  of 
grain  in  a  day/'  Defendant  was  allowed  to  testify  against  plain- 
tiffs' objection  that  the  agent  said  "one  span  of  horses"  such  as  de- 
fendant's would  do  the  work,  and  another  witness  (Gunn)  was  also 
allowed  to  testify  to  the  effect  that  in  a  sale  to  him  the  agent  said 
two  horses  would  do  the  work.  The  evidence  went  to  establish  that 
the  machine  plaintiffs  alleged  they  tendered  to  defendant  required 
four  horses  to  run  it. 

DIXON,  C.  J.  .  .  .  The  word  "team/'  as  used  in  the  contract,  is 
of  doubtful  signification.  It  may  mean  horses,  mules,  or  oxen,  and 
two,  four,  six,  or  even  more  of  either  kind  of  beasts.  We  look  upon 
the  contract  and  cannot  say  what  it  is.  And  yet  we  know  very  well 
that  the  parties  had  some  definite  purpose  in  using  the  word.  The 
trouble  is  not  that  the  word  is  insensible,  and  has  no  settled  meaning, 

i  See  also  Chapin  v.  Dobson,  78  N.  Y.  74 ;  Naumberg  v.  Young,  44  N.  J. 
L.  331;  Hale  v.  Spaulding,  145  Mass.  482,  ante,  p.  552;  Van  Brunt  v.  Day, 
81' N.  Y.  251;  Wood  Mowing  &c.  Co.  v.  Gaertner,  55  Mich,  453;  Bradshaw 
v.  Combs,  102  111.  428;  Sayre  v.  Wilson,  86  Ala.  151;  Greenawalt  v.  Kohne, 
85  Pa.  St.  369.  For  the  special  rule  applicable  to  deeds,  see  Green  v.  Batson, 
71  Wis.  54. 


RULES    RELATING   TO    EVIDENCE.  571 

but  that  it  at  the  same  time  admits  of  several  interpretations,  accord- 
ing to  the  subject  matter  in  contemplation  at  the  time.  It  is  an 
uncertainty  arising  from  the  indefinite  and  equivocal  meaning  of  the 
word,  when  an  interpretation  is  attempted  without  the  aid  of  sur- 
rounding circumstances.  It  appears  on  the  face  of  the  instrument, 
and  is  in  reality  a  patent  ambiguity.  The  question  is,  can  extrinsic 
evidence  be  received  to  explain  it?  We  think  it  can.  There  is 
undoubtedly  some  confusion  in  the  authorities  upon  this  subject, 
especially  if  we  look  to  the  earlier  cases ;  but  the  later  decisions  seem 
to  be  more  uniform.  As  observed  by  Chancellor  Desaussure,  in  Du- 
pree  v.  McDonald  (4  Des.  209),  the  great  distinction  of  ambiguitas 
latens,  in  which  parol  evidence  has  been  more  freely  received,  and 
ambiguitas  patens,  in  which  it  has  been  more  cautiously  received,  has 
not  been  sufficient  to  guide  the  minds  of  the  judges  with  unerring 
correctness;  some  of  the  later  cases  show  that  there  is  a  middle 
ground,  furnishing  circumstances  of  extreme  difficulty.  Judge  Story 
was  of  opinion  (Peisch  v.  Dickson,  1  Mason,  11)  that  there  was  an 
intermediate  class  of  cases,  partaking  of  the  nature  both  of  patent 
and  latent  ambiguities,  and  comprising  those  instances  where  the 
words  are  equivocal,  but  yet  admit  of  precise  and  definite  application 
by  resorting  to  the  circumstances  under  which  the  instrument  was 
made,  in  which  parol  testimony  was  admissible.  As  an  example,  he 
put  the  case  of  a  party  assigning  his  freight  in  a  particular  ship  by 
contract  in  writing;  saying  that  parol  evidence  of  the  circumstances 
attending  the  transaction  would  be  admissible  to  ascertain  whether 
the  word  "freight"  referred  to  the  goods  on  board  of  the  ship,  or 
an  interest  in  the  earnings  of  the  ship.  This  distinction  seems  to 
be  fully  sustained  by  the  later  authorities,  and  we  can  discover  no 
objection  to  it  on  principle.  Eeay  v.  Richardson,  2  C.,  M.  &  R.  422 ; 
Hall  v.  Davis,  36  N.  H.  569;  Emery  v.  Webster,  42  Maine,  204; 
Baldwin  v.  Carter,  17  Ct.  201 ;  Drake  v.  Goree,  22  Ala.  409 ;  Cowles 
v.  Garrett,  30  Ala.  348 ;  Waterman  v.  Johnson,  13  Pick.  261 ;  Mechs.' 
Bank  v.  Bank  of  Columbia,  5  Wheat.  326;  Jennings  v.  Sherwood,  8 
Ct.  122;  1  Greenl.  Ev.,  §§  286,  287,  and  288. 

The  general  rule  is  well  stated  by  the  Supreme  Court  of  New  Hamp- 
shire, in  Hall  v.  Davis,  as  follows : 

"As  all  written  instruments  are  to  be  interpreted  according  to  their  sub- 
ject matter,  and  such  construction  given  them  as  will  carry  out  the  intention 
of  the  parties,  whenever  it  is  legally  possible  to  do  so,  consistently  with  the 
language  of  the  instruments  themselves,  parol  or  verbal  testimony  may  be 
resorted  to,  to  ascertain  the  nature  and  qualites  of  the  subject  matter  of 
those  instruments,  to  explain  the  circumstances  surrounding  the  parties,  and 
to  explain  the  instruments  themselves  by  showing  the  situation  of  the  par- 
ties in  all  their  relations  to  persons  and  things  around  them.  Thus  if  the 
language  of  the  instrument  is  applicable  to  several  persons,  to  several  parcels 
of  land,  to  several  species  of  goods,  to  several  monuments,  boundaries  or 


572  INTERPRETATION  OF  CONTRACT. 

lines,  to  several  writings,  or  the  terms  be  vague  and  general,  or  have  divers 
meanings,  in  all  these  and  the  like  cases,  parol  evidence  is  admissible  of  any 
extrinsic  circumstances  tending  to  show  what  person  or  persons,  or  what 
things,  were  intended  by  the  party,  or  to  ascertain  his  meaning  in  any  other 
respect;  and  this  without  any  infringement  of  the  general  rule,  which  only 
excludes  parol  evidence  of  other  language,  declaring  the  meaning  of  the  par- 
ties, than  that  which  is  contained  in  the  instrument  itself." 

If  evidence  of  surrounding  facts  and  circumstances  is  admitted  to 
explain  the  sense  in  which  the  words  were  used,  certainly  proof  of 
the  declarations  of  the  parties,  made  at  the  time  of  their  understand- 
ing of  them,  ought  not  to  be  excluded.  And  so  it  was  held  in  sev- 
eral of  the  cases  above  cited.  2  C.,  M.  &  E.  422;  42  Maine,  204; 
13  Pick.  261.  Such  declarations,  if  satisfactorily  established,  would 
seem  to  be  stronger  and  more  conclusive  evidence  of  the  intention  of 
the  parties  than  proof  of  facts  and  circumstances,  since  they  come 
more  nearly  to  direct  evidence  than  any  to  be  obtained,  whilst  the 
other  is  but  circumstantial.  And  though  in  general  the  construction 
of  a  written  instrument  is  a  matter  of  law  for  the  court — the  mean- 
ing to  be  collected  from  the  instrument  itself;  yet,  where  the  mean- 
ing is  to  be  judged  of  by  extrinsic  evidence,  the  construction  is  usually 
a  question  for  the  jury.  Jennings  v.  Sherwood,  and  other  cases 
above.  The  circuit  judge  was  therefore  right  in  receiving  parol  evi- 
dence to  ascertain  the  sense  in  which  the  word  was  used  by  the  parties, 
and  in  submitting  that  question  to  the  decision  of  the  jury. 

But  he  was  clearly  wrong  in  receiving  evidence  of  the  statements 
of  the  plaintiff's  agent  to  the  witness  Gunn,  at  the  time  of  making 
the  contract  with  him.  The  occasions  were  different — the  two  con- 
tracts entirely  disconnected,  and  though  both  concerned  a  machine 
of  the  same  pattern  and  manufacture,  yet  what  was  said  in  the  one 
case  was  not  a  part  of  the  transaction  in  the  other.  It  was  no  part 
of  the  res  gestce.  If  the  agent  Chase,  in  negotiating  with  Gunn,  had 
made  an  admission  of  his  representations  to  the  plaintiff,  evidence  of 
such  admission  could  not  have  been  received.  Mil.  and  Miss.  E.  E. 
Co.  v.  Finney,  10  Wis.  388.  It  would  be  going  much  too  far,  were 
we  to  hold  that  it  was  proper  to  give  the  jury  the  agent's  statement 
to  Gunn,  as  evidence  tending  to  prove  that  a  similar  statement  was 
made  to  the  plaintiff.  If  it  has  any  such  tendency,  it  is  so  remote 
that  the  law  cannot  lay  hold  of  and  apply  it. 

The  question  then  comes  up,  must  the  judgment,  for  this  reason, 
be  reversed?  The  defendant's  counsel  insist  not — that  the  evidence 
before  the  jury  was  sufficient  without  this,  and  if  it  had  been  re- 
jected, the  verdict  must  have  been  the  same.  We  are  inclined  to 
take  the  same  view.  The  defendant's  testimony  was  clear  and  positive 
as  to  the  kind  of  team — that  the  agent  said  "one  span  of  horses" 
would  work  the  machine  up  to  the  warranty.  In  this  he  was  not 


RULES  RELATING  TO  EVIDENCE.  573 

contradicted,  but  rather  corroborated  by  the  agent,  who  was  himself 
upon  the  stand.  We  would  naturally  expect,  if  the  fact  had  been 
otherwise,  the  agent  would  have  said  so.  On  the  other  hand,  he 
testifies  very  frankly  that  the  defendant  said  he  had  but  one  team; 
that  he  told  him  one  good  team  would  work  the  machine.  The  ad- 
mission of  the  improper  evidence  could  not,  therefore,  have  affected 
the  finding  of  the  jury  upon  this  point;  and  consequently  the  plain- 
tiffs were  not  prejudiced  by  it. 

We  can  hardly  believe  that  the  argument  of  the  plaintiff's  counsel 
upon  the  construction  of  the  warranty,  that  it  referred  to  the  ca- 
pacity of  the  machine  without  regard  to  the  kind  of  team  employed, 
and  was  satisfied,  if,  under  any  circumstances,  and  with  any  number 
of  horses,  it  could  be  made  to  perform  as  alleged,  was  urged  with  any 
real  hope  of  success.  Such  a  construction  would  be  directly  opposed 
to  the  manifest  intention  of  the  parties. 

The  jury,  upon  proper  evidence,  and  under  proper  instructions, 
having  found  that  the  machine  delivered  at  Milwaukee  was  not  such 
as  the  contract  called  for,  the  judgment  upon  their  verdict  must  be 
affirmed. 

Ordered  accordingly. 

17  Cyc.  675  (69-71). 


c.  Usages  of  trade. 
PENNELL  v.  DELTA  TRANSPORTATION  CO. 

94  MICHIGAN,  247.— 1892. 

LONG,  J.  This  action  was  commenced  in  justice's  court,  and  after 
a  trial  there  appealed  to  the  circuit,  where,  upon  the  trial  before  a 
jury,  plaintiff  had  verdict  and  judgment  for  $29.78. 

It  appears  that  the  plaintiff  entered  into  a  verbal  contract  with  the 
defendant  through  defendant's  agent,  Capt.  Field,  who  was  in  the 
employ  of  defendant  as  captain  of  a  boat  running  on  what  is  known 
as  the  "Inland  Route,"  through  Cheboygan  county,  by  the  terms  of 
which  the  plaintiff  was  to  clean  out  Crooked  river  from  snags,  logs, 
stumps,  etc.,  that  obstructed  the  channel.  He  was  to  be  allowed 
two  dollars  per  day,  and  the  same  for  all  help  which  he  might  employ. 
He  hired  two  men,  and  entered  upon  the  work  the  next  day.  Upon 
the  completion  of  the  work,  plaintiff  was  paid  the  two  dollars  per 
day  for  himself  and  each  man,  as  the  contract  stipulated.  He  then 
presented  a  bill  for  board  of  himself  and  men  during  the  time  em- 
ployed. It  is  conceded  that  nothing  was  said  about  the  board  of 
himself  and  men  at  the  time  the  contract  was  entered  into,  but  on 
trial  the  court  permitted  the  plaintiff  to  give  evidence  of  a  custom 


574  INTERPRETATION  OF  CONTRACT. 

or  usage  in  that  community  to  pay  the  board  of  men  employed  in 
certain  kinds  of  business.  This  evidence  was  admitted  under  ob- 
jection of  defendant's  counsel.  It  was  shown  by  several  witnesses 
for  the  plaintiff  that  a  custom  existed  among  lumbermen  in  that 
vicinity  to  pay  the  board  of  the  men  who  were  engaged  in  running 
logs  down  the  streams,  and  cleaning  out  streams  for  the  purpose  of 
running  logs.  It  was  also  shown  that  Capt.  Field,  defendant's  agent, 
had  resided  in  that  vicinity  for  five  years  and  upwards.  Capt.  Field 
was  called  as  a  witness  by  defendant,  and  asked  if  he  knew  of  any 
such  custom.  The  answer  was  objected  to  by  plaintiff's  counsel  as 
incompetent,  and  it  was  ruled  out  by  the  court. 

At  the  close  of  the  testimony,  counsel  for  defendant  asked  the 
court  to  instruct  the  jury : 

"2.  That,  in  order  to  bind  defendant  under  a  custom  or  usage, 
when  the  custom  was  not  made  known  to  defendant  when  it  made  the 
contract,  the  jury  must  find  from  the  evidence  that  defendant  or  its 
agent  had  been  engaged  in  a  business  before  the  contract  was  made 
in  some  manner  connected  with  the  business  in  which  said  custom 
is  sought  to  be  established,  or  the  defendant  cannot  be  presumed  to 
have  knowledge  of  said  custom. 

"3.  That  the  simple  fact  that  defendant's  agent  had  resided  in  the 
section  or  vicinity  where  said  custom  is  sought  to  be  established  is 
not  sufficient 'in  itself  to  warrant  the  jury  in  rinding  that  the  de- 
fendant had  knowledge  of  said  custom. 

"4.  That,  in  order  to  bind  the  defendant  to  pay  for  the  board  of 
plaintiff  and  his  men,  the  jury  must  find  from  the  evidence  that  the 
defendant  had  knowledge  of  the  custom  to  charge  for  board  when 
not  expressed  in  the  contract;  and  that,  if  they  do  not  so  find,  then 
their  verdict  must  be  for  defendant  as  to  the  question  of  board." 

These  requests  were  refused  by  the  court,  and  the  jury  directed 
upon  the  subject  as  follows:  "If  you  find  from  the  evidence  that 
the  defendant  agreed  with  the  plaintiff  to  pay  him  for  cleaning  out 
this  river  at  the  rate  of  two  dollars  a  day  for  all  the  work  performed, 
and  that  there  was  a  custom  in  that  vicinity  that  persons  who  were 
working  upon  the  river  cleaning  out  the  river  in  the  manner  that 
these  men  were  working  should  be  boarded  by  the  person  hiring  them, 
and  that  such  custom  was  general,  uniform,  certain,  established,  then, 
in  that  case,  you  should  allow  the  plaintiff  for  his  board  and  the 
board  of  these  men  whatever  you  find  it  to  be  reasonably  worth." 
The  court  charged  further:  "The  custom  must  be  general,  and  it 
must  be  uniform.  It  must  not  vary  from  time  to  time.  It  must 
be  an  established  custom ;  that  is  to  say,  a  custom  which  would  spring 
up  at  the  time  this  contract  was  made,  and  continue  from  that  time 
to  the  present,  would  not  be  an  established  custom.  This  must  be 
the  custom  of  that  vicinity;  it  must  be  general,  universal."  Con- 


RULES   RELATING   TO   EVIDENCE.  575 

turning,  the  court  said :  "Now,  if  you  find  that  such  a  custom  ex- 
isted, and  that  this  contract  was  made  in  relation  to  such  custom, 
or  that  it  was  so  well  established  and  universal  that  all  persons  in 
that  vicinity  would  be  supposed  to  know  the  custom,  and  make  their 
contracts  in  relation  to  it,  then  you  will  bring  in  a  verdict  for  the 
plaintiff." 

We  think  the  court  was  in  error  in  refusing  to  permit  the  defend- 
ant's agent  to  testify  that  he  had  no  knowledge  of  such  a  custom; 
and  that  the  court  was  also  in  error  in  refusing  to  give  the  defend- 
ant's second,  third,  and  fourth  requests  to  charge,  as  well  as  in  the 
charge  as  given.  Where  the  custom  or  usage  is  restricted  to  a  cer- 
tain locality,  or  business,  though  it  has  become  general  and  uniform 
in  that  locality  or  in  that  particular  business,  and  the  custom  is  relied 
upon  as  a  ground  of  recovery,  it  is  settled,  we  think,  that  such  custom 
is  not  conclusive  on  the  party,  so  that  he  may  not  give  evidence  that 
it  was  unknown  to  him. 

In  Walls  v.  Bailey,  49  N.  Y.  476,  Mr.  Justice  Folger  laid  down 
the  rule  as  follows :  "We  have  seen  that  there  are  usages  which  have 
become  so  general  and  so  universally  received  and  acted  upon  as 
that  they  have  become  a  part  of  the  common  law,  and  no  one  can 
be  heard  to  profess  ignorance  of  them.  But  it  is  equally  true  that 
there  are  usages  so  restricted  as  to  locality  or  trade  or  business  as  that 
ignorance  of  them  is  a  valid  reason  why  a  party  may  not  be  held  to  have 
contracted  in  reference  to  them.  There  are  many  cases  of  this  kind 
collected  in  notes  in  Broom's  Legal  Maxims.  (See  p.  684  [691], 
notes  2,  3.)  It  seems,  then,  to  come  to  this:  Is  the  presumption 
which  the  jury  may  thus  make  conclusive,  or  may  not  that  presump- 
tion be  repelled  by  express  negatory  proof  of  ignorance?  When  the 
defendant  proposed,  by  the  question  which  was  rejected,  to  offer  evi- 
dence tending  to  show  his  ignorance  of  the  existence  of  the  usage, 
he  claimed  no  more  than  to  exercise  the  right  of  attempting  by  direct 
evidence  to  repel  the  presumption  of  his  knowledge  which  might 
without  that  proof,  or  perhaps  in  opposition  to  it,  be  made  from  the 
facts  of  the  case.  It  is  for  the  jury,  then,  under  proper  instructions 
from  the  court,  to  take  all  the  evidence  in  the  case — that  as  to  the 
existence,  duration,  and  other  characteristics  of  the  custom  or  usage, 
and  that  as  to  the  knowledge  thereof  of  the  parties, — and  therefrom 
to  determine  whether  there  is  shown  a  custom  of  such  age  and  char- 
acter as  that  the  presumption  of  law  will  arise  that  the  parties  knew 
of  and  contracted  in  reference  to  it;  or  whether  the  usage  is  so  local 
and  particular  as  that  knowledge  in  the  party  to  be  charged  must  be 
shown  affirmatively  or  may  be  negatived.  In  this  view,  it  was  proper 
for  the  defendant  to  put  and  answer  the  question  rejected." 

Applying  this  rule  to  the  facts  in  the  present  case,  it  is  evident 
that  the  defendant's  agent,  with  whom  the  contract  was  made,  should 


576  INTERPRETATION  OF  CONTRACT. 

have  been  permitted  to  answer  the  question  whether  he  had  any 
knowledge  of  the  existence  of  such  a  custom.  The  proofs  in  support 
of  the  prevalence  of  such  custom  were  confined  to  lumbermen  who 
were  having  logs  driven  down  the  streams  or  through  the  waters 
there,  and  who  were  compelled  to  clean  out  those  waters  for  the 
purpose  of  driving  logs.  There  was  no  testimony  offered  showing 
or  tending  to  show  that  the  defendant  company,  or  Capt.  Field,  its 
agent,  had  ever  driven  logs  down  those  streams,  or  that  they  were  in 
-my  manner  engaged  in  the  lumbering  business,  necessitating  the 
cleaning  out  of  any  streams  for  the  purpose  of  driving  logs.  The 
only  evidence  of  the  business  of  the  defendant  company  offered  in 
the  case  was  that  it  was  running  its  boat  through  the  inland  waters  in 
Cheboygan  county,  and  that  Capt.  Field  was  the  captain  of  the  boat. 
Under  these  circumstances,  the  presumption  cannot  be  conclusive 
upon  the  defendant  that  it  had  knowledge  of  this  local  custom  or 
usage  existing  among  lumbermen  to  pay  the  board  of  their  men  in 
running  logs  or  cleaning  out  streams  for  the  purpose  of  running 
logs.  The  mere  fact  that  defendant's  agent  resided  in  that  vicinity 
would  not  be  sufficient  to  bring  home  to  him  the  knowledge  of  this 
custom,  or  warrant  the  jury  in  finding  that  the  defendant  had  knowl- 
edge of  it. 

In  cases  where  evidence  of  usage  is  admissible  at  all,  it  is  only 
on  the  ground  that  the  parties  who  made  the  contract  are  both  cog- 
nizant of  the  usage,  and  must  be  presumed  to  have  made  their  en- 
gagements in  reference  to  it.  Van  Hoesen  v.  Cameron,  54  Mich. 
614.  The  decisions  in  this  State  are  uniform  that  custom  cannot 
change  a  definite  contract,  and  that  no  custom  is  binding  which  is 
not  certain,  definite,  uniform,  and  notorious.  Lamb  v.  Henderson, 
63  Mich.  305,  and  the  cases  there  cited.  In  the  above  case  it  was 
said  by  Chief  Justice  Campbell:  "No  attempt  was  made  to  bring 
notice  of  this  usage  to  the  knowledge  of  plaintiff."  The  defendant 
in  that  case  sought  to  set  up  a  custom  to  defeat  the  payment  of  cer- 
tain traveling  expenses  to  one  of  his  salesmen  during  the  time  he 
spent  at  the  home  office. 

The  court  in  the  trial  of  the  present  case  should  not  only  have 
allowed  Capt.  Field  to  answer  the  question,  and  given  the  requests 
to  charge  asked,  but  should  also  have  instructed  the  jury  that  the 
plaintiff  could  not  recover  unless  they  found  that  the  parties  con- 
tracted in  reference  to  this  custom ;  and  in  determining  that  question 
they  should  consider  the  testimony  of  defendant's  agent,  who  made 
the  contract.  Higgins  v.  Moore,  34  N.  Y.  425. 

Judgment  must  be  reversed,  with  costs,  and  a  new  trial  ordered. 
The  other  Justices  concurred. 

12  Cyc.  1041-1044  (43-56).  See  also  Wait's  Engineering  and  construction 
contracts,  ch.  21  (custom  and  usage),  for  many  examples. 


CHAPTER  II. 

RULES  RELATING  TO  CONSTRUCTION. 

General  rules. 

KEED  v.  INSURANCE  CO. 

95  UNITED  STATES,  23.— 1877. 

Appeal  from  a  decree  of  the  Circuit  Court  of  the  United  States  for 
the  District  of  Maryland,  affirming  a  decree  of  the  District  Court 
dismissing  a  libel. 

MR.  JUSTICE  BRADLEY.  This  is  a  cause  of  contract,  civil  and 
maritime,  commenced  by  a  libel  in  personam  by  Samuel  G.  Reed, 
the  appellant,  against  the  Merchants'  Mutual  Insurance  Company 
of  Baltimore,  the  appellee,  to  recover  $5000,  the  amount  insured  by 
the  latter  on  the  ship  Minnehaha,  belonging  to  the  libellant.  The 
policy  was  dated  the  fourteenth  day  of  January,  1868,  and  insured 
said  ship  in  the  amount  named,  lost  or  not  lost,  at  and  from  Hono- 
lulu, via  Baker's  Island,  to  a  port  of  discharge  in  the  United  States 
not  east  of  Boston,  with  liberty  to  use  Hampton  Roads  for  orders, 
"the  risk  to  be  suspended  while  vessel  is  at  Baker's  Island  loading." 
The  ship  was  lost  at  Baker's  Island,  where  she  had  gone  for  the 
purpose  of  loading,  on  the  third  day  of  December,  1868.  The  de- 
fense was  that  the  loss  occurred  whilst  the  risk  was  suspended  under 
the  clause  above  quoted;  also  laches  by  reason  of  the  delay  in  com- 
mencing suit,  being  more  than  four  years  after  the  cause  of  action 
accrued. 

This  case,  upon  the  merits,  depends  solely  upon  the  construction 
to  be  given  to  the  clause  in  the  policy  before  referred  to,  namely, 
"the  risk  to  be  suspended  while  vessel  is  at  Baker's  Island  loading"; 
and  turns  upon  the  point  whether  the  clause  means,  while  the  vessel 
is  at  Baker's  Island  for  the  purpose  of  loading,  or  while  it  is  at  said 
island  actually  loading.  If  it  means  the  former,  the  company  is 
not  liable ;  if  the  latter,  it  is  liable. 

A  strictly  literal  construction  would  favor  the  latter  meaning.  But 
a  rigid  adherence  to  the  letter  often  leads  to  erroneous  results,  and 
misinterprets  the  meaning  of  the  parties.  That  such  was  not  the 
sense  in  which  the  parties  in  this  case  used  the  words  in  question  is 
manifest,  we  think,  from  all  the  circumstances  of  the  case.  Although 
a  written  agreement  cannot  be  varied  (by  addition  or  subtraction) 

577 


578  INTERPRETATION  OF  CONTRACT. 

by  proof  of  the  circumstances  out  of  which  it  grew  and  which  sur- 
rounded its  adoption,  yet  such  circumstances  are  constantly  resorted 
to  for  the  purpose  of  ascertaining  the  subject  matter  and  the  stand- 
point of  the  parties  in  relation  thereto.  Without  some  knowledge 
derived  from  such  evidence,  it  would  be  impossible  to  comprehend 
the  meaning  of  an  instrument,  or  the  effect  to  be  given  to  the  words  of 
which  it  is  composed.  This  preliminary  knowledge  is  as  indispen- 
sable as  that  of  the  language  in  which  the  instrument  is  written.  A 
reference  to  the  actual  condition  of  things  at  the  time,  as  they  ap- 
peared to  the  parties  themselves,  is  often  necessary  to  prevent  the 
court,  in  construing  their  language,  from  falling  into  mistakes  and 
even  absurdities.  On  this  subject  Professor  Greenleaf  says: 

"The  writing,  it  is  true,  may  be  read  by  the  light  of  surrounding  circum- 
stances, in  order  more  perfectly  to  understand  the  intent  and  meaning  of 
the  parties;  but,  as  they  have  constituted  the  writing  to  be  the  only  out- 
ward and  visible  expression  of  their  meaning,  no  other  words  are  to  be  added 
to  it,  or  substituted  in  its  stead.  The  duty  of  the  courts  in  such  cases  is  to 
ascertain,  not  what  the  parties  may  have  secretly  intended,  as  contradistin- 
guished from  what  their  words  express,  but  what  is  the  meaning  of  the  words 
they  have  used." — 1  Greenl.  .Ev.,  sec.  277. 

Mr.  Taylor  uses  language  of  similar  purport.     He  says: 

"Whatever  be  the  nature  of  the  document  under  review,  the  object  is  to 
discover  the  intention  of  the  writer  as  evidenced  by  the  words  he  has  used; 
and,  in  order  to  do  this,  the  judge  must  put  himself  in  the  writer's  place, 
and  then  see  how  the  terms  of  the  instrument  affect  the  property  or  subject 
matter.  With  this  view,  extrinsic  evidence  must  be  admissible  of  all  the 
circumstances  surrounding  the  author  of  the  instrument." — Taylor,  Ev.,  sec. 
1082. 

Again  he  says: 

"It  may,  and  indeed  it  often  does,  happen,  that,  in  consequence  of  the 
surrounding  circumstances  being  proved  in  evidence,  the  courts  give  to  the 
instrument,  thus  relatively  considered,  an  interpretation  very  different  from 
what  it  would  have  received  had  it  been  considered  in  the  abstract.  But  this 
is  only  just  and  proper;  since  the  effect  of  the  evidence  is  not  to  vary  the 
language  employed,  but  merely  to  explain  the  sense  in  which  the  writer  un- 
derstood it." — Id.,  sec.  1085. 

See  Thorington  v.  Smith,  8  Wall.  1,  and  remarks  of  Mr.  Justice 
Strong  in  Maryland  v.  Railroad  Company,  22  Id.  105. 

The  principles  announced  in  these  quotations,  with  the  limitations 
and  cautions  with  which  they  are  accompanied,  seem  to  us  indispu- 
table; and  availing  ourselves  of  the  light  of  the  surrounding  circum- 
stances in  this  case,  as  they  appeared,  or  must  be  supposed  to  have 
appeared,  to  the  parties  at  the  time  of  making  the  contract,  we  can- 
not doubt  that  the  meaning  of  the  words  which  are  presented  for 
our  consideration  is  that  the  risk  was  to  be  suspended  while  the 


RULES    RELATING    TO    CONSTRUCTION.  579 

vessel  was  at  Baker's  Island  for  the  purpose  of  loading,  whether 
actually  engaged  in  the  process  of  loading  or  not.  Taking  this  clause 
in  absolute  literality,  the  risk  would  only  be  suspended  when  loading 
was  actually  going  on.  It  would  revive  at  any  time  after  the  loading 
was  commenced,  if  it  had  to  be  discontinued  by  stress  of  weather,  or 
any  other  cause.  It  would  even  revive  at  night,  when  the  men  were 
not  at  work.  This  could  not  have  been  the  intent  of  the  parties. 
It  could  not  have  been  what  they  meant  by  the  words  "while  vessel 
is  at  Baker's  Island  loading/'  It  was  the  place,  its  exposure,  its 
unfavorable  moorage,  which  the  insurance  companies  had  to  fear, 
and  the  risk  of  which  they  desired  to  avoid.  The  whole  reason  of 
the  thing  and  the  object  in  view  point  to  the  intent  of  protecting 
themselves  whilst  the  vessel  was  in  that  exposed  place  for  the  purpose 
referred  to,  not  merely  to  protect  themselves  whilst  loading  was 
actually  going  on.  Her  visit  to  the  island  was  only  for  the  purpose 
of  loading;  as  between  the  contracting  parties,  she  had  no  right  to 
be  there  for  any  other  purpose;  and,  supposing  that  they  intended 
that  the  risk  should  be  suspended  whilst  she  was  there  for  that  pur- 
pose, it  would  not  be  an  unnatural  form  of  expression  to  say,  "the  risk 
to  be  suspended  while  vessel  is  at  Baker's  Island  loading/'  And 
we  think  that  no  violence  is  done  to  the  language  used,  to  give  it  the 
sense  which  all  the  circumstances  of  the  case  indicate  that  it  must 
have  had  in  the  minds  of  the  parties. 

If  we  are  right  in  this  construction  of  the  contract,  there  can  be 
no  uncertainty  as  to  its  effect  upon  the  liability  of  the  underwriters. 
The  loss  clearly  accrued  at  a  time  when,  by  the  terms  of  the  policy, 
the  risk  was  suspended.  The  ship  sailed  in  ballast  from  Honolulu 
on  or  about  the  7th  of  November,  1867,  and  arrived  at  Baker's  Island 
on  the  afternoon  of  the  twentieth  day  of  November,  1867.  She  came 
to  her  mooring  in  safety,  and  her  sails  were  furled,  shortly  after 
which  a  heavy  gale  and  heavy  surf  arose.  The  gale  and  surf  con- 
tinued with  violence  until  the  3d  of  December,  1867,  when  the  ship 
parted  her  moorings,  and  was  totally  wrecked  and  lost.  At  no  time 
after  her  arrival  at  Baker's  Island  was  it  possible  to  discharge  ballast 
to  receive  cargo  or  to  commence  the  progress  of  loading.  The  vio- 
lence of  the  winds,  current,  and  waves,  and  their  adverse  course  and 
direction,  prevented  the  ship  from  slipping  her  cables  and  getting  to 
sea,  or  otherwise  escaping  the  perils  that  surrounded  her. 

These  facts  are  indisputable;  and  they  show  that,  when  the  loss 
occurred,  the  vessel  was  at  Baker's  Island  for  the  purpose  of  loading. 
That  the  process  of  loading  had  not  actually  commenced  is  of  no 
consequence.  The  suspension  of  the  risk  commenced  as  soon  as  the 
vessel  arrived  at  the  island  and  was  safely  moored  in  her  proper 
station  for  loading. 

The  appellee,  as  a  further  defense,  set  up  laches  in  bringing  suit. 


580  INTERPRETATION  OF  CONTRACT. 

The  libel  was  not  filed  until  more  than  four  years  had  elapsed  after 
the  cause  of  action  had  accrued.  The  statute  of  limitations  of  Mary- 
land requires  actions  of  account,  assumpsit,  on  the  case,  etc.,  to  be 
brought  within  three  years;  and  the  counsel  for  the  appellee  insists 
that  by  analogy  to  this  statute  the  admiralty  court,  having  concur- 
rent jurisdiction  with  the  State  courts  in  this  case,  should  apply  the 
same  rule.  We  had  occasion,  in  the  case  of  The  Key  City  (14  Wall. 
653),  to  explain  the  principles  by  which  courts  of  admiralty  are  gov- 
erned when  laches  in  bringing  suit  is  urged  as  an  exception  in  cases 
cognizable  therein.  In  view  of  the  construction  which  we  have  given 
to  the  contract  in  this  case,  it  is  not  necessary  to  pass  upon  the  pre- 
cise question  now  raised  by  the  appellee. 

It  is  also  unnecessary  to  examine  other  questions  which  were  mooted 
on  the  argument. 

Decree  affirmed.1 
.9  Cyc.  588   (42);   17  Cyc.  673   (67). 


Rules  of  law  and  equity  as  to  time  and  penalties. 
THURSTON  v.  ARNOLD. 
43  IOWA,  43.— 1876. 

Action  in  equity  to  compel  specific  performance.  Judgment  for 
defendant.  Plaintiff  appeals. 

Defendant  agreed  to  convey  his  farm  to  plaintiff  in  consideration 
that  the  plaintiff  would  pay  $1200  on  or  before  September  2,  1872, 
and  $300  on  taking  possession,  and  convey  or  cause  to  be  conveyed 
to  defendant  certain  lands  in  Missouri. 

ROTHROCK,  J.  1.  We  have  carefully  read  and  considered  the  evi- 
dence in  the  case.  It  is  voluminous,  and  the  review  of  it  here  would 
serve  no  useful  purpose.  We  believe  that  the  referee's  findings  of 
fact  are  fully  sustained  by  the  evidence.  It  is  perhaps  proper  to  say 
that  the  written  contract  by  its  terms  did  not  make  time  as  of  its 
essence,  but  provided  generally  that  the  $1200  was  to  be  paid  on 
the  second  day  of  September,  1872.  The  plaintiff  endeavored  to 
show  that  there  was  a  subsequent  parol  extension  of  time.  The  ref- 
eree, as  we  think,  properly  found  that  there  was  no  such  extension, 
but  that  defendant  insisted  on  a  compliance  at  the  time  fixed,  and 
that  his  situation  with  reference  to  other  important  business  inter- 
ests required  that  the  payments  should  be  promptly  made.  It  fur- 
ther appears  that  the  contract  on  plaintiff's  part  was  a  mere  specu- 
lation; that  he  did  not  have  title  to  the  Missouri  land,  and  did  not 

iSee  also  Davison  v.  Von  Lingen,  113  U.  S.  40,  ante.  p.  302;  Norrington  v. 
Wright,  115  U.  S.  188  post,  p.  671;  Moore  v.  Ins.  Co.,  62  N.  H.  240,  post.  598. 


RULES  RELATING  TO  CONSTRUCTION.  581 

have  any  means  to  pay  the  $1200,  and  relied  on  a  re-sale  of  defend- 
ant's farm  at  an  advance  to  pay  for  the  Missouri  land,  and  that  he 
did  not  succeed  in  making  a  re-sale  by  the  time  fixed  for  perform- 
ance but  afterwards,  by  taking  a  partner  in  the  speculation, 
raised  the  money  and  procured  a  deed,  and  tendered  performance  on 
the  17th  day  of  September,  1872;  which  tender  the  defendant  refused. 
These  are  the  important  features  of  the  case.  There  are  many  other 
facts  which  we  do  not  deem  it  necessary  to  refer  to. 
Among  the  findings  of  the  referee  is  the  following: 

"I  further  find  from  the  testimony  in  the  cause,  independent  of  what  ap- 
pears on  the  face  of  the  written  contract  between  Thurston  and  Arnold,  that 
the  time  therein  fixed  for  payment  of  the  consideration  by  Thurston  to  Ar- 
nold was  understood  and  intended  by  the  parties  to  be  'of  the  essence  of  the 
contract.'  I  am  of  opinion  that,  as  a  matter  of  law,  evidence  extrinsic  to 
the  written  contract  is  competent  to  prove  such  intention  and  understand- 
ing." 

Counsel  for  plaintiff  insist  that  extrinsic  evidence  is  not  competent 
for  such  purpose,  for  the  reason  that  it  varies  and  modifies  the  terms 
of  the  written  contract.  The  contract  provides  for  the  payment  to 
be  made  on  a  day  certain,  and  extrinsic  evidence,  consisting  of  the 
acts,  statements,  and  the  verbal  negotiations  of  the  parties,  showing 
that  the  time  was  intended  to  be  essential,  does  not  contradict  or  vary 
the  writing,  but  rather  confirms  it,  by  showing  that  it  means  just 
what  its  terms  provide.  1  Greenleaf  Ev.,  §  296;  3  Id.,  §  366,  and 
cases  there  cited. 

Time  may  be  made  the  essence  of  the  contract  by  the  express  stipu- 
lation of  the  parties,  or  it  may  arise  by  implication  from  the  very 
nature  of  the  property,  or  the  avowed  objects  of  the  seller  or  pur- 
chaser. Taylor  v.  Longworth,  14  Pet.  172,  and  see  also  Young  v. 
Daniels,  2  Iowa,  126. 

Equity  will  not  ordinarily  regard  time  as  of  essence  of  the  contract 
in  a  sale  of  real  estate.  At  law  such  contracts  are  treated  as  other 
contracts,  and  in  order  to  maintain  an  action  the  plaintiff  must  show 
performance  or  readiness  to  perform  at  the  time  fixed,  unless  per- 
formance be  waived  by  the  other  party.  Equity  presumes  that  the 
time  named  in  the  contract  was  not  intended  as  essential  by  parties. 
This,  however,  is  such  a  presumption  as  may  be  rebutted  by  parol  evi- 
dence. 

2.  An  application  to  enforce  the  specific  performance  of  a  con- 
tract is  always  addressed  to  the  sound  discretion  of  the  chancellor, 
guided  and  governed  by  the  general  rules  and  principles  of  equity 
jurisprudence.  In  such  cases  relief  is  not  a  matter  of  right  in  either 
party,  but  it  is  granted  or  withheld  according  to  the  circumstances 
of  each  case  when  such  rules  or  principles  will  not  furnish  any  exact 
measure  of  justice  between  the  parties.  If,,  in  the  judgment  of  a 


582  INTERPRETATION  OF  CONTRACT. 

court  of  equity,  good  faith  and  justice  between  the  parties  will  be 
attained  by  enforcing  the  contract,  the  failure  to  perform,  or  of  a 
readiness  to  perform,  at  the  precise  time  fixed,  will  not  prevent  its 
enforcement.  In  this  case,  we  are  satisfied,  equity  will  be  better 
subserved  by  denying  specific  performance  than  by  granting  it;  and 
these  considerations  are  independent  of  any  question  as  to  the  right 
of  defendant  to  show  by  parol  evidence  that  time  was  intended  to  be 
the  essence  of  the  contract. 

The  evidence  satisfies  us  that  it  would  be  grossly  inequitable  to 
compel  defendant,  Arnold,  to  now  perform,  or  to  make  compensation 
for  inability  to  do  so,  finding,  as  we  do,  from  the  evidence,  that  on 
the  day  fixed  he  was  ready  and  willing  to  perform,  and  was  prevented 
from  doing  so  by  plaintiff's  default. 

Affirmed.1 
9  Cyc.  605-606   (28-29). 

1  "It  is  a  general  principle  governing  the  construction  of  contracts  that 
stipulations,  as  to  the  time  of  their  performance,  are  not  necessarily  of  their 
essence  unless  it  clearly  appears  in  the  given  case  from  the  expressed  stipu- 
lations of  the  contract,  or  the  nature  of  its  subject  matter,  that  the  parties 
intended  performance  within  the  time  fixed  in  the  contract  to  be  a  condition 
precedent  to  its  enforcement,  and  where  the  intention  of  the  parties  does  not 
so  appear,  performance  shortly  after  the  time  limited  on  the  part  of  either 
party  will  not  justify  a  refusal  to  perform  by  the  party  aggrieved;  but  his 
only  remedy  will  be  an  action  or  counter-claim  for  the  damages  he  has  sus- 
tained from  the  breach  of  the  stipulations.  In  the  application  of  this  princi- 
ple to  the  cases  as  they  have  arisen,  in  the  promulgation  of  the  rules  naturally 
deduced  from  it,  and  in  the  assignment  of  the  various  cases  to  the  respective 
classes  in  which  the  stipulation  as  to  the  time  of  performance  te,  or  is  not, 
deemed  of  the  essence  of  the  contract,  the  controlling  consideration  has  been, 
and  ought  to  be,  so  to  decide  and  classify  the  cases  that  unjust  penalties  may 
not  be  inflicted  or  unreasonable  damages  recovered.  .  .  .  The  cases  just 
referred  to  illustrate  two  well-settled  rules  of  law  which  have  been  deduced 
from  this  general  principle,  and  in  accordance  with  which  this  case  must  be 
determined.  They  are:  In  contracts  of  merchants  for  the  sale  and  delivery, 
or  for  the  manufacture  and  sale,  of  marketable  commodities  a  statement 
descriptive  of  the  subject  matter  or  some  material  incident,  such  as  the  time 
of  shipment,  is  a  condition  precedent,  upon  the  failure  or  non-performance 
of  which  th  party  aggrieved  may  repudiate  the  whole  contract.  Norrington 
v.  Wright,  115  U.  S.  188,  203  [post,  p.  671];  Cleveland  Rolling  Mill  v. 
Rhodes,  121  U.  S.  255,  261.  But  in  contracts  for  work  or  skill  and  the 
materials  upon  which  it  is  to  be  bestowed,  a  statement  fixing  the  time  of 
performance  of  the  contract  is  not  ordinarily  of  its  essence,  and  a  failure  to 
perform  within  the  time  stipulated  followed  by  substantial  performance  after 
a  short  delay  will  not  justify  the  aggrieved  party  in  repudiating  the  entire 
contract,  but  will  simply  give  him  his  action  for  damages  for  the  breach  of 
the  stipulation.  Tayloe*  v.  Sandiford,  7  Wheat.  13,  17;  Hambly  v.  Dela- 
ware, M.  &  V.  R.  Co.,  21  Fed.  Rep.  541,  544,  554,  557."— Sanborn,  J.,  in 
Beck  &c.  Co.  v.  Colorado  &c.  Co.,  10  U.  S.  App.  465. 


RULES  RELATING  TO  CONSTRUCTION.  583 

WATSON  v.  GUGINO. 

204  NEW  YORK,  535.— 1912. 

VANN,  J.  .  .  .  The  covenant  sued  upon  is  as  follows:  "The  said 
Carmelo  Gugino  further  agrees  to  devote  his  whole  time  and  atten- 
tion to  the  said  corporation  business,  and  is  to  receive  the  weekly 
salary  of  twenty  dollars."  It  is  to  be  observed  that  no  period  of 
service  was  specified,  and  even  if  the  stipulation  as  to  "the  weekly 
salary"  implies  a  hiring  by  the  week  it  would  not  aid  the  plaintiff. 

The  effect  of  a  general  contract  of  hiring,  no  time  being  specified, 
varies  in  different  jurisdictions.  In  England  it  is  presumed  to  be  a 
hiring  for  a  year  regardless  of  the  nature  of  the  service,  unless  there 
is  a  custom  relating  to  the  subject  and  it  appears  that  the  contract 
was  made  with  reference  to  the  custom.  (Fawcett  v.  Cash,  3  Nev. 
&  Man.  177;  Littey  v.  Elwin,  2  Ad.  &  El.  742;  Davis  v.  Marshall,  4 
L.  T.  [N".  S.]  216.)  In  some  States  a  stipulation  as  to  the  method 
of  payment,  such  as  weekly,  monthly  or  yearly,  is  held  to  denote  the 
period  of  service  contracted  for.  (Tatterson  v.  Suffolk  Mfg.  Co.,  106 
Mass.  56;  Franklin  Mining  Co.  v.  Harris,  24  Mich.  116;  Beach  v. 
Mullin,  34  N.  J.  Law,  343.)  In  this  State  the  rule  is  settled  that 
unless  a  definite  period  of  service  is  specified  in  the  contract,  the 
hiring  is  at  will  and  the  master  has  the  right  to  discharge  and  the 
servant  to  leave  at  any  time.  In  Martin  v.  New  York  Life  Ins.  Co. 
(148  N.  Y.  117)  the  defendant  employed  the  plaintiff  to  take  charge 
of  its  real  estate  department  at  a  salary  of  $5,000  a  year.  Subse- 
quently his  salary  was  raised  to  $6,500  and  finally  to  $10,000  a  year, 
payable  monthly.  We  held  that  the  hiring-  was  at  will  and  that 
the  contract  could  be  terminated  at  any  time  by  either  party.  Judge 
Bartlett,  speaking  for  the  court,  adopted  the  language  used  by  Mr. 
Wood  in  section  136  of  his  work  on  Master  and  Servant,  as  follows : 
"The  rule  is  inflexible,  that  a  general  or  indefinite  hiring  is  prima 
facie  a  hiring  at  will ;  and  if  the  servant  seeks  to  make  it  out  a  yearly 
hiring,  the  burden  is  upon  him  to  establish  it  by  proof.  A  hiring  at 
so  much  a  day,  week,  month  or  year,  no  time  being  specified,  is  an 
indefinite  hiring,  and  no  presumption  attaches  that  it  was  for  a 
day  even,  but  only  at  the  rate  fixed  for  whatever  time  the  party  may 
serve.  ...  A  contract  to  pay  one  $2,500  a  year  for  services  is  not 
a  contract  for  a  year,  but  a  contract  to  pay  at  the  rate  of  $2,500  a  year 
for  services  actually  rendered,  and  is  determinable  at  will  by  either 
party.  Thus  it  will  be  seen  that  the  fact  that  the  compensation  is 
measured  at  so  much  a  day,  month  or  year  does  not  necessarily  make 
such  hiring  a  hiring  for  a  day,  month  or  year,  but  that  in  all  such 
cases  the  contract  may  be  put  an  end  to  by  either  party  at  any  time, 


584  INTERPRETATION  OF  CONTRACT. 

unless  the  time  is  fixed,  and  a  recovery  had,  at  the  rate  fixed  for  the 
services  actually  rendered."  (p.  121.) 

This  rule  was  deliberately  adopted,  all  the  judges  concurring,  to 
settle  the  differences  of  opinion  which  had  prevailed  in  the  lower 
courts.  It  applies  to  the  contract  before  us  and  must  control  the 
decision  of  this  appeal,  unless  the  theory  of  the  Appellate  Division 
is  correct,  that  the  covenant,  under  the  circumstances,  means  a  hiring 
for  a  reasonable  time.  [It  was  held  that  such  theory  was  incorrect.] 

Cullen,  Ch.  J.,  Gray,  Haight,  Werner,  Hiscock,  and  Collin,  JJ., 
concur. 

Order  reversed,  etc. 
26  Cyc.  974-976   (46-52)  ;  12  C.  L.  R.  562. 


STEEEPEK  v.  WILLIAMS. 

48  PENNSYLVANIA  STATE,  450.— 1865. 

Assumpsit  to  recover  damages  for  the  non-performance  of  a  con- 
tract to  purchase  plaintiff's  hotel. 

The  court  allowed  the  jury  to  find  the  actual  damage,  which  they 
fixed  at  $50,  reserving  the  question  whether  judgment  should  be 
entered  for  that  amount  or  for  the  amount  of  $500  fixed  as  a  "for- 
feit" in  the  contract.  Subsequently  the  court  entered  judgment  for 
$500,  the  amount  fixed  in  the  contract.  Defendant  appeals. 

AGNEW,  J.  This  case  is  very  defectively  stated.  We  find,  in  our 
paper-book,  no  copy  of  the  bill  of  exceptions,  and  no  statement  of 
facts.  We  understand,  from  the  argument,  that  it  was  a  case  of 
total  failure  on  the  part  of  the  defendant,  and  we  infer,  from  the  ver- 
dict against  the  defendant,  that  the  plaintiff  must  have  tendered 
performance  on  his  part. 

Upon  these  facts  and  the  terms  of  the  agreement  we  must  deter- 
mine whether  the  stipulated  sum  is  a  penalty,  or  liquidated  damages. 
Upon  no  question  have  courts  doubted  and  differed  more.  It  is  un- 
necessary to  examine  the  numerous  authorities  in  detail,  for  they  are 
neither  uniform  nor  consistent.  No  definite  rule  to  determine  the 
question  is  furnished  by  them,  each  being  determined  more  in  direct 
reference  to  its  own  facts  than  to  any  general  rule.  In  the  earlier 
cases,  the  courts  gave  more  weight  to  the  language  of  the  clause 
designating  the  sum  as  a  penalty  or  as  liquidated  damages.  The 
modern  authorities  attach  greater  importance  to  the  meaning  and 
intention  of  the  parties.  Yet  the  intention  is  not  all-controlling,  for 
in  some  cases  the  subject  matter  and  surroundings  of  the  contract 
will  control  the  intention  where  equity  absolutely  demands  it.  A  sum 
expressly  stipulated  as  liquidated  damages  will  be  relieved  from,  if 
it  is  obviously  to  secure  payment  of  another  sum  capable  of  being 


RULES   RELATING    TO    CONSTRUCTION.  585 

compensated  by  interest.  On  the  other  hand,  a  sum  denominated  a 
penalty,  or  forfeiture,  will  be  considered  liquidated  damages  where  it 
is  fixed  upon  by  the  parties  as  the  measure  of  the  damages,  because 
the  nature  of  the  case,  the  uncertainty  of  the  proof,  or  the  difficulties 
of  reaching  the  damages  by  proof,  have  induced  them  to  make  the 
damages  a  subject  of  previous  adjustment.  In  some  cases  the  magni- 
tude of  the  sum,  and  its  proportion  to  the  probable  consequence  of 
a  breach,  will  cause  it  to  be  looked  upon  as  minatory  only.  Upon  the 
whole,  the  only  general  observation  we  can  make  is  that  in  each  case 
we  must  look  at  the  language  of  the  contract,  the  intention  of  the 
parties  as  gathered  from  all  its  provisions,  the  subject  of  the  con- 
tract and  its  surroundings,  the  ease  or  difficulty  of  measuring  the 
breach  in  damages,  and  the  sum  stipulated,  and  from  the  whole 
gather  the  view  which  good  conscience  and  equity  ought  to  take  of 
the  case.  Equity  lies  at  the  foundation  of  relief  in  the  case  of  for- 
feiture and  penalties,  and  hence  the  difficulty  of  reaching  any  general 
rule  to  govern  all  cases.  The  research  of  counsel  has  furnished  us 
with  many  authorities,  but  I  refer  to  the  following  only  as  containing 
these  general  views:  Chase  v.  Allen,  13  Gray,  42;  Sainter  v.  Fer- 
guson, 7  C.  B.  716;  Chamberlain  v.  Bagley,  11  N.  H.  234;  Gammon 
v.  Howe,  2  Shep.  250;  Mead  v.  Wheeler,  13  N.  H.  351 ;  Main  v.  King, 
10  Barb.  S.  C.  59;  Niver  v.  Rossman,  18  Barb.  50;  Lampman  v. 
Cochran,  19  Id.  388;  Cotheal  v.  Talmage,  5  Seld.  551;  Duffy  v. 
Shockey,  11  Ind.  70;  Jaquith  v.  Hudson,  5  Mich.  123. 

The  agreement  in  this  case  is  a  contract  for  the  sale  of  a  hotel. 
The  plaintiff  agreed  to  make  a  clear  title  to  defendant  on  the  first 
day  of  April  following  its  date,  which  was  in  February,  and  to  give 
immediate  possession  of  the  bar-room  and  fixtures.  The  defendant 
was  to  pay  $3000  on  the  signing  of  the  deed  on  the  1st  of  April,  and 
agreed  that  plaintiff  should  retain  possession  of  a  certain  part  of 
the  property  four  weeks.  The  price  was  to  be  $14,000,  but  no  time 
was  fixed  for  the  payment  of  any  part  except  the  $3000.  Then  came 
the  clause  in  question:  "The  parties  to  the  above  agreement  doth 
severally  agree  to  forfeit  the  sum  of  $500 — say  five  hundred  dollars, 
in  case  either  party  fail  to  comply  with  the  terms  of  this  agreement." 
The  first  feature  striking  our  attention  is  the  great  disproportion  be- 
tween this  sum  and  the  purchase  money,  or  even  the  portion  to  be 
paid  on  the  1st  of  April,  when  the  deed  was  to  be  made.  Clearly,  it 
was  not  intended  to  enforce  payment  of  the  purchase  money,  or  its 
first  instalment  only.  Nor  could  it  be  intended  to  protect  the  de- 
fendant against  a  failure  to  make  the  title  after  payment  of  the  first 
instalment.  This  leads  obviously  to  the  conclusion  that  the  only 
intention  of  stipulating  this  sum  was  to  protect  against  a  total  failure 
where  the  contract  was  abandoned.  If  either  party  failed,  the  other 
might  abandon  and  demand  the  sum  stipulated  for  this  contingency. 


586  INTERPRETATION  OF  CONTRACT. 

Were  the  sum  adequate  in  magnitude  to  compel  specific  performance, 
we  might  conclude  it  was  intended  as  a  penalty  only,  against  which 
equity  would  relieve  on  a  full  compliance  with  the  contract.  But  its 
manifest  inadequacy,  as  compared  with  the  value  or  the  price  of  the 
property,  leaves  no  other  reasonable  conclusion  than  that  it  was  in- 
tended as  a  compensation  to  either  party,  when  the  other  wholly 
abandoned  the  contract.  In  this  view,  the  parties  must  have  intended 
the  sum  as  liquidated  damages,  and  not  as  a  penalty. 

But  this  intention  might  not  alone  determine  the  equity,  and  there- 
fore we  also  look  at  the  state  of  the  case  as  it  probably  might  be  in 
case  of  abandonment ;  for,  if  the  damages  are  definite  in  their  nature, 
and  easily  to  be  ascertained,  it  might  be  unconscionable  to  award  the 
whole  sum  as  damages.  This  leads  to  a  consideration  of  the  subject 
matter,  and  the  terms  of  the  contract.  The  property  is  a  hotel — the 
plaintiff  describes  himself  to  be  a  hotel-keeper,  and  he  contracts  to 
deliver  immediate  possession  of  a  part.  Now,  this  involves  the  break- 
ing up  of  his  business,  the  purchase  or  lease  of  a  new  residence,  and 
the  disposal  of  furniture  needed  for  a  hotel,  but  probably  not  for  a 
private  family.  Relying  on  the  performance  of  the  defendant,  the 
plaintiff  may  make  many  journeys  in  search  of  a  new  home,  encounter 
difficulties  in  suiting  himself,  involve  himself  in  new  purchases,  raise 
large  sums  of  money,  and  in  many  ways  incur  heavy  losses  and  ex- 
penses, and  yet  he  may  be  unable,  or  find  it  very  difficult,  to  prove 
their  extent.  So  the  defendant  might  contract  for  the  sale  of  his 
own  property,  purchase  furniture  and  liquors,  contract  for  loans  of 
money  to  perform  his  contract,  and  incur  liabilities,  all  causing  him 
losses  very  difficult  to  be  ascertained.  Now  every  one  knows  how 
difficult  it  is  to  reach  and  estimate  the  real  losses  men  suffer  from 
disappointment  in  their  plans,  and  many  of  the  subjects  of  loss  can- 
not be  put  in  evidence.  An  accurate  account  can  scarcely  be  stated 
in  dollars  and  cents,  and  yet  but  few,  if  asked  to  name  a  sum  for  a 
total  abandonment  of  such  a  contract,  would  be  willing  to  take  the 
risk  much  lower  than  at  the  sum  stipulated  here. 

From  all  these  circumstances,  added  to  the  intention  deduced  from 
the  contract,  we  conclude  that  the  parties  fixed  the  sum  stipulated, 
as  the  measure  of  the  damages  either  would  probably  suffer  from  a 
total  failure,  and  the  compensation  to  be  made  therefor.  The  word 
"forfeit,"  according  to  many  of  the  authorities,  is  therefore  out- 
weighed by  the  other  elements  of  interpretation,  and  we  must  con- 
strue it  as  meaning  "to  pay." 

But  we  are  told  that  the  jury  assessed  the  damages  at  $50 — one- 
tenth  of  the  stipulated  sum.  This  is  true,  but  it  does  not  follow 
they  had  no  difficulty  in  doing  so,  or  that  the  very  difficulty  of  prov- 
ing and  making  the  proof  was  not  the  cause  of  so  small  a  verdict. 
It  establishes  only  that,  as  a  jury  must  find  upon  the  evidence,  the 


RULES   RELATING  TO   CONSTRUCTION.  587 

proof  was  not  sufficient  to  enable  them  to  give  more.  But  it  does 
not  detract  from  the  nature  of  the  case,  or  explain  away  the  intention 
gathered  from  the  contract. 

The  judgment  is  affirmed.1 

13  Cyc.  90  (21)  ;  91  (23)  ;  13  L.  R.  A.  671;  34  L.  R.  A.  (w.  s.)  588;  3  C. 
L.  R.  588;  5  C.  L.  R.  398;  Drake,  Liquidated  damages  and  estoppel  by  con- 
tract, 9  Mich.  L.  R.  588. 

i  "It  is,  however,  the  law  of  this  State,  as  settled  by  this  court,  that  where 
the  language  used  is  clear  and  explicit  to  that  effect,  the  amount  is  to  be 
deemed  liquidated  damages  when  the  actual  damages  contemplated  at  the 
time  the  agreement  was  made  'are  in  their  nature  uncertain  and  unascer- 
tainable  with  exactness,  and  may  be  dependent  upon  extrinsic  considerations 
and  circumstances,  and  the  amount  is  not,  on  the  face  of  the  contract,  out 
of  all  proportion  to  the  probable  loss.'" — Curtis  v.  Van  Bergh,  161  N.  Y.  47. 

For  distinction  between  a  case  where  the  sum  is  liquidated  damages  and 
one  where  it  is  an  alternative  consideration,  see  Pearson  v.  Williams,  post, 
p.  615. 


PART  IV. 

DISCHARGE  OF  CONTRACT. 


CHAPTER  I. 

DISCHARGE  OF  CONTRACT  BY  AGREEMENT. 

Waiver. 

KELLETT  v.  EOBIE. 

99  WISCONSIN,  303.— 1898. 

WINSLOW,  J.  This  is  an  action  for  breach  of  promise  of  marriage, 
and  the  plaintiff  has  obtained  a  judgment  for  damages  fixed  at  $3500. 
The  contract  of  marriage  was  admitted,  but  the  defendant  claimed 
that  there  was  a  subsequent  mutual  release.  This  was  denied  by  the 
plaintiff,  and  upon  this  issue  the  case  was  tried.  r^ 

The  evidence  showed  that  the  parties  became  engaged  on  August 
30,  1890,  the  plaintiff  then  being  twenty  years  of  age;  and  it  was 
agreed  that  the  marriage  should  not  take  place  for  three  years.  The 
parties  were  farmers'  children,  and  lived  with  their  parents  in  ad- 
joining towns  in  Winnebago  County,  about  a  mile  and  a  half  from 
each  other.  After  the  engagement,  the  defendant  frequently  called 
upon  the  plaintiff  until  December  17,  1893,  at  which  time  the  de- 
fendant claims  that  the  plaintiff  suggested  to  him  that,  as  long  as 
his  (defendant's)  people  were  opposed  to  the  match,  they  should 
separate,  and  call  the  engagement  off,  and  that  he  assented  to  this 
proposition.  The  defendant  never  called  on  the  plaintiff  after  this 
time,  although  they  had  some  correspondence,  which  is  in  the  record. 
Soon  after  this  alleged  conversation,  the  defendant  commenced  to 
call  upon  another  young  lady  in  the  neighborhood,  and  continued  to 
pay  attention  to  her  without  objection  on  the  part  of  the  plaintiff, 
until  he  was  married  to  her  in  December,  1895.  The  plaintiff  denied 
positively  that  she  released  the  defendant  from  the  engagement.  In 
the  course  of  her  examination  as  a  party  under  section  4096,  Eev. 
St.  1878,  she  admitted  that  they  had  a  conversation  in  December, 
1893,  in  which  she  says,  "I  told  him  if  he  did  not  want  to  marry 

588 


BY   AGREEMENT.  589 

me,  of  course  he  could  suit  himself ;  but  he  said  he  was  marrying  me, 
not  his  people,  and  he  came  to  see  me  just  the  same."  The  evidence 
showed  that  the  defendant  was  worth  about  $6000,  composed  of  his 
interest  in  the  estates  of  his  father  and  grandfather,  both  of  which 
were  still  unsettled. 

Several  exceptions  to  rulings  upon  evidence  and  to  the  charge  of 
the  court  were  argued  by  the  appellant,  but,  as  we  do  not  think  we 
should  be  compelled  to  reverse  the  judgment  on  account  of  them 
alone,  we  shall  not  discuss  them,  but  proceed  to  the  main  question, 
namely,  whether  the  verdict  is  contrary  to  the  evidence. 

Upon  this  question,  after  careful  consideration  of  all  the  evidence, 
and  especially  of  the  letters  written  by  the  plaintiff  after  the  alleged 
release,  we  can  come  to  no  conclusion  except  that  the  verdict  is  clearly 
against  the  preponderance  of  the  evidence.  These  letters  demon- 
strated to  a  certainty  that  something  of  a  serious  nature  had  inter- 
rupted the  relations  of  the  parties  about  the  time  that  the  defend- 
ant alleges  the  release  took  place.  No  explanation  as  to  what  this 
serious  event  was  is  offered  except  the  defendant's  explanation  of  a 
release.  We  shall  not  give  the  letters  in  full,  but  content  ourselves 
with  some  extracts,  which  seem  to  conclusively  establish  that  the 
former  relationship  was  broken  off,  and  that  marriage  was  no  longer 
contemplated. 

In  a  letter  of  January  21,  1894,  she  says :  "Fred :  If  you  desire 
a  change,  why  take  it,  and  end  the  matter  right  here.  As  I  said 
previously,  I  cannot  count  second.  I  am  glad  of  one  thing:  if  we 
do  separate  forever,  you  can  always  think  that  I  performed  my  duty 
by  you  from  the  very  first  to  the  last."  On  March  1,  1894,  she 
wrote:  "Fred:  You  may  think  it  queer  on  my  part  in  asking  you 
to  come  and  see  me,  after  what  has  happened.  I  would  never  do 
so  if  it  were  not  absolutely  necessary,  Fred;  that  you  know.  I  know 
it  will  cause  hard  feelings,  but  I  cannot  help  it.  You  must  know, 
and  the  sooner  the  better.  So  let  me  see  you  as  soon  as  possible. 
If  I  have  done  wrong  in  writing,  please  forgive  me,  Fred;  it  is  for 
your  and  my  welfare/'  On  March  8,  1894,  she  wrote  again:  "I 
just  want  you  to  come  just  once,  and  risk  ever}rthing  to  oblige  me. 
Your  trouble  is  as  nothing  compared  to  mine.  I  knew  you  were  in 
town  Monday.  I  seen  your  horse,  and  some  way  I  felt  you  were 
there.  I  don't  feel  hard  toward  you  one  bit,  Fred.  You  will  find 
me  just  the  same.  I  am  not  fickle ;  once  is  forever  with  me ;  so  don't 
feel  bad  about  nothing.  You  shall  never  suffer  through  me  again. 
I  hope  the  day  may  come  when  you  forget  that  you  ever  knew 
me.  ...  Now,  Fred,  if  you  don't  want  to  come,  and  if  you  think 
you  will  be  happier  by  staying  away,  why  I  will  try  and  bear  it." 

When  the  plaintiff  said  to  the  defendant  in  her  letter  of  January 
21st,  "If  you  desire  a  change,  take  it,  and  end  the  matter  right  here," 


590  DISCHARGE   OF   CONTRACT. 

we  can  see  no  escape  from  the  conclusion  that  it  was  an  offer  of  free- 
dom from  the  engagement;  and  when  it  further  appears  that  the 
defendant  acted  upon  this  or  a  similar  offer,  and  without  objection 
from  the  plaintiff,  but  with  her  knowledge,  courted  and  married 
another  woman,  it  must  be  considered  that  the  offer  was  accepted,  and 
that  the  plaintiff  has  become  bound  by  the  offer  and  its  acceptance. 
We  are  unable  to  understand  how,  in  the  face  of  this  evidence,  the 
jury  could  have  found  that  there  was  not  a  mutual  release  of  the 
engagement. 

In  connection  with  this  unaccountable  verdict,  we  cannot  refrain 
from  saying  that  the  damages  awarded  are  grossly  excessive,  and  that 
we  should  feel  obliged  to  reverse  upon  this  ground  in  any  event. 
The  defendant's  estate  amounted  to  about  $6000,  and  there  are  no 
circumstances  of  aggravation  in  the  case.  The  defendant  is  now 
married,  and  to  give  considerably  more  than  half  of  his  property  as 
damages  upon  the  facts  appearing  here,  even  if  there  had  been  no  ex- 
press release,  we  regard  as  out  of  the  bounds  of  reason.  The  damages 
are  so  far  excessive  as  to  show  passion,  if  not  perversity,  on  the  part 
of  the  jury. 

By  the  Court. — Judgment  reversed,  and  action  remanded  for  a 
new  trial. 

9  Cyc.  593-594  ( 62-67 )  ;  Williston,  Rescission  by  parol  agreement,  4  C.  L. 
R.  455. 


COLLYEE  &  CO.  v.  MOULTON  et  al. 
9  RHODE   ISLAND,  90.— 1868. 

Assumpsit.     Plea,  the  general  issue. 

POTTER,  J.  The  plaintiffs  made  a  verbal  contract  with  the  de- 
fendants, then  partners,  to  build  a  machine.  The  work  was  charged 
as  fast  as  done,  and  the  materials  when  furnished.  After  a  small 
part  of  the  work  had  been  done,  the  firm  was  dissolved;  and  the 
defendant  Moulton,  the  same  day,  gave  notice  of  it  to  the  plaintiffs, 
and  told  them  he  could  be  no  longer  responsible  for  the  machine. 
The  defendant  Moulton  claims  that  the  plaintiffs  released  him  and 
agreed  to  look  to  the  other  partner  for  payment;  but  this  the  plain- 
tiffs deny.  The  plaintiffs  went  on  and  completed  the  machine,  and 
then  sued  Bromley  alone  for  his  claim,  but  discontinued  the  suit, 
and  now  sue  both  the  former  partners,  the  writ  having  been  served 
on  Moulton  only. 

Where  two  parties  contract,  one  to  do  a  particular  piece  of  work 
and  the  other  to  pay  for  it,  the  latter  may,  at  any  time,  countermand 
the  completion  of  it,  and  in  such  case  the  former  cannot  go  on  and 
complete  the  work  and  claim  the  whole  price,  but  will  be  entitled 


BY   AGREEMENT.  591 

only  to  pay  for  his  part  performance,  and  to  be  compensated  for  his 
loss  on  the  remainder  of  the  contract.  Clark  v.  Marsiglia,  1  Denio, 
317;  Durkee  v.  Mott,  8  Barb.  S.  C.  423;  Hosmer  v.  Wilson,  7  Mich- 
igan, 294. 

In  the  present  case,  the  two  defendants,  although  the  partnership 
was  dissolved,  still  remain  joint  contractors  so  far  as  the  plaintiff 
was  concerned;  and  we  think  that  either  of  them  had  a  right  to 
countermand  the  order  before  completion,  and  then  the  joint  con- 
tractors would  have  remained  liable  as  before  stated.  But  the  de- 
fendant Moulton  claims  that  he  was  verbally  released  by  the  plaintiffs 
and  that  the  plaintiffs  agreed  to  look  to  the  other  defendant,  Brom- 
ley, alone  for  their  pay. 

There  is  some  apparent  inconsistency  in  the  language  used  in  the 
reports  and  text  writers,  as  to  the  manner  in  which  a  simple  con- 
tract may  be  annulled.  We  think  the  rule  is  that  so  long  and  so  far 
as  the  contract  remains  executory  and  before  breach,  it  may  be  an- 
nulled by  agreement  of  all  parties;  but  that  when  it  has  been  broken 
and  a  right  of  action  has  accrued,  the  debt  or  damages  can  only  be 
released  for  a  consideration;  and  even  so  far  as  it  remains  executory, 
it  may  be  said  that  the  agreement  to  annul  on  one  side  may  be  taken 
as  the  consideration  for  the  agreement  to  annul  on  the  other  side. 
Dane,  5,  112;  Johnson  v.  Heed,  9  Mass.  84;  Cummings  v.  Arnold, 
3  Met.  486-9 ;  Eichardson  v.  Hooper,  13  Pick.  446 ;  Blood  v.  Enos, 
12  Vermont,  625. 

So  far,  therefore,  as  the  contract  in  the  present  case  remained  un- 
finished on  the  10th  of  February,  1865,  when  the  notice  was  given 
and  the  alleged  waiver  was  made,  we  may  consider,  either  that  the 
contract  was  annulled  or  waived  by  consent,  in  which  case  (the  ma- 
chine, so  far  as  completed,  being  tendered  or  delivered)  the  plaintiff 
could  claim  only  for  work  and  materials  to  that  date  without  further 
damages, — or  that  the  work  was  countermanded  by  the  defendant 
Moulton,  without  the  assent  of  the  plaintiffs,  in  which  case  the  de- 
fendant would  be  liable  for  the  part  performed  and  for  the  loss  on 
the  part  unperformed. 

We  consider  the  present  case  to  fall  under  the  first  head,  the  notice 
to,  and  declarations  and  conduct  of  the  plaintiffs  amounting  to  a 
waiver  of  the  fulfilment  of  the  contract  as  first  made,  that  is,  to  a 
release  of  the  defendant  Moulton  for  the  part  still  unperformed. 

But  the  claim  for  payment  for  the  part  performed  stands,  as  we 
have  seen,  on  a  different  ground.  Was  there  any  agreement  to  release 
Moulton  from  liability  for  this,  i.  e.  the  part  performed;  and  if  so, 
was  there  any  agreement  to  take  the  other  partner's  individual  promise 
in  lieu  of  the  promise  of  the  firm,  or  anything  which  would  amount 
to  a  consideration  for  the  release  of  the  firm? 

Tf,  by  a  mutual  arrangement  between  the  plaintiff  Collyer  and  the 


592  DISCHARGE   OF   CONTRACT. 

two  defendants,  Moulton  had  been  released  from  his  liability  for  the 
work  already  done,  and  a  new  promise  made  by  Bromley,  the  other 
defendant,  to  pay  for  it,  this  would  have  been  a  valid  release  for  a 
valuable  consideration — one  debt  would  have  been  substituted  for  the 
other.  Thompson  v.  Percival,  5  B.  &  A.  925. 

But  we  cannot  find  sufficient  evidence  of  any  promise  on  the  part 
of  the  other  partner,  Bromley,  to  assume  the  liability;  and  if  there 
was  none,  then  the  release  of  liability  for  the  work  already  done  was 
without  consideration,  as  it  is  not  claimed  that  there  was  any  other 
consideration.  We  cannot  find,  however,  any  count  in  the  declaration 
upon  which,  upon  this  view  of  the  case,  we  can  allow  for  anything 
except  labor  done  before  February  10th,  the  day  of  the  giving  of  the 
notice. 

Judgment  for  plaintiffs  for  amount  so  found  due. 

9   Cyc.  594    (66);    W.  P.  349    (69);   816    (25);    818    (36). 


Substituted  contract. 

DREIFTJS  et  al.  v.  COLUMBIAN  EXPOSITION  SALVAGE  CO. 

194  PENNSYLVANIA  STATE,  475.— 1900. 

DEAN,  J.  This  suit  was  begun  by  foreign  attachment,  and  at  the 
hearing  the  issue  took  the  form  of  an  action  of  assumpsit.  The  cause 
was  sent  for  trial  to  E.  Hunn  Hanson,  Esq.,  as  referee,  to  find  facts 
and  apply  to  them  his  conclusions  of  law.  In  effect,  both  his  findings 
and  conclusions  are  in  favor  of  plaintiffs;  and  defendant  appeals, 
alleging  that  he  erred  in  not  finding  for  defendant,  and  certifying 
a  balance  in  its  favor.  The  findings  of  fact  are  so  full,  and  so 
orderly  stated  by  the  learned  referee,  that  it  would  be  a  useless  labor 
to  restate  them  at  length  in  this  opinion.  Counsel  for  appellant  ac- 
cepts as  true  all  the  material  facts  of  the  referee,  approved  by  the 
court  below,  but  he  assigns  for  error  the  referee's  conclusions  from 
them. 

Briefly  stated,  defendant  in  February,  1895,  contracted  to  deliver 
f.  o.  b.  cars  at  Chicago,  for  shipment  to  Pittsburg,  3,000  tons  of 
sheared  steel,  at  $7.50  per  ton ;  the  deliveries  to  be  completed  by  June 
30th  following;  to  be  paid  for  in  plaintiffs'  30-day  drafts  when  de- 
livered. At  the  expiration  of  the  time  neither  party  had  performed, 
to  the  letter,  the  contract.  Shipments  continued  during  the  summer, 
but  defendant,  alleging  a  breakdown  of  its  machinery  for  shearing 
the  steel,  made  no  shipments  after  the  7th  of  August,  and  on  the 
10th  of  that  month  notified  plaintiffs  that  it  was  impossible  to  ship 
sheared  steel,  as  provided  by  the  contract.  By  this  time  the  steel 
had  largely  advanced  in  price  over  the  contract  figure, — had  very 


BY    AGREEMENT.  593 

nearly  doubled.  It  is  not  improbable,  as  plaintiffs  allege,  that  de- 
fendant sought  to  evade  its  contract  obligation;  and  it  is  too  plain 
for  argument  that  plaintiffs  wanted  the  steel,  and  did  not  want  a 
suit  against  defendant  for  damages.  So  on  September  llth  L.  E. 
Block,  a  member  of  the  plaintiff  partnership,  met  Levine,  president 
of  defendant  company,  in  Chicago.  Much  anger  was  displayed  by 
both,  and  suits  were  threatened;  but  the  interview  ended  in  the 
making  of  a  new  contract,  by  which  the  old  one  was  canceled,  and 
the  new  one,  materially  modifying  and  changing  the  terms  of  the 
old,  was  agreed  upon.  The  terms  of  the  new  one  are  expressly  set 
out  in  the  two  letters  of  12th  and  13th  of  September,  one  and  two 
days  after  the  interview  between  Block  and  Levine.  These  are  the 
letters : 

"Chicago,  September  12th,  1895.  Messrs.  Dreifus,  Block  &  Co., 
Pittsburg,  Pa. — Gentlemen :  In  accordance  with  agreement  between 
the  writer  and  your  Mr.  L.  E.  Block,  the  various  contracts  between  you 
and  this  company  are  canceled,  and  you  agree  to  accept  in-  lieu  thereof 
200  tons  of  steel  scrap,  6  feet  and  under,  and  900  tons  of  steel  in 
shape  as  we  bring  them  to  our  shears.  In  all  other  respects,  such 
as  to  price,  delivery,  terms  of  payment,  and  return  of  expense  bills, 
etc.,  the  same  provisions  shall  apply  as  in  the  contracts  which  are 
canceled.  Please  acknowledge  receipt,  and  oblige.  The  .Columbian 
Exposition  Salvage  Co.,  per  A.  Levine,  President." 

"Pittsburg,  Pa.,  September  13,  1895.  The  Columbian  Exposition 
Co.,  Chicago,  111. — Gentlemen:  Eeplying  to  your  favor  of  the  12th, 
same  is  satisfactory  to  us.  Please  have  all  of  this  material  shipped 
without  further  delay.  Yours,  respectfully,  Dreifus,  Block  &  Co." 

Shipments  continued  under  this  new  contract  for  months,  when 
plaintiffs  seized  by  foreign  attachment  104  tons  of  steel  shipped  by 
defendant  to  Pittsburg,  and  refused  payment  of  the  drafts  therefor. 
Then  this  suit  was  commenced  in  Philadelphia  by  plaintiffs  to  recover 
damages  for  the  breach  of  the  old  contract. 

The  referee  finds  thus:  "The  letters  of  12th  and  13th  September 
exhibit  in  the  clearest  way  that  it  was  the  express  purpose  of  the 
parties  to  end  their  rights  under  the  contract  of  8th,  9th,  and  12th 
February,  and  in  place  of  them  to  substitute  the  September  agree- 
ment." But  on  this  established  fact  the  referee  concludes  thus: 
".  .  .  There  was  no  valuable  consideration  for  the  agreement.  Since 
the  plaintiffs  invoke  the  strict  legal  principle,  it  is  decided  that  after 
the  breach  of  the  February  contracts  there  could  be  neither  the  sub- 
stitution of  another  nor  its  cancellation — neither  its  release  nor  dis- 
charge— without  a  valuable  consideration  for  it."  Hence  his  finding 
for  the  plaintiffs.  He  states  the  general  rule  of  law  correctly  when 
he  says:  "It  is  true  that  even  after  a  breach  of  contract  a  debtor, 
by  paying  to  his  creditor  but  a  part  of  his  debt,  may  have  a  valid 


594  DISCHARGE   OF    CONTRACT. 

discharge  of  all,  if  there  was  doubt  as  to  the  amount  due,  or  if  that 
which  was  due  is  unliquidated,  but  not  otherwise.  ...  In  this  case 
the  debt  was  capable  of  exact  ascertainment  by  calculation,  .  .  .  and 
that  which  was  due  was  not  unliquidated." 

The  opinion  of  a  lawyer  of  the  learning  and  ability  of  the  referee 
has  moved  us  to  a  careful  revision  and  consideration  of  his  report. 
After  the  most  mature  deliberation,  we  are  clearly  of  the  opinion  that 
he  erred  in  his  application  of  the  law  to  the  facts  found  by  him. 
Assume,  as  he  does,  that  at  the  personal  interview  between  Block  and 
Levine  on  the  llth  of  September  there  was  a  distinct  declaration 
by  the  latter  that  his  company  would  not  perform  its  contract;  still, 
if  anything  can  be  clear,  it  is  that,  above  all  things,  plaintiffs  did 
not  want  a  lawsuit  for  damages.  At  that  stage  their  damages  were 
wholly  uncertain,  depending  on  the  fluctuating  price  of  steel.  They 
did  know  that  they  wanted  the  steel.  What  damages  they  might  want 
by  reason  of  defendant's  breach,  or  what  they  might  sustain,  they 
did  not  know.  In  this  dilemma,  they  sought  for  and  obtained  a 
new  contract,  expressly  canceling  the  old.  They  did  not  accept  a 
less  sum  than  the  money  due  on  a  debt  certam  in  amount, — a  con- 
tract which,  under  the  authorities,  would  have  been  without  consid- 
eration. They  agreed  to  accept  a  fixed  quantity  and  quality  of  mer- 
chandise, at  fixed  times  and  prices,  instead  of  the  uncertain  event  of 
a  lawsuit.  It  in  no  way  changes  the  character  of  the  contract  of 
llth  September,  1895,  that  now,  long  after  the  event,  the  referee  can, 
under  the  terms  of  the  old  contract,  to  his  satisfaction,  with  approxi- 
mate certainty,  liquidate  the  damages  occasioned  by  the  breach.  How 
did  matters  stand  then,  with  the  uncertainty  of  the  steel  market  on 
that  day?  That  was  the  question  in  contemplation  of  both  parties. 
In  McNish  v.  Eeynolds,  95  Pa.  St.  483,  we  held  "that  the  mutual 
unexecuted  undertakings  of  an  existing  contract  are  a  sufficient  con- 
sideration for  the  cancellation  of  such  a  contract,  and  the  substitution 
of  a  new  one  with  different  terms."  It  is  immaterial  if  for  a  moment, 
during  the  interview,  there  was  technically  a  breach  by  defendant. 
By  the  new  agreement  both  treated  the  old  one  as  an  existing  con- 
tract, and  mutually  agreed  to  rescission  of  it.  And,  even  taking  the 
most  rigid  statement  of  the  rule  invoked  by  the  referee,  that  rule 
reaches  no  further  than  stated  by  Sharswood,  C.  J.,  in  Bank  v.  Hus- 
ton, 11  Wkly.  Notes  Gas.  389:  "It  may  be  considered  now  well 
settled  in  this  State  that  payment  of  a  part  of  an  undisputed  debt, 
after  it  is  due,  though  accepted  in  full,  is  not  a  good  accord  and 
satisfaction.  While  this  is  so,  it  is  equally  well  settled  that  the  ac- 
ceptance of  a  collateral  thing,  without  regard  to  its  value,  is  a  good 
accord  and  satisfaction.  In  the  absence  of  fraud,  the  courts  never 
inquire  into  the  adequacy  of  the  consideration  of  an  agreement." 

Assuming  that  the  damages  could  have  been  liquidated  with  cer- 


BY   AGREEMENT.  595 

tainty  at  that  date,  plaintiffs  condoned  all  the  wrong  defendant  threat- 
ened, and  accepted  as  full  satisfaction  certain  merchandise, — a  col- 
lateral thing;  steel  of  a  different  size,  unsheared  scrap, — at  a  dif- 
ferent price,  instead  of  insisting  on  payment  in  money  of  the  sum 
certain.  In  Flegal  v.  Hoover,  156  Pa.  St.  276,  27  Atl.  162,  involving 
a  contract  which  in  all  its  material  features  resembles  the  one  before 
us,  our  Brother  Mitchell,  speaking  for  the  court,  says:  "The  parties 
then  came  together,  agreed  upon  a  settlement,  put  its  terms  in  writ- 
ing, which  was  signed  by  both,  and  partly  carried  out.  Such  an 
agreement  is  not  an  accord,  but  a  compromise,  and  is  as  binding  as 
any  other  contract.  But  it  was  not  necessary  to  the  validity  of  the 
agreement  of  May,  1892,  that  there  should  have  been  even  a  com- 
promise of  disputed  rights.  The  parties  to  a  contract  may  at  any 
time  rescind  it,  either  in  whole  or  in  part,  by  mutual  consent,  and 
the  surrender  of  their  mutual  rights  is  sufficient  consideration.  That 
is  what  the  parties  did  in  the  present  case,  and  their  rights  must 
be  determined  exclusively  by  the  agreement  of  May,  1892.  .  .  .  The 
parties  have  made  a  final  adjustment  of  all  these  matters,  and  the 
original  contract  of  1891  is  of  no  further  efficacy,  except  as  a  guide 
in  determining  how  much  was  due  under  it  for  the  logs  and  bark 
mentioned  in  the  agreement  of  1892." 

The  learned  referee  holds  that  this  contract  must  be  determined 
by  the  lex  loci,  the  law  of  Illinois ;  but  there  is  no  substantial  conflict 
between  the  law  of  that  State  and  this,  as  will  be  seen  by  reference 
to  Martin  v.  White,  40  111.  App.  281;  Bishop  v.  Busse,  69  111.  403. 
And  in  Insurance  Co.  v.  Detwiler,  23  111.  App.  656,  the  court  says: 
"The  term  'cancellation'  of  a  contract  necessarily  implies  a  waiver  of 
all  rights  thereunder  by  the  parties.  If,  after  breach  by  one  of  the 
parties,  they  agreed  to  'cancel'  it,  and  make  a  new  contract  with 
reference  to  its  subject  matter,  that  is  a  waiver  of  any  cause  of  action 
growing  out  of  the  original  breach ;  and  this  is  the  rule  even  though 
the  original  contract  was  under  seal."  As  to  the  attachment  proceed- 
ings on  the  104  tons  of  iron  in  Pittsburg,  delivered  on  the  second 
contract,  we  think,  as  the  court  there  had  jurisdiction  before  suit 
was  entered  here  on  the  old  contract  for  damages,  it  is  best  that  that 
court  should  retain  jurisdiction  in  that  matter  until  final  judgment. 
It  would  not  be  conducive  to  orderly  litigation  to  import  that  ques- 
tion into  this  issue.  But,  for  the  reasons  given,  the  judgment  of 
the  court  below  in  this  case  is  reversed,  and  judgment  is  entered  for 
defendant.1 

9  Cyc.  595  (71-72)  ;  W.  P.  203  (15)  ;  815  (21)  ;  341  (42)  ;  Ames,  Novation, 
6  H.  L.  R.  184. 

i  "We  shall  not  question  the  rule  that  a  contract  or  covenant  under  seal 
cannot  be  modified  by  a  parol  unexecuted  contract.  Coe  v.  Hobby,  72  N.  Y. 
141;  Smith  v.  Kerr*  33  Hun,  567-571;  108  N.  Y.  31.  ...  The  reason  of 


596  DISCHARGE   OF    CONTRACT. 

WALTER  v.  VICTOR  G.  BLOEDE  CO. 

94  MARYLAND,  80.— 1901. 

Action  by  Edward  J.  Walter  against  the  Victor  G.  Bloede  Company 
of  Baltimore  City.  From  a  judgment  in  favor  of  defendant,  plain- 
tiff appeals. 

PEARCE,  J.  On  October  27,  -1899,  the  appellee  entered  into  a 
written  contract  with  the  appellant  to  purchase  of  him  50  tons,  of 
2,240  pounds  each,  of  tapioca  flour  of  a  certain  brand,  to  be  shipped 
by  steamer  from  Europe,  and  to  be  delivered  at  Canton,  Baltimore, 
10  tons  monthly,  from  November,  1899,  to  March,  1900,  both  in- 
clusive; payment  to  be  made  in  cash,  at  the  rate  of  4!/4  cents  per 
pound  upon  arrival  of  each  lot;  and  this  action  was  brought  by  the 
appellant  to  recover  damages  for  the  alleged  breach  of  this  contract 
by  the  appellee  in  refusing  to  accept  and  pay  for  part  of  the  flour 
thus  purchased.  About  7^  tons  were  delivered  November  27,  1899, 
which  the  appellee  accepted  and  paid  for,  but  no  further  deliveries 
have  been  made  by  the  appellant. 

The  declaration  set  out  the  contract  fully,  and  the  delivery  made 
as  above,  and  then  averred  that  on  December  18th  it  was  agreed  be- 
tween the  parties  that  the  shipments  of  the  remaining  4%y2  tons 
should  be  monthly  during  January,  February,  March,  and  April, 
1900,  instead  of  December,  1899,  and  January,  February,  and  March, 
1900,  as  stipulated  in  the  written  contract;  and  that  still  later,  on 
February  2,  1900,  plaintiff  informed  defendant  that  for  reasons  then 
explained,  and  beyond  his  control,  there  would  be  still  further  delay 
in  the  monthly  shipments  from  Europe,  and  that  he  would  not  be 
able  to  make  deliveries  as  agreed  upon  December  18th,  and  that  de- 
fendant then  waived  the  monthly  deliveries  as  agreed  upon  Decem- 

the  rule  was  founded  upon  public  policy.  It  was  not  regarded  as  safe  or 
prudent  to  permit  the  contract  of  parties  which  had  been  carefully  reduced 
to  writing  and  executed  under  seal  to  be  modified  or  changed  by  the  testi- 
mony of  witnesses  as  to  parol  statements  or  agreements  of  parties.  Hence 
the  rule  that  testimony  of  parol  agreements  shall  not  be  competent  as  evi- 
dence to  impeach,  vary,  or  modify  written  agreements  or  covenants  under  seal. 
But  the  parties  may  waive  this  rule  and  carry  out  and  perform  the  agree- 
ments under  seal  as  changed  or  modified  by  the  parol  agreement,  thus  ex- 
ecuting both  agreements;  and  where  this  has  been  done,  and  the  parties 
have  settled  with  a  full  knowledge  of  the  facts  and  in  the  absence  of  fraud, 
there  is  no  power  to  revoke  or  remedy  reserved  to  either  party.  Munroe  v. 
Perkins,  9  Pick.  298;  Laittimore  v.  Harsen,  14  Johns.  329;  McCreery  v.  Day, 
28  N.  Y.  S.  R.  597."— Haight,  J.,  McKenzie  v.  Harrison,  120  N.  Y/260,  263, 
264.  See  also  Canal  Co.  v.  Ray,  101  U.  S.  522. 

On  substituted  contracts,  see  also  the  cases  under  "Promise  to  perform 
existing  contract,"  ante,  p.  214.  Also  Heaton  v.  Angier,  7  N.  H.  397,  ante, 
p.  510. 


BY   AGREEMENT.  597 

her  18th,  and  agreed  to  accept  the  same  as  they  arrived.  The  de- 
fendant pleaded  the  general  issue,  and  the  case  was  tried  before  the 
court  without  a  jury,  the  verdict  and  judgment  being  for  the  defend- 
ant. Four  exceptions  were  taken  by  the  plaintiff  to  rulings  upon  the 
testimony  and  one  to  the  ruling  upon  the  prayers,  the  main  ques- 
tion in  the  case  being  whether  a  verbal  agreement  for  the  extension 
of  time  for  the  deliveries  fixed  by  the  contract  is  admissible  in  evi- 
dence. 

It  is  settled  that  at  common  law  the  parties  to  a  written  agreement 
not  under  seal,  before  any  breach  has  occurred,  may,  by  a  mere  oral 
agreement,  vary  one  or  more  of  the  terms  of  the  contract,  or  wholly 
waive  or  annul  it,  and  thus  make  a  new  contract  resting  partly  in 
writing  and  partly  in  parol,  and  as  such  remaining  obligatory  upon 
the  parties.  Browne,  St.  Frauds  (5th  ed.),  §  409;  Kerr's  Benj. 
Sales,  §  240.  But  the  question  here  is  whether  this  rule  is  applicable 
in  this  State  to  contracts  required  to  be  in  writing  by  the  provisions 
of  the  statute  of  frauds.  In  England  it  was  held  by  Lord  Ellen- 
borough  in  Cuff  v.  Penn,  1  Maule  &  S.  21,  that  the  rule  was  ap- 
plicable there.  In  that  case  there  was  a  written  contract  for  the  pur- 
chase of  300  hogs  of  bacon,  to  be  delivered  at  fixed  times,  and  in 
specified  quantities.  After  part  delivery,  defendant  requested  plain- 
tiff not  to  press  delivery  of  the  residue,  as  sale  was  dull,  to  which 
plaintiff  assented;  and  the  court  said  this  was  only  a  parol  dispensa- 
tion of  performance  of  the  original  contract  in  respect  to  the  times 
of  delivery,  and  was  not  affected  by  the  statute  of  frauds;  thus  dis- 
tinguishing between  the  contract  itself,  as  being  the  only  thing  re- 
quired by  the  statute  to  be  in  writing,  and  the  performance  of  the 
contract  as  something  distinct  from  the  contract,  and  to  which  the 
statute  has  no  application.  But  the  authority  of  that  case  does  not 
appear  to  have  been  ever  fully  accepted  in  England,  and  has  long 
been  regarded  there  as  overruled  by  later  cases.  In  Stead  v.  Daw- 
ber,  10  Adol.  &  E.  57,  it  was  distinctly  doubted  by  Lord  Denman, 
who  declined  to  follow  it,  though  not  overruling  it  otherwise  than  by 
the  course  of  his  reasoning.  In  Marshall  v.  Lynn,  6  Mees.  &  W.  109, 
the  point  to  be  decided,  as  stated  in  the  opinion,  was,  where  a  writ- 
ten contract  for  the  sale  of  goods  within  the  statute  stated  a  time  for 
the  delivery  of  the  goods,  whether  an  agreement  to  substitute  another 
day  for  that  purpose,  if  made  by  parol,  could  be  binding;  and  it  was 
held,  in  an  opinion  by  Baron  Parke,  that  it  could  not.  In  the  course 
of  that  opinion  he  said :  "As  the  case  of  Cuff  v.  Penn,  which  had  be- 
fore been  very  much  doubted,  appears  to  have  been  overruled  by 
Stead  v.  Dawber,  we  do  not  think  it  necessary  to  do  so;"  and  the 
rule  thus  laid  down  has  been  firmly  established  by  later  cases  as  the 
law  in  England.  Browne,  St.  Frauds,  §  411 ;  Kerr's  Benj.  Sales, 
§  240. 


598  DISCHARGE   OF    CONTRACT. 

In  this  country  there  is  some  divergence  of  opinion  among  the 
States,  though  the  weight  of  authority  seems  to  be  decidedly  with  the 
English  rule,  and  the  Supreme  Court  of  the  United  States  is  in  full 
accord  therewith.  In  Swain  v.  Seamans,  9  Wall.  271,  19  L.  Ed. 
554,  it  is  said:  "Views  of  the  complainants  are  that  an  agreement, 
though  in  writing  and  under  seal,  may  in  all  cases  be  varied  as  to 
time  or  manner  of  its  performance,  or  may  be  waived  altogether,  by 
a  subsequent  oral  agreement;  but  the  court  is  of  a  different  opinion 
if  the  agreement  to  be  modified  is  within  the  statute  of  frauds.  .  .  . 
Reported  cases  may  be  found  where  that  rule  is  promulgated  without 
any  qualification;  but  the  better  opinion  is  that  a  written  contract 
falling  within  the  statute  of  frauds  cannot  be  varied  by  any  subse- 
quent agreement  of  the  parties,  unless  such  new  agreement  is  also 
in  writing.  Express  decision  in  the  case  of  Marshall  v.  Lynn  is  that 
the  terms  of  a  contract  for  the  sale  of  goods  falling  within  the  oper- 
ation of  the  statute  of  frauds  cannot  be  varied  or  altered  by  parol." 
And  to  the  same  effect  are  the  cases  of  Emerson  v.  Slater,  22  How. 
28,  16  L.  Ed.  360;  Railroad  Co.  v.  Trimble,  10  Wall.  367,  19  L.  Ed. 
948 ;  Delaware  v.  Iron  Co.,  14  Wall.  579,  20  L.  Ed.  779 ;  Hawkins  v. 
TL  S.,  96  U.  S.  689,  24  L.  Ed.  607.  .  .  .  Judgment  affirmed. 

9  Cyc.  599  (95-98)  ;  W.  P.  823-824  (55-64)  ;  15  H.  L.  R.  587;  11  C.  L. 
R.  386. 


Provisions  for  discharge. 

MOORE  v.  PHCENIX  INS.  CO. 
62  NEW  HAMPSHIRE,  240.— 1882. 

Assumpsit  on  a  policy  of  insurance.  Defense,  discharge  of  policy 
before  loss  accrued.  Verdict  for  plaintiff.  Defendants  appeal. 

SMITH,  J.  The  defendants  are  liable  only  in  accordance  with  the 
terms  and  stipulations  expressed  in  their  contract  as  the  conditions 
of  their  liability.  The  contract  is  in  writing,  and  is  contained  in 
the  policy  of  insurance.  In  consideration  of  $8.50  paid  by  the  plain- 
tiff, the  defendants  covenanted  to  insure  his  property  against  loss 
or  damage  by  fire  for  the  term  of  three  years,  commencing  August 
15,  1876.  The  policy  contained  this  condition: 

"If  the  above-mentioned  premises  shall  be  occupied  or  used  so  as  to  in- 
crease the  risk,  or  become  vacant  and  unoccupied  for  a  period  of  more  than 
ten  days,  or  the  risk  be  increased  by  any  means  whatever  within  the  con- 
trol of  the  assured,  without  the  assent  of  this  company  indorsed  hereon  .  .  . 
then,  and  in  every  such  case,  this  policy  shall  be  void." 

The  premises  remained  unoccupied  from  August  24th  until  De- 
cember 11,  1876,  and  on  the  18th  or  19th  of  that  month  were  de- 


BY    AGREEMENT.  599 

stroyed  by  fire.  The  contract  was,  not  that  the  policy  should  be  void 
in  case  of  loss  or  damage  by  fire  during  the  period  of  unoccupancy, 
but  that  vacancy  and  unoccupancy  should  terminate  the  policy.  There 
is  no  occasion  to  inquire  what  distinction  there  may  be  between  a 
vacant  and  an  unoccupied  building  (Herrman  v.  Merchants'  Ins. 
Co.,  81  N.  Y.  184;  Herrman  v.  Adriatic  Ins.  Co.,  85  N.  Y.  162; 
N.  A.  Fire  Ins.  Co.  v.  Zaenger,  63  111.  464;  American  Ins.  Co.  v. 
Padfield,  78  111.  167),  for  no  point  was  made  at  the  trial  that  the 
plaintiff's  buildings  were  not  both  vacant  and  unoccupied  from  August 
24  until  December  11.  Nor  is  it  necessary  to  go  into  an  .inquiry  of 
the  reasons  for  exacting  this  condition.  It  is  enough  that  the  parties 
entered  into  the  covenant.  It  was  a  condition  that  would  afford 
protection  of  a  substantial  character  against  fraudulent  incendiarism, 
of  which  insurers  may  well  avail  themselves.  Hill  v.  Ins.  Co.,  58  N. 
H.  82 ;  Sleeper  v.  Ins.  Co.,  56  N.  H.  406.  The  insurers  had  a  right, 
by  the  terms  of  the  policy,  to  the  care  and  supervision  which  are  in- 
volved in  the  occupancy  of  the  buildings.  Ashworth  v.  Ins.  Co., 
112  Mass.  422. 

There  was  no  waiver  by  the  defendants  of  the  condition,  nor  any 
assent  to  the  changed  conditions  of  the  premises  insured,  for  they 
had  no  notice  or  knowledge  that  the  buildings  were  unoccupied  until 
the  plaintiff  furnished  his  proofs  of  loss.  A  waiver,  to  be  effectual, 
must  be  intentional.  The  premises  were  left  unoccupied  more  than 
ten  days;  and  if  the  non-occupation  had  continued  to  the  time  of 
the  fire,  the  plaintiff  could  not  recover.  Fabyan  v.  Ins.  Co.,  33  N".  H. 
206;  Shepherd  v.  Ins.  Co.,  38  N.  H.  240;  Sleeper  v.  Ins.  Co.,  56 
N.  H.  406;  Hill  v.  Ins.  Co.,  58  N.  H.  82;  Baldwin  v.  Ins.  Co.,  60 
N".  H.  164;  Lyman  v.  Ins.  Co.,  14  Allen,  329;  Merriam  v.  Ins.  Co., 
21  Pick.  162 ;  Herrman  v.  Ins.  Co.,  85  N.  Y.  162 ;  Harrison  v.  Ins. 
Co.,  9  Allen,  231;  Wustum  v.  Ins.  Co.,  15  Wis.  138;  Mead  v.  Ins. 
Co.,  7  N.  Y.  530;  May  Ins.  (ed.  1873),  §  248. 

It  is  contended  by  the  plaintiff,  upon  the  authority  of  State  v. 
Richmond  (26  N.  H.  232),  that  the  policy  had  not  become  absolutely 
void  at  the  expiration  of  ten  days  from  the  time  the  house  became 
unoccupied,  but  was  voidable  only  at  the  election  of  the  defendants. 
In  the  construction  of  contracts  words  are  to  be  understood  in  their 
ordinary  and  popular  sense,  except  in  those  cases  in  which  the  words 
used  have  acquired  by  usage  a  peculiar  sense  different  from  the  ordi- 
nary and  popular  one.  In  this  case  the  word  "void"  has  not  acquired 
by  usage  a  different  signification  from  the  ordinary  and  popular  one 
of  a  contract  that  has  come  to  have  no  legal  or  binding  force. 
Whether  the  cessation  of  the  executory  contract  of  insurance  was 
temporary  and  conditional,  or  perpetual  and  absolute,  is  a  question; 
but  "void"  means  that  on  the  eleventh  day  of  continuous  non-occu- 
pation the  plaintiff  was  not  insured.  The  defendants  might  have 


600  DISCHARGE   OF   CONTRACT. 

waived  their  condition  altogether,  or  might  have  waived  its  breach; 
but  having  had  no  opportunity  before  the  loss  to  make  their  election 
to  waive  the  breach,  their  refusal  to  pay,  when  notified  of  the  loss 
and  unoccupancy,  was  an  effectual  election  that  they  insisted  upon 
the  condition  in  the  policy. 

The  duty  of  obtaining  the  consent  of  the  defendants  to  the  changed 
condition  of  the  buildings  rested  with  the  plaintiff.  By  his  neglect 
to  comply  with  this  requirement  of  the  contract,  it  came  to  an  end 
by  force  of  its  own  terms.  Girard  Ins.  Co.  v.  Hebard,  95  Pa.  St. 
45.  If,  when  the  unoccupancy  commenced,  he  had  requested  the 
assent  of  the  defendants,  they  would  have  had  their  option  to  con- 
tinue the  policy  upon  payment  of  such  additional  premium  as  the 
increased  risk  called  for,  or  to  cancel  the  policy,  refunding  the  un- 
earned premium.  Lyman  v.  Ins.  Co.,  14  Allen,  329.  There  is  no 
presumption  that  they  would  have  given  their  assent  to  the  unoccu- 
pancy of  the  buildings  without  the  payment  of  a  premium  commen- 
surate with  the  additional  hazard. 

The  contract  being  once  terminated,  it  could  not  be  revived  without 
the  consent  of  both  of  the  contracting  parties.  It  is  immaterial, 
then,  whether  the  loss  of  the  buildings  is  due  to  unoccupancy  or  to 
some  other  cause.  Mead  v.  N.  W.  Ins.  Co.,  7  N.  Y.  530,  535,  536; 
Lyman  v.  State  M.  F.  Ins.  Co.,  14  Allen,  329,  335 ;  Merriam  v.  Ins. 
Co.,  21  Pick.  162;  Jennings  v.  Ins.  Co.,  2  Denio,  81;  Shepherd  v. 
Ins.  Co.,  38  N.  H.  232,  239,  240;  Poor  v.  Ins.  Co.,  125  Mass.  274; 
Alexander  v.  Ins.  Co.,  66  N.  Y.  464,  468;  Sleeper  v.  Ins.  Co.,  56 
N.  H.  401;  Hill  v.  Ins.  Co.,  58  N.  H.  82. 

[After  discussing  the  cases  cited  above.]  The  strict  and  literal 
meaning  of  the  stipulation  that  the  policy  shall  be  void  if  the  prem- 
ises remain  unoccupied  more  than  ten  days  is  not  that  the  insurance 
will  be  suspended  merely  during  non-occupation  after  the  ten  days, 
and  will  revive  when  occupation  is  resumed.  In  ordinary  speech,  a 
void  policy  is  one  that  does  not  and  will  not  insure  the  holder  if  the 
insurer  seasonably  asserts  its  invalidity.  It  might  be  argued  that 
this  clause  should  be  so  construed  as  to  accomplish  no  more  than  the 
purpose  for  which  it  was  inserted;  that  its  sole  purpose  was  to  pro- 
tect the  insurer  against  the  risk  resulting  from  non-occupation;  and 
that  if  this  risk  was  terminated  by  reoccupation,  the  parties  intended 
the  insurance  should  be  suspended  only  during  the  existence  of  the 
cause  of  a  risk  which  the  company  did  not  assume.  On  the  other 
hand,  it  might  be  argued  that  such  an  intention  would  have  been 
manifested  by  words  specially  and  expressly  providing  for  a  sus- 
pension and  resumption  of  the  insurance,  and  would  not  have  been 
left  to  be  inferred  from  the  general  agreement  that  the  policy  should 
be  void;  that  a  final  termination  of  the  insurance  at  the  end  of  ten 
days  of  non-occupation  is  plainly  expressed  by  the  provision  that  the 


BY    AGREEMENT.  601 

policy  shall  then  be  void;  and  that  the  parties  would  not  think  it 
necessary  to  go  further,  and  provide  that  the  void  policy  should  not 
become  valid  on  reoccupation. 

Without  determining  the  true  construction,  or  what  the  result 
would  be  if  there  were  no  authority  in  this  State,  we  are  inclined  to 
follow  the  decision  in  Fabyan  v.  Insurance  Company  (33  N.  H.  203), 
although  in  that  case  the  question  of  suspension  seems  not  to  have 
been  presented  by  the  plaintiff  or  considered  by  the  court.  It  was 
apparently  assumed  that  "void"  meant  finally  extinguished,  and  not 
temporarily  suspended;  and  in  the  present  state  of  the  authorities 
we  are  not  prepared  to  hold  that  the  assumption  was  erroneous. 

Verdict  set  aside. 

Blodgett  and  Carpenter,  JJ.,  did  not  sit;  Stanley,  J.,  dissented; 
and  the  others  concurred. 

19  Cyc.  726    (48-49);   728    (60). 


GEAY  v.  GARDNER  AND  OTHERS 

17   MASSACHUSETTS,    188.— 1821. 

Assumpsit  on  a  written  promise  to  pay  the  plaintiff  $5198.87,  with 
the  following  condition  annexed — viz.,  "On  the  condition  that  if  a 
greater  quantity  of  sperm  oil  should  arrive  in  whaling  vessels  at  Nan- 
tucket  and  New  Bedford,  on  or  between  the  first  day  of  April  and  the 
first  day  of  October  of  the  present  year,  both  inclusive,  than  arrived 
at  said  places,  in  whaling  vessels,  on  or  within  the  same  term  of  time, 
the  last  year,  then  this  obligation  to  be  void."  Dated  April  14th, 
1819. 

The  consideration  of  the  promise  was  a  quantity  of  oil  sold  by  the 
plaintiff  to  the  defendants.  On  the  same  day  another  note  uncondi- 
tional had  been  given  by  the  defendants,  for  the  value  of  the  oil  esti- 
mated at  60  cents  per  gallon ;  and  the  note  in  suit  was  given  to  secure 
the  residue  of  the  price  estimated  at  85  cents,  to  depend  on  the 
contingency  mentioned  in  the  said  condition. 

At  the  trial  before  the  Chief  Justice  the  case  depended  upon  the 
question  whether  a  certain  vessel,  called  the  Lady  Adams,  with  a  cargo 
of  oil,  arrived  at  Nantucket  on  October  1st,  1819,  about  which  fact 
the  evidence  was  contradictory.  The  judge  ruled  that  the  burden 
of  proving  the  arrival  within  the  time  was  on  the  defendants,  and 
further  that,  although  the  vessel  might  have,  within  the  time,  gotten 
within  the  space  which  might  be  called  Nantucket  Roads,  yet  it  was 
necessary  that  she  should  have  come  to  anchor,  or  have  been  moored, 
somewhere  within  that  space  before  the  hour  of  twelve  following  the 
first  day  of  October  in  order  to  have  arrived  within  the  meaning  of 
the  contract. 


602  DISCHARGE   OF   CONTRACT. 

The  opinion  of  the  Chief  Justice  on  both  these  points  was  objected 
to  by  the  defendants,  and  the  questions  were  saved.  If  it  was  wrong 
on  either  point,  a  new  trial  was  to  be  had,  otherwise  judgment  was 
to  be  rendered  on  the  verdict,  which  was  found  for  the  plaintiff. 

PARKER,  C.  J.  The  very  words  of  the  contract  show  that  there  was 
a  promise  to  pay,  which  was  to  be  defeated  by  the  happening  of  an 
event — viz.,  the  arrival  of  a  certain  quantity  of  oil  at  the  specified 
places  in  a  given  time.  It  is  like  a  bond  with  a  condition;  if  the 
obligor  would  avoid  the  bond,  he  must  show  performance  of  the  con- 
dition. The  defendants  in  this  case  promise  to  pay  a  certain  sum 
of  money  on  condition  that  the  promise  shall  be  void  on  the  happen- 
ing of  an  event.  It  is  plain  that  the  burden  of  proof  is  upon  them, 
and  if  they  fail  to  show  that  the  event  has  happened,  the  promise  re- 
mains good. 

The  other  point  is  equally  clear  for  the  plaintiff.  Oil  is  to  arrive 
at  a  given  place  before  12  o'clock  at  night.  A  vessel  with  oil  heaves 
in  sight,  but  she  does  not  come  to  anchor  before  the  hour  is  gone. 
In  no  sense  can  the  oil  be  said  to  have  arrived.  The  vessel  is  coming 
until  she  drops  anchor  or  is  moored.  She  may  sink  or  take  fire,  and 
never  arrive,  however  near  she  may  be  to  her  port.  It  is  so  in  con- 
tracts of  insurance,  and  the  same  reason  applies  to  a  case  of  this  sort. 
Both  parties  put  themselves  upon  a  nice  point  in  this  contract;  it 
was  a  kind  of  wager  as  to  the  quantity  of  oil  which  should  arrive  at 
the  ports  mentioned  before  a  certain  period.  They  must  be  held 
strictly  to  their  contract,  there  being  no  equity  to  interfere  with  the 
terms  of  it. 

Judgment  on  the  verdict. 

9  Cyc.  600   (3-4). 


RAY  v.  THOMPSON. 
12  GUSHING   (MASS.),  281.— 1853. 

Assumpsit  for  the  price  of  a  horse  sold  to  defendant.  Defense, 
sale  on  condition  that  defendant  might  return  the  horse,  and  that  he 
had  returned  it.  Verdict  for  defendant. 

Plaintiff  offered  to  prove  that  defendant  has  so  abused  the  horse 
that  it  was  materially  injured  and  lessened  in  value  and  the  plaintiff 
had  refused  in  consequence  to  receive  it  back.  This  evidence  was 
excluded  and  plaintiff  excepted  to  the  ruling. 

BY  THE  COURT.  The  evidence  offered  by  the  plaintiff  ought  to  have 
been  admitted,  to  prove,  if  he  could,  that  the  horse  had  been  abused 
and  injured  by  the  defendant,  and  so  to  show  that  the  defendant  had 
put  it  out  of  his  power  to  comply  with  the  condition,  by  returning  the 
horse.  The  sale  was  on  a  condition  subsequent ;  that  is,  on  condition 


BY   AGREEMENT.  603 

he  did  not  elect  to  keep  the  horse,  to  return  him  within  the  time 
limited.  Being  on  a  condition  subsequent,  the  property  vested  pres- 
ently in  the  vendee,  defeasible  only  on  the  performance  of  the  condi- 
tion. If  the  defendant,  in  the  meantime,  disabled  himself  from  per- 
forming the  condition, — and  if  the  horse  was  substantially  injured 
by  the  defendant  by  such  abuse,  he  would  be  so  disabled, — then  the 
sale  became  absolute,  the  obligation  to  pay  the  price  became  uncon- 
ditional, and  the  plaintiff  might  declare  as  upon  an  indebitatus  as- 
sumpsit,  without  setting  out  the  conditional  contract.  Moss  v.  Sweet, 
3  Eng.  Law  &  Eq.  311 ;  16  Ad.  &  EL  N.  S.  493. 

New  trial  ordered. 

35  Cyc.  290  (19). 


CHAPTER  II. 

DISCHARGE  OF  CONTRACT  BY  PERFORMANCE. 

Payment. 

DILLE  v.  WHITE. 

132  IOWA,  327.— 1906. 

The  petition  alleges  that  the  defendant  undertook  to  make  a  loan 
to  plaintiff  of  $4,400,  the  repayment  of  which  was  to  be  secured  by 
mortgage  upon  certain  real  estate  in  Einggold  county;  that,  in  pur- 
suance of  such  agreement,  plaintiff  did  make  and  deliver  to  defendant 
his  promissory  note  and  mortgage  for  said  amount,  but  that  no  part 
of  said  loan  has  ever  in  fact  been  received  by  the  plaintiff,  and  the 
defendant  refuses  to  pay  or  furnish  the  same  to  the  plaintiff,  and  re- 
fuses to  return  the  said  note  or  to  cancel  and  discharge  the  mortgage. 
Upon  these  allegations,  plaintiff  demands  judgment  against  the  de- 
fendant in  the  sum  of  $4,400,  and  interest  from  the  date  of  the  de- 
livery of  the  note  and  mortgage,  or  that  said  securities  be  canceled 
and  discharged.  The  defendant,  in  pursuance  of  such  agreement, 
delivered  to  plaintiff  "cashier's  checks"  upon  the  Citizens'  Bank  of 
Mt.  Ayr,  Iowa,  to  the  amount  of  $4,400.  The  checks  so  delivered 
were,  by  the  said  bank,  paid  to  plaintiff  by  the  issuance  to  him,  at 
his  request,  of  a  draft  on  the  Stockyards  Bank  of  St.  Joseph,  Mo., 
for  an  equal  amount,  and  the  checks  were  thereupon  marked  "paid 
and  canceled."  At  the  time  of  the  transaction  with  the  defendant, 
and  at  all  times  thereafter,  the  said  Citizens'  Bank  was  insolvent  and 
had  no  money  with  which  to  pay  said  checks,  nor  any  in  the  Stock- 
yards Bank  with  which  to  meet  said  draft.  No  part  of  the  checks  or 
draft  has  been  paid. 

WEAVER,  J.  .  .  .  From  the  foregoing  statement  it  is  readily  appar- 
ent that  the  one  question  to  be  determined  in  this  controversy  is 
whether  the  delivery  of  the  so-called  "cashier's  checks"  by  the  ap- 
pellant, and  their  receipt  by  the  appellee,  are  to  be  treated  as  consti- 
tuting a  payment  to  the  latter  of  the  money  which  the  former  under- 
took to  loan  him ;  and  hence  upon  which  party  the  loss  occasioned  by 
the  insolvency  of  the  bank  must  fall.  .  .  . 

If  this  were  a  case  in  which,  as  urged  by  appellant's  counsel,  the 
appellee  could  fairly  be  said  to  have  negotiated  for  the  purchase  from 
appellant  of  checks  or  drafts  which  had  been  drawn  by  the  Citizens' 

604 


BY   PERFORMANCE.  605 

Bank,  it  could  then  be  conceded  that,  under  the  ordinary  rule,  the 
delivery  of  the  instruments  which  were  the  subject  of  the  negotiation 
would  liav«  served  to  pass  the  title,  and,  in  the  absence  of  fraud  or 
misrepresentation  by  the  appellant,  the  risk  of  the  bank's  failure  be- 
fore payment  would  have  been  borne  by  the  former.  But  such  is  not 
the  case  here  presented.  Appellee  was  not  purchasing  or  desiring  to 
purchase  commercial  paper  of  any  kind  from  the  appellant.  He  was 
a  borrower,  seeking  a  loan  of  money  with  which  to  complete  a  land 
purchase.  The  appellant  undertook  to  lend  him  the  desired  sum  of 
money,  not  to  sell  him  commercial  paper  or  securities.  The  terms  of 
the  loan  had  been  fully  agreed  upon  before  anything  was  said  as  to 
the  manner  or  form  in  which  the  specified  sum  should  be  paid  over 
and  the  checks  or  drafts  were  given  and  accepted  not  as  the  money 
itself,  but  as  a  convenient  mode  of  obtaining  the  money.  That  such 
is  the  effect  of  payment  by  check  or  draft  in  the  absence  of  an  agree- 
ment to  receive  the  paper  in  satisfaction  or  extinguishment  of  the 
original  obligation  is.  well  settled.  3  Randolph,  Com.  Paper,  §  15 ; 
Finney  v.  Edwards,  75  Va.  44;  Brown  v.  Kewley,  2  Bos.  PI.  518; 
Weddigen  v.  Fabric  Co.,  100  Mass.  422 ;  Bank  v.  R.  R.  Co.,  44  Minn. 
224,  46  N.  W.  342,  560,  9  L.  R.  A.  263,  20  Am.  St.  Rep.  566 ;  Born 
v.  Bank,  123  Ind.  78,  24  N.  E.  173,  7  L.  R.  A.  442,  18  Am.  St.  Rep. 
312 ;  Bickford  v.  Bank,  42  111.  238,  89  Am,  Dec.  436 ;  Good  v.  Single- 
.ton,  39  Minn.  340  N.  W.  359.  Payment  by  check  is  said  in  these 
and  numerous  other  authorities  to  be  conditional  only,  and  becomes 
effective  to  discharge  the  obligations  upon  which  they  are  delivered 
only  when  duly  honored.  This  is  also  true  under  ordinary  condi- 
tions where  the  party  under  obligation  attempts  to  pay  money  by 
means  of  bills  of  exchange  drawn  by  and  upon  third  parties.  See 
Weddigen  v.  Fabric  Co.,  100  Mass.  422;  Clark  v.  Young,  1  Cranch 
(U.  S.)  181,  2  L.  Ed.  74;  Insurance  Co.  v.  Goble  51  Neb.  5,  70  N.  W. 
503. 

A  contrary  rule  has  been  announced  in  Massachusetts,  Maine,  and 
Indiana,  where  the  giving  of  a  check,  note,  or  draft  for  a  debt  or 
obligation  to  pay  money  is  held  to  operate  as  a  payment  or  extinguish- 
ment of  the  obligation,  but  elsewhere  the  authorities  are  quite  unani- 
mous in  support  of  the  rule  as  we  have  stated  it.  But  even  in  the 
States  named  it  is  held  to  be  a  rule  of  presumption  only,  and  that 
the  intention  of  the  parties  when  expressly  declared  or  when  shown 
by  collateral  facts  and  circumstances  will  be  allowed  to  prevail.  Dun- 
can v.  Kimball,  3  Wall.  (U.  S.)  37,  18  L.  Ed.  50.  In  the  applica- 
tion of  this  doctrine  a  distinction  has  frequently  been  drawn  between 
checks,  drafts,  and  notes  received  upon  a  precedent  indebtedness,  and 
those  received  in  the  transaction  out  of  which  the  indebtedness  arises, 
and  it  is  sometimes  said  that  the  delivery  and  acceptance  of  the  unin- 
dorsed  check,  draft,  or  note  of  a  third  party  for  a  debt  of  contempo- 


606  DISCHARGE   OF    CONTRACT. 

raneous  origin  will  operate  as  payment.  In  support  of  this  proposi- 
tion, no  case  has  been  more  frequently  cited  than  Whitbeck  v.  Van 
Ness,  11  Johns.  (N.  Y.)  409,  6  Am.  Dec.  383,  a  decision  which  was 
clearly  right  upon  the  facts  involved.  In  that  case  one  Deane  was 
indebted  to  Van  Ness  in  the  sum  of  $90,  and  Van  Ness,  desiring  to 
purchase  a  horse  owned  by  Whitbeck,  offered  to  give  him  $90  for  it, 
if  the  latter  would  accept  in  payment  the  note  of  Deane  for  that 
amount.  This  offer  was  accepted,  and  Deane,  at  the  request  of  Van 
Ness,  made  his  note  direct  to  Whitbeck.  The  note  not  being  paid, 
and  the  maker  proving  insolvent,  Whitbeck  sued  Van  Ness  for  the 
purchase  price  of  the  horse.  As  to  the  record  presented,  the  court 
says:  "Nothing  can  be  more  manifest  than  that  both  parties  per- 
fectly understood  that  the  plaintiff  should  take  Deane's  note  at  his 
own  hazard."  With  that  fact  established,  no  room  was  left  for  argu- 
ment. The  agreement  to  take  the  note  at  his  own  risk  being  made 
manifest,  the  transaction  was  one  of  exchange  of  one  commodity  for 
another  instead  of  a  sale  in  the  ordinary  sense  of  the  word,  and  plain- 
tiff had  no  more  claim  for  recovery  against  Van  Ness  than  he  would 
have  had  if,  instead  of  the  note,  he  had  accepted  shares  of  corporation 
stocks  in  exchange  for  his  horse,  and  later  ascertained  that  the  shares 
were  less  valuable  than  he  supposed.  And  it  may  be  fully  conceded 
that  in  all  cases  where  a  party  holding  the  note  or  other  written  obli- 
gation of  another  sells  it  or  exchanges  it  for  other  property  without 
indorsement,  and  without  fraud,  no  presumption  of  liability  arises 
against  him  in  the  event  the  paper  proves  to  be  worthless.  But, 
where  the  note,  check,  or  draft  is  not  given  and  accepted  as  the  thing 
for  which  the  receiver  has  bargained,  but  as  a  convenient  method  by 
which  the  money  it  represents  may  be  transferred  from  one  party  to  the 
other,  there  is  a  presumption  that  the  payment  is  conditional  upon 
the  paper  being  honored  on  due  presentation.  It  is  undoubtedly  true 
that  as  to  the  presumption  attending  transactions  of  this  kind  and  the 
burden  of  proof  concerning  the  intention  of  the  parties,  the  cases  are 
in  considerable  confusion,  but  the  exigencies  of  the  present  appeal  do 
not  require  any  attempt  on  our  part  to  elucidate  the  true  rule  in  these 
respects;  for,  wherever  the  burden  be  placed,  we  believe  the  record 
sufficient  to  support  the  finding  of  the  trial  court.  That  the  intention 
of  the  parties  shall  prevail  in  determining  whether  the  delivery  and 
acceptance  of  a  note,  check,  or  draft,  drawn  by  the  debtor  or  by  a 
third  person  are  to  be  treated  as  payment  in  themselves,  or  as  pay- 
ment conditional  upon  the  honoring  of  the  paper  by  the  drawee,  is 
held  with  substantial  unanimity  by  all  the  courts. 

There  are  a  few  exceptional  cases,  principally  in  the  State  of  New 
York,  where  the  court  has  seemed  to  trench  upon  the  province  of  the 
jury  respecting  this  matter  of  fact  (see  Whitbeck  v.  Van  Ness,  supra; 
Gibson  v.  Tobey,  46  N.  Y.  637,  7  Am.  Rep.  397;  Hall  v.  Stevens,  116 


BY   PERFORMANCE.  607 

N.  Y.  201,  22  N.  E.  374,  5  L.  E.  A.  802),  and  dispose  of  the  question 
as  one  of  law,  but  the  courts  of  that  State  appear,  nevertheless,  to  be 
committed  to  the  rule  as  above  stated  that  the  intention  of  the  parties 
will  control  the  question  of  payment,  and  that  such  intention  may  be 
established  by  proof  of  an  express  agreement  or  of  circumstances  from 
which  an  agreement  or  understanding  may  be  implied.  Eoberts  v. 
Fi'sher,  43  N.  Y.  159,  3  Am.  Eep.  680;  Noel  v.  Murray,  13  N.  Y.  167; 
Monroe  v.  Hoff,  5  Demo  (N.  Y.),  360;  Porter  v.  Talcott,  1  Cow.  (N. 
Y.)  383;  Ontario  Bank  v.  Lightbody,  13  Wend.  (N.  Y.)  101,  27  Am. 
Dec.  179;  Johnson  v.  Weed,  9  Johns.  (N.  Y.)  310,  6  Am.  Dec.  279; 
Vail  v.  Foster,  4  N.  Y.  312;  Eoget  v.  Merritt,  2  Caines  (N.  Y.),  116. 
Such,  also,  as  we  have  said,  is  the  current  of  authority  in  other  juris- 
dictions. [Citing  cases  from  Wash.,  Pa.,  Md.,  Vt.,  Ohio,  Wis.,  Neb., 
Mich.,  Mass.,  Ga.,  England,  and  U.  S.  Supreme  Ct]  In  considering 
the  question  of  the  intent  of  the  parties  in  the  instant  case,  we  must 
not  close  our  eyes  to  the  facts  attending  and  characterizing  the  trans- 
action between  the  parties,  or  to  the  manner  in  which  such  transactions 
are  usually  negotiated  and  consummated  in  the  business  world.  The 
vast  majority  of  men  having  money  to  invest  in  any  considerable  sum 
do  not  carry  their  funds  upon  their  person  or  in  their  desks,  but  keep 
them  on  deposit  in  some  bank,  and,  save  in  exceptional  cases,  the  de- 
livery of  money  upon  a  loan  or  other  investment  is  accomplished 
through  the  medium  of  checks,  orders,  or  drafts,  and  not  by  immediate 
and  direct  transfer  of  the  money.  Of  such  transactions,  a  leading 
writer  says  that,  in  the  absence  of  any  agreement  to  the  contrary,  a 
payment  by  note  or  bill  of  exchange  "is  always  presumed  to  be  condi- 
tional." Benjamin  on  Sales  (2d  ed.),  §  729.  The  paper  is  given  and 
received  upon  the  mutual  faith  and  understanding  of  the  parties  that 
it  represents  actual  value  to  its  full  nominal  amount,  and  that  on  du« 
presentation  to  the  drawee  it  will  be  honored,  and  only  upon  its  being 
thus  honored  does  the  payment  become  effective  and  absolute.  This 
has  often  been  held  true  even  where  the  person  entitled  to  receive  the 
money  expresses  a  preference  for  its  payment  by  check,  but  does  not 
agree  to  assume  the  risk  of  its  being  honored.  Everett  v.  Collins,  2 
Campbell,  515 ;  Hughes  v.  May,  4  A.  &  E.  954 ;  Cohen  v.  Hale,  3  Q. 
B.  D.  371. 

In  Millard  v.  Argyle,  [6  M.  &  G.  40],  Maule,  J.,  says:  Payment  is 
not  a  technical  term.  It  has  been  imported  into  law  proceedings  from 
the  exchange  and  not  from  law  treatises.  When  you  speak  of  paying 
cash,  that  means  satisfaction;  but  when  by  bill,  that  does  not  import 
satisfaction  unless  the  bill  is  ultimately  taken  up/'  So,  also,  in  Sted- 
man  v.  Gooch,  [1  Esp.  3],  it  is  said  by  Lord  Kenyon  that  "the  law  is 
clear  that  if  in  payment  of  a  debt  the  creditor  is  content  to  take  a  bill 
or  note  payable  at  a  future  day,  he  cannot  legally  commence  action  on 
his  original  claim  until  such  bill  or  note  becomes  payable,  but  if  such 


608  DISCHARGE   OF    CONTRACT. 

bill  or  note  is  of  no  value,  he  may  consider  it  as  waste  paper,  and 
resort  to  his  original  demand."  When  a  shipper  was  about  to  pay  the 
freight  upon  goods  being  shipped  by  him,  the  agent  of  the  carrier 
expressed  his  preference  to  receive  it  in  a  check,  which  was  given  him 
accordingly.  The  drawer  of  the  check  had  the  money  in  the  bank 
to  which  the  check  was  directed,  but,  on  the  following  day,  and  before 
the  check  was  presented  for  payment,  the  bank  failed.  No  agree- 
ment being  shown  that  the  check  was  intended  to  be  received  as 
absolute  payment,  the  carrier  was  held  entitled  to  recover  on  the 
original  consideration.  Eailroad  Co.  v.  Collins,  1  Abb.  N.  C.  47, 
affirmed  in  57  N.  Y.  641.  Judge  Story,  in  his  well-known  treatise 
on  Promissory  Notes  (section  104),  says:  "In  general  by  our  law,  un- 
less otherwise  especially  agreed,  the  taking  of  a  promissory  note  for  a 
pre-existing  debt  or  a  contemporaneous  consideration  is  treated  as  a 
conditional  payment  only;  that  is,  as  payment  only  in  case  it  is  duly 
paid  at  maturity."  Where  A.  sold  goods  to  B.  at  an  agreed  price,  and 
received  in  payment  the  note  of  C.  without  B.'s  indorsement,  a  re- 
covery by  A.  upon  the  original  consideration  (C.  becoming  insolvent 
before  the  note  fell  due)  was  upheld  on  appeal,  the  court  there  saying: 
"If  it  was  a  part  of  the  original  agreement  between  the  parties  that 
plaintiff  should  take  the  note  in  full  satisfaction  of  the  goods  sold, 
so  that  he,  and  not  the  defendants,  should  run  the  risk  of  the  note, 
then  undoubtedly  the  plaintiff  has  no  right  of  action.  But  the  fact 
whether  such  was  or  was  not  the  agreement  was  submitted  to  the  jury, 
and  they  have  decided  in  favor  of  the  plaintiff.  The  books  all  agree 
that  there  must  be  a  clear  and  special  agreement  that  the  vendor  shall 
take  paper  absolutely  as  payment,  or  it  will  be  no  payment  if  it  after- 
wards turns  out  to  be  of  no  value.  And  this  rule  requiring  such  a 
special  agreement  ought  to  be  adhered  to,  for  it  is  well  calculated  to 
prevent  fraud  and  support  justice."  Johnson  v.  Weed,  9  Johns.  (N. 
Y.)  310,  6  Am.  Dec.  279.  If  this  language  were  to  be  construed 
as  requiring  in  all  cases  proof  of  an  express  agreement  by  the  recip- 
ient of  the  bill  or  note  to  receive  it  as  absolute  payment,  it  is  prob- 
able that  it  states  the  rule  too  rigidly,  for,  as  we  have  already  shown, 
the  generally  accepted  doctrine  gives  effect  to  the  implied,  as  well  as 
the  express,  agreement  or  understanding  of  the  parties.  We  think, 
however,  that  the  passage  we  have  quoted  was  not  intended  as  requir- 
ing the  establishment  of  an  express  agreement  in  all  cases  to  sustain 
a  claim  of  payment  by  the  acceptance  of  commercial  paper,  but  rather 
as  emphasizing  the  proposition  that  the  mere  fact  of  such  delivery  and 
acceptance  upon  a  money  demand  in  the  ordinary  course  of  business 
gives  rise  to  no  presumption  of  absolute  payment.  It  is  true  that,  in 
Whitbeck  v.  Van  Ness,  supra,  the  court  indulges  in  some  criticism  of 
the  language  used  in  Johnson  v.  Weed,  but  concedes  that  it  was  cor- 
rectly decided.  The  same  language  was  thereafter  quoted  approvingly 


BY    PERFORMANCE.  609 

in  Bank  v.  Lightbody,  13  Wend.  (N.  Y.)  112,  27  Am.  Dec.  179,  and 
by  Sutherland,  J.,  in  Porter  v.  Talcott,  1  Cow.  (N.  Y.)  384.  It  may 
also  be  said  of  the  opinion  in  the  Whitbeck  case  that,  under  the  con- 
ceded or  assumed  state  of  facts  then  before  the  court,  the  criticism  of 
Johnson  v.  Weed  is  clearly  obiter. 

In  Hoeflinger  v.  Wells,  47  Wis.  631,  3  N.  W.  589,  the  distinction 
sought  to  be  made  concerning  the  burden  of  proof  between  cases 
where  the  bill  or  note  is  transferred  upon  an  existing  indebtedness  and 
cases  where  the  indebtedness  is  contracted  at  the  time,  is  said  to  be 
"Not  supported  by  the  weight  of  authority." 

In  Gardner  v.  Gorham,  1  Doug.  (Mich.)  507,  the  plaintiff  sold  to 
the  defendants  a  quantity  of  goods,  and,  as  part  of  the  same  transac- 
tion, defendants  transferred  to  plaintiffs  certain  notes  executed  by 
third  parties.  Defendants  made  some  representations  as  to  the  value 
of  these  securities,  but  expressly  refused  to  indorse  or  guaranty  their 
payment.  The  notes  proving  worthless,  plaintiffs  brought  action  to 
recover  the  price  of  the  goods  sold.  Keversing  a  judgment  for  the 
defendants  the  court  expressly  waives  any  consideration  of  the  ques- 
tion of  fraud  or  false  representation,  and  says  that  the  question 
whether  the  notes  were  received  as  payment  was  one  of  fact  on  which 
the  plaintiff  was  entitled  to  go  to  the  jury.  It  is  there  said: 
"It  is  believed  that  no  principle  of  law  is  better  established  at  the 
present  day  than  that  the  giving  of  a  promissory  note  for  goods  sold, 
or  for  any  other  valuable  consideration,  is  not  payment  unless  it  is 
agreed  to  be  so  taken,  and,  in  this  respect,  it  makes  no  difference 
whether  the  note  be  given  for  a  precedent  debt  or  for  a  debt  con- 
temporaneously with  the  agreement."  To  same  effect,  see  Crawford 
v.  Berry,  6  Gill  &  J.  72.  In  this  case,  the  Maryland  court  says :  "If 
the  appellee  sold  the  oxen  to  the  appellant,  and  received  the  single  bill 
of  Magruder  on  that  account  without  an  agreement  to  receive  it  as  pay- 
ment for  the  oxen,  and  to  run  the  risk  of  its  being  paid  or  not,  it  was 
not  an  extinguishment  of  the  debt  due  for  the  oxen  which  continued 
liable  to  be  enforced  if  the  assigned  bill,  without  laches  on  part  of  the 
appellee,  should  not  be  paid."  The  same  court,  in  Insurance  Co.  v. 
Smith,  6  Har.  &  J.  166,  14  Am.  Dec.  268,  says:  "Where  a  party, 
at  the  time  of  contracting  a  debt,  assigns  the  note  of  a  third  person 
to  the  vendor,  such  note  does  not  extinguish  the  original  cause  of  action 
unless  it  was  received  as  payment  or  satisfaction  of  the  original  con- 
tract." Responding  to  a  call  of  his  creditor,  requesting  remittance 
of  amount  due  by  draft,  a  debtor  purchased  and  forwarded  a  draft 
for  the  proper  amount,  but  the  bank  issuing  the  paper  failed  before 
it  was  presented  for  payment,  and  the  loss  was  held  to  fall  upon  the 
debtor  who  purchased  it.  Insurance  Co.  v.  Goble  51  Neb.  5,  70  N.  W. 
503.  This  decision  goes  farther  perhaps  than  we  might  be  disposed 
to  follow  under  similar  circumstances.  "Nothing  is  better  settled 


610  DISCHARGE   OF    CONTRACT. 

than  that  a  check  is  not  payment  but  is  only  so  when  the  cash  is  re- 
ceived on  it.  There  is  no  presumption  that  a  creditor  takes  a  check 
in  payment  arising  from  the  mere  fact  that  he  accepts  it  from  his 
debtor/'  Bank  v.  Railroad  Co.,  44  Minn.  224,  46  N.  W.  342,  560,  9 
L.  E.  A.  263,  20  Am.  St.  Rep.  566.  Whether  the  delivery  of  cashier's 
checks  like  those  involved  in  this  suit  was  intended  and  accepted  as 
absolute  payment  has  been  held  to  be  a  question  of  fact  for  the  jury. 
Briggs  v.  Holmes,  118  Pa.  283,  12  Atl.  355,  4  Am.  St.  Rep.  597. 
Even  in  Massachusetts,  where  the  giving  of  a  bill  or  note  is  prima 
facie  payment  of  the  original  obligation,  it  has  been  held  that,  where 
goods  were  sold  under  an  agreement,  the  seller  would  receive  his  pay- 
ment by  drafts  drawn  by  him  on  a  third  person,  and  the  drafts 
were  in  fact  so  drawn  and  accepted  by  the  drawee,  but  the  latter  be- 
came insolvent  before  these  obligations  were  taken  up,  the  seller  could 
abandon  the  drafts,  and  recover  of  the  purchaser  as  for  goods  sold  and 
delivered.  It  was  further  held  that  a  surrender  of  the  drafts  to  the 
drawer  was  not  essential  to  a  maintenance  of  the  action  if  tender  be 
made  on  the  trial.  Alcock  v.  Hopkins,  60  Mass.  484.  See,  also, 
Zerrano  v.  Wilson,  62  Mass.  424.  The  same  rule  has  been  applied 
in  Georgia,  in  Johnson  v.  Bank,  25  Ga.  643,  and  Weaver  v.  Nixon, 
69  Ga.  699. 

In  Weddigen  v.  Fabric  Co.,  100  Mass.  422,  we  have  another  case 
where,  as  part  of  the  original  contract  of  sale,  the  seller  was  to  receive 
bills  of  exchange  drawn  by  one  third  party  upon  another.  Goods  were 
sold,  drafts  drawn  and  accepted,  as  agreed,  and  receipt  in  full  issued, 
but,  upon  failure  of  the  drawee,  the  seller  was  permitted  to  recover  the 
price  of  the  goods  from  the  purchaser.  To  same  effect  is  Sebastian 
v.  Codd,  77  Md.  293,  26  Atl.  316.  And  see  Vail  v.  Foster,  4  1ST.  Y. 
312;  Times  Co.  v.  Benedict,  37  111.  App.  250;  Bradway  v.  Groenen- 
dyke,  153  Ind.  508,  55  N.  E.  434;  Benj.  on  Sales  (2d  ed.),  §  729; 
Loeschigh  v.  Blum,  1  Daly  (N.  Y.),  49;  Bill  v.  Porter,  9  Conn. 
23 ;  Davidson  v.  Bridgeport,  8  Conn.  473 ;  Heartt  v.  Rhodes,  66  111. 
351. 

In  Huse  v.  McDaniel,  33  Iowa,  406,  the  plaintiff  sold  land  and  took 
in  part  payment  therefor  certificates  of  deposit.  These  certificates  of 
deposit  were  not  negotiable,  and  were  not  indorsed  or  guaranteed  by  the 
defendant,  and  in  that  respect  were  not  unlike  the  instruments  now 
under  consideration.  The  certificates  not  being  paid  on  presentment 
plaintiff  brought  suit  and  obtained  judgment  thereon  against  prior 
indorsers  (Huse  v.  Hamblin,  29  Iowa,  501,  4  Am.  Rep.  244),  and  the 
judgment  proving  uncollectible,  he  brought  action  against  the  pur- 
chaser upon  the  original  contract  of  sale,  and  this  court  held  him 
entitled  to  recover.  In  an  earlier  case  (Gower  v.  Halloway,  13  Iowa, 
154)  we  stated  our  view  as  follows:  "The  general  rule  is  that  the 
giving  of  a  bill  of  exchange  or  a  promissory  note  for  goods  sold,  or 


BY   PERFORMANCE.  611 

for  an  existing  contract,  is  not  to  be  regarded  as  payment  of  the  in- 
debtedness unless  there  is  an  express  agreement  to  that  effect." 

But  even  if  we  should  go  to  the  extreme  of  some  of  the  precedents 
relied  upon  by  the  appellant,  and  hold  that  the  appellee  in  the 
instant  case  is  required  to  assume  the  burden  of  showing  the  pay- 
ment by  cashier's  checks  was  conditional  rather  than  absolute  (a  prop- 
osition which  we  do  not  decide),  we  must  still  hold  that  the  require- 
ment has  been  met.  In  addition  to  the  circumstances  already  alluded 
to,  which  in  themselves  tend  to  show  that  the  parties  did  not  con- 
template a  mere  sale  and  delivery  of  cashier's  checks  or  drafts,  the  ap- 
pellee, as  a  witness,  expressly  negatives  such  intent,  and  the  appellant, 
though  a  witness  in  his  own  behalf,  does  not  testify  otherwise.  It  is 
the  settled  rule  of  this  court  that  the  intent  with  which  the  note  or 
check  is  received  is  a  fact  to  which  the  parties  may  testify.  Kruse 
v.  Lumber  Co.,  108  Iowa,  355,  79  N.  W.  118;  Browne  v.  Hicker,  68 
Iowa,  330,  27  N.  W.  276;  Frost  v.  Rosecrans,  66  Iowa,  405,  23  N. 
W.  895.  Taking  the  facts  as  admitted,  or  as  they  have  been  dis- 
closed without  dispute  in  the  testimony,  it  is  inconceivable  that  when 
the  papers  had  been  exchanged  appellant  supposed  he  had  simply  sold 
two  cashier's  checks,  representing  the  nominal  amount  of  $4,400,  the 
payment  of  which  was  at  the  appellee's  risk.  Assuming  as  we  do  that 
appellant  was  acting  in  entire  good  faith,  he  believed  that  he  had  the 
money  in  the  bank,  and  that  the  paper  would  be  promptly  honored 
on  presentation.  He  made  a  loan  of  that  money,  and  not  simply  an 
assignment  of  his  claim  against  the  bank.  Had  he  said  to  the  appellee : 
"Here  are  two  cashier's  checks,  which  I  expect  you  to  take  as  money, 
and  if  dishonored  on  presentation  you  must  bear  the  loss,"  it  is  not 
in  the  least  probable  that  they  would  have  been  accepted.  Appellee 
was  in  the  need  of  money,  and  was  borrowing  it  for  immediate  use. 
He  was  not  in  a  situation  to  deal  with  uncertainties  or  to  engage  in 
any  speculation  upon  the  possible  insolvency  of  the  bank,  and  he 
took  the  checks  as  countless  thousands  of  people  in  the  world  of  busi- 
ness are  taking  them  every  day,  not  as  money,  and  not  as  absolute  pay- 
ment, but  as  an  assurance  that,  upon  making  due  demand  at  the  place 
of  deposit,  payment  would  then  and  there  be  consummated.  .  .  . 

[Deemer,  J.,  and  McClain,  C.  J.,  dissented,  the  latter  saying  in  the 
course  of  his  opinion :  "I  desire  to  draw  attention  more  specifically 
to  one  question  which  seems  to  me  to  be  controlling  in  the  disposition 
of  this  case.  The  vital  question  is  whether  plaintiff  accepted  the 
cashier's  checks,  and  voluntarily  converted  them  for  his  own  purposes, 
and  not  in  pursuance  of  any  agreement  or  arrangement  with  defendant, 
express  or  implied,  into  a  different  form  of  obligation  on  the  part  of 
the  bank.  If  he  did  this,  he  plainly  cannot  recover/']1 

30  Cyc.   1199    (38-42);   35  L.  R.  A.    (N.  8.)    1. 

i  In  Hall  v.  Stevens,  ct  al.,  116  N.  Y.  201,  cattle  were  sold  by  plaintiff  to 


612  DISCHARGE   OF   CONTRACT. 

Tender. 

KNIGHT  v.  ABBOTT. 
30  VERMONT,   577.— 1858. 

Book  account.  Defense,  tender.  Judgment  for  defendant.  Plain- 
tiff appeals. 

BENNETT,  J.  We  think  no  valid  tender  was  made.  It  seems  all 
that  was  done  was  that  the  defendant  remarked  to  the  plaintiff,  as 
the  latter  was  passing  by  him,  "I  want  to  tender  you  this  money  be- 
fore Mr.  Dodge  (at  the  same  time  holding  in  his  hands  thirty-five 
dollars  and  fifty  cents),  for  labor  you  have  done  for  me/'  but  the 
plaintiff  kept  along  with  his  team,  making  no  reply.  The  defendant 

defendants  and  plaintiff  accepted  from  defendants  a  draft  for  $1311.25  drawn 
T>y  the  First  National  Bank  of  Buffalo  upon  the  Fourth  National  Bank  of 
INew  York.  The  Buffalo  bank  was  insolvent,  unknown  to  plaintiff  or  defend- 
ants. The  drawee  refused  to  pay  the  draft.  The  court  said :  "The  plain- 
tiff having  proved  the  sale  and  delivery  of  the  cattle  and  the  acceptance  by 
him  of  a  draft  growing  out  of  the  transaction  itself,  but  neither  signed  nor 
indorsed  by  the  defendants,  who  was  required  to  show  whether  the  draft  was 
taken  as  payment  or  as  security?  The  answer  to  this  question  depends  upon 
whether  the  draft  was  taken  for  a  present  or  a  precedent  debt.  If  it  was 
the  former,  the  presumption  is  that  it  was  agreed  to  be  taken  in  payment, 
and  the  burden  of  proving  the  contrary  rested  upon  the  plaintiff;  while  if 
it  was  for  the  latter,  the  presumption  is  that  it  was  not  taken  as  payment, 
and  the  onus  of  establishing  that  it  was  so  taken  rested  upon  the  defend- 
ants. (Noel  v.  Murray,  13  N.  Y.  167;  Whitbeck  v.  Van  Ness,  11  Johns. 
409.)" 

Place  of  payment. — In  Weyand  v.  Park  Terrace  Co.,  202  N.  Y.  231,  the 
court  after  a  review  of  English  and  American  authorities,  says:  "The 
rules  relating  to  the  place  where  payments  should  be  made  upon  contract 
have  been  established  by  long  usage  and  can  be  briefly  stated  as  follows: 

1.  It  is  a  general  rule  that  a  debtor  must  seek  his  creditor  to  make  pay- 
ment of  his  indebtedness. 

2.  The  parties  to  a  contract  may  provide  therein  where   payments   there- 
on shall  be  made. 

3.  Where  a  contract  is  made  outside  of  the  State  in  which  the  promisor 
resides,    and    it    does    not,    either    by    express    terms    or    by    fair    inference, 
provide  where  the  same  is  to  be  performed,  it  will  be  presumed  that  the  parties 
intend   that  it  shall  be  performed   at  the  place  where   it  is  made,   and  the 
promisor  must  provide   at  such  place  to  make  the   payments   thereon. 

4.  Where  a  contract  is  made   in  this   State   either   with   a   person   then  a 
resident  of  this   State,  who  afterwards   removes   therefrom,   or  with   a   non- 
resident of  this  State,  it  is  the  duty  of  the  promisee  to  provide  a  place  in 
this   State   where   payments   can   be   made,   and   it   is   not   necessary   for   the 
debtor  to  go  beyond  the  bounds  of  this  State  to  make  payments  thereon. 

Where  a  person  promises  to  pay  specified  amounts  from  time  to  time  pur- 
suant to  a  written  contract,  if  he  or  the  payee  desire  that  the  same  be  paid 
at  a  particular  place,  it  is  just  as  easy  to  specify  in  the  instrument  the 
place  where,  as  the  time  when,  such  payments  are  to  be  made." 


BY   PERFORMANCE.  613 

named  no  sum  which  he  wished  to  tender,  nor  the  amount  he  held  in 
his  hands,  although  it  appeared  subsequently  that  he  had  thirty-five 
dollars  and  fifty  cents  in  his  hands.  It  was  for  the  defendant  to  make 
out  affirmatively  that  he  made  a  legal  tender.  The  plaintiff  was  under 
no  obligation  to  stop  his  team  to  make  inquiries,  or  to  have  a  sum  of 
money  tendered  him;  and  unless  the  defendant  specified  the  amount 
which  he  wished  to  tender,  the  plaintiff  could  not  determine  as  to 
the  sufficiency  of  the  sum,  and  no  refusal  by  the  plaintiff  to  receive 
any  specific  sum  of  money  could  be  predicated  upon  such  an  offer  as 
the  case  shows  was  made.  All  that  the  case  legally  shows,  is  an  in- 
tention on  the  part  of  the  defendant,  or  rather  a  willingness,  to  make  a 
tender.  If  no  tender  was  made  at  the  time  suggested,  there  is  no 
occasion  to  inquire  about  its  being  kept  good. 

The  judgment  of  the  County  Court  is  reversed,  and  judgment  for 
the  plaintiff,  for  the  sum  reported  by  the  auditors,  and  interest. 

38  Cyc.  138   (35-36). 


VANN,  J.,  IN  MANN"  v.  SPROUT. 

185  NEW  YORK,   109.— 1906. 

When  a  debt  is  due,  a  tender  of  the  entire  amount  with  no  condi- 
tion attached,  and  the  payment  thereof  into  court  pursuant  to  its 
order,  even  if  not  accepted,  is  an  absolute  transfer  of  the  money  to 
the  creditor.  When  the  sum  tendered  is  less  than  the  amount  due, 
it  is  a  conclusive  admission  of  the  indebtedness  to  the  extent  of  the 
tender,  regardless  of  the  final  result  of  the  action,  and  not  only  does 
the  party  paying  it  into  court  lose  all  right  to  it,  but  the  court  itself 
has  no  power  to  make  an  order  in  the  same  action,  which,  in  effect, 
retransfers  the  title.  Eelief  from  mutual  mistake,  or  mistake  on 
one  side  and  fraud  on  the  other,  can  be  had,  if  at  all,  only  in  an  in- 
dependent action  brought  for  the  purpose.  Even  if  the  verdict  is 
for  a  less  amount,  or  for  nothing  at  all,  the  title  has  irrevocably 
passed,  and  the  result  of  the  action  has  no  effect  thereon.  The  same 
rule  prevails  whether  the  action  is  in  tort  or  on  contract,  for  in  either 
case  the  money  paid  into  court  by  the  defendant  pursuant  to  a  tender 
belongs  to  the  plaintiff  in  any  event.  Eefusal  of  the  creditor  to 
accept,  or  the  death  of  either  party,  or  the  commencement  of  another 
action,  does  not  change  the  effect,  for  the  title  passes  by  operation  of 
law  the  same  as  if  the  tender  had  been  accepted.  The  transfer  is 
complete  and  cannot  be  changed  without  consent,  or  a  decree  in  equity, 
from  the  moment  the  court  takes  control  of  the  money.  Acceptance 
by  the  court  for  the  plaintiff  has  the  same  effect  as  acceptance  by  the 
plaintiff  himself.  Deposit  in  a  bank,  or  with  a  third  party,  without 
the  order  of  the  court,  does  not  prevent  a  withdrawal  if  there  has  been 


614  DISCHARGE  OF   CONTRACT. 

no  acceptance,  but  the  action  of  the  court  in  a  suit  pending  before  it, 
whereby  at  the  request  of  one  party  it  takes  money  into  its  possession 
for  the  benefit  of  the  other,  has  the  same  effect  as  actual  acceptance, 
and  ipso  facto  vests  the  title  in  him.  The  custody  of  the  law  is  the 
custody  of  the  plaintiff,  and  the  action  of  the  defendant  operates  as 
a  final  and  irrevocable  transfer.  If  the  plaintiff  goes  on  with  the  ac- 
tion and  is  nonsuited,  or  the  verdict  is  against  him  or  is  for  a  sum 
less  than  the  amount  tendered  and  paid  into  court,  still  the  defendant 
cannot  take  the  money  back,  for  it  is  not  his,  but  has  passed  irrevo- 
cably to  his  adversary.  If  thereafter  the  fund  is  lost  or  stolen  by  the 
county  treasurer,  the  loss  falls  on  the  plaintiff,  not  on  the  defendant, 
who  has  no  further  interest  in  the  money.  Taylor  v.  Brooklyn  El. 
B.  Co.,  119  1ST.  Y.  561,  23  N.  E.  1106 ;  Wilson  v.  Doran,  39  Hun,  88 ; 
Id.,  110  N.  Y.  101,  17  N.  E.  688;  Becker  v.  Boon,  61  N.  Y.  317; 
Beil  v.  Supreme  Council  Am.  L.  of  H.,  42  App.  Div.  168,  58  N.  Y. 
Supp.  1049;  Murray  v.  Bethune,  1  Wend.  191;  Slack  v.  Brown,  13 
Wend.  390 ;  Dakin  v.  Dunning,  7  Hill,  30,  42  Am.  Dec.  33 ;  Bank  of 
Columbia  v.  Southerland,  3  Cow.  336 ;  Malcolm  v.  Fullarton,  2  Dura. 
&  E.  645,  648;  2  Parsons  on  Cont.  (9th  ed.)  789;  2  Whart.  on  Cont., 
§  976 ;  1  Beach  on  Cont.,  §  331. 
38  Cyc.  176  (86-87);  177  (92). 


Alternative  performance. 

PLOWMAN  &  McLANE  v.  RIDDLE 
7    ALABAMA,   775.— 1845. 

Assumpsit  by  the  defendant  against  the  plaintiffs  in  error.  The 
plaintiff  declared  on  a  promissory  note  for  $300. 

ORMOND,  J.  The  last  plea  sets  up  as  defence  to  the  action  a  condi- 
tion of  the  contract  that  the  sum  of  money  for  which  it  was  made 
"may  be  discharged  in  good  leather;  one  third  in  sole  leather  at  30 
cents  per  pound,  one  third  in  harness  or  skirting  leather,  at  37Vfc 
cents  per  pound,  and  the  residue  in  upper  leather  priced  in  the  same 
proportion/'  and  averred  a  readiness  and  willingness  to  deliver  the 
leather  at  the  maturity  of  the  note.  .  .  . 

The  defendant  appears  to  have  considered  this  contract,  as  in 
legal  effect,  a  promise  to  deliver  leather  of  the  kinds  specified  to  the 
value  of  $300,  at  a  particular  time,  but  that  is  clearly  not  the  con- 
tract of  the  parties,  which  is  to  pay  $300  at  a  particular  time  with  a 
condition  superadded,  giving  them  the  privilege  of  discharging  it  in 
leather  at  a  specified  price.  This  is  clearly  for  their  benefit,  and  it 
was  their  duty,  if  they  elected  to  deliver  the  leather  in  discharge  of 
their  contract,  to  give  notice  to  the  plaintiff  of  their  readiness  and 


BY   PERFORMANCE.  615 

willingness  to  do  so.  Having  omitted  to  do  so,  their  contract  to  pay 
the  money  has  become  absolute,  and  they  cannot,  when  sued  for  the 
money,  defeat  the  action  by  proving  the  existence  of  a  fact  which  was 
peculiarly  within  their  own  knowledge. 

The  injustice  of  this  defence  will  be  apparent  when  it  is  considered 
that  the  defendants  were  under  no  obligation  to  deliver  the  leather, 
and  if  it  had  risen  in  price,  doubtless  would  not  have  delivered  it,  but 
would  have  paid  the  money ;  being  then  a  condition  inserted  for  their 
benefit,  it  was  necessary  that  they  should  have  given  notice  of  their 
election  to  pay  in  leather.  McEae  v.  Baser,  9  Porter,  122;  Stewart 
v.  Donnelly,  4  Yerger,  177 ;  Church  v.  Feteran,  2  Penn.  301 ;  Erwin 
v.  Cook,  2  Dev.  183.  From  this  examination  it  appears  that  the  plea 
was  bad,  in  not  averring  notice  of  an  election  to  discharge  the  obliga- 
tion in  leather.  .  .  .* 

9  Cyc.  647-648   (84-90)  ;  14  H.  L.  R.  613. 


PEARSON  v.  WILLIAMS'  ADMINISTRATORS. 

24  WENDELL    (N.  Y.),  244.— 1840. 

The  administrators  of  Williams  sued  Pearson  in  the  court  below. 
The  trial  judge  decided  that  the  $4000,  stated  in  the  contract,  was 
liquidated  damages;  to  which  opinion  the  defendant  excepted  and 
judgment  having  passed  against  him  for  that  sum  he  now  brings 
error.  The  material  facts  are  stated  in  the  opinion. 

BRONSON,  J.  The  defendant,  in  consideration  that  the  intestate 
sold  him  fourteen  lots  of  land  for  the  sum  of  twenty-one  thousand 
dollars  only,  covenanted  to  do  two  things — first,  to  remove  from  the 
lots  the  surplus  earth  and  stone  above  the  corporation  level,  within  a 
reasonable  time;  and  second,  to  erect  two  brick  houses  upon  the  lots 
by  a  specified  day;  or,  in  default  of  erecting  such  houses,  to  pay  the 
intestate  four  thousand  dollars,  when  afterwards  demanded.  So  far 
as  this  action  is  concerned,  we  may  lay  the  first  branch  of  the  cove- 
nant, which  relates  to  the  surplus  earth  and  stone  entirely  out  of  view. 
It  is  a  distinct  stipulation,  which  cannot  affect  the  remaining  branch 
of  the  covenant. 

The  case  then  comes  to  this :  The  defendant,  for  a  specified  con- 
sideration, agreed  that  he  would  erect  two  brick  houses  on  the  lots  by 
a  certain  day,  or  in  default  of  so  doing,  would  afterwards  pay  the  in- 
testate four  thousand  dollars  on  demand.  This  was  an  optional  agree- 

i  "I  take  it  that  the  rule  is  very  clear,  that  when  one  contracts  in  the  alterna- 
tive to  do  one  of  two  things  by  a  given  day,  he  has,  until  the  day  is  past, 
the  right  to  elect  which  of  them  he  will  perform ;  but  if  he  suffer  the  day  to 
elapse  without  performing  either,  his  contract  is  broken,  and  his  right  of 
election  is  lost." — Choice  v.  Moseley,  1  Bailey  (S.  C.)  136. 


616  DISCHARGE   OF   CONTRACT. 

ment.  The  defendant  has  the  choice  of  erecting  the  houses  by  the  day ; 
or  of  omitting  to  do  so,  and  then  paying  the  specified  sum  of  money. 
He  made  his  election  by  omitting  to  build  within  the  time.  The 
obligation  to  pay  four  thousand  dollars  thereupon  became  absolute, 
and  the  plaintiffs  were,  I  think,  entitled  to  recover  that  sum,  with  in- 
terest from  the  time  of  the  demand. 

This  does  not  belong  to  the  class  of  cases  in  which  the  question 
of  liquidated  damages  has  usually  arisen.  It  will  be  found  in  most, 
if  not  all,  of  those  cases  that  there  was  an  absolute  agreement  to  do, 
or  not  to  do,  a  particular  act,  followed  by  a  stipulation  in  relation  to 
the  amount  of  damages  in  case  of  a  breach;  and  in  declaring  upon 
the  contract,  the  breach  has  been  well  assigned  by  alleging  that  the 
party  did,  or  omitted  to  do,  the  particular  act.  But  here,  there  is  no 
absolute  engagement  to  build  the  houses.  It  was  optional  with 
the  defendant  whether  he  would^ build  them  or  not;  and  there  would 
have  been  no  sufficient  breach,  if  the  plaintiffs  had  stopped  with  alleg- 
ing that  the  houses  were  not  built.  This  is  not  a  covenant  to  build, 
with  a  liquidation  of  the  damages  in  case  of  non-performance;  but  it 
is  a  covenant  to  build  within  a  specified  time,  or  afterwards  to  pay 
a  sum  of  money.  The  money  is  not  to  be  paid  by  way  of  damages  for 
not  building  the  houses ;  but  is  to  be  paid,  if  the  houses  are  not  built, 
as  part  of  the  contract  price  for  the  lots  conveyed  by  the  intestate. 

Again:  This  is  not  simply  an  alternative  covenant,  to  build,  or  to 
pay  a  sum  of  money,  within  a  specified  period.  If  it  were  so,  the 
question  of  damages  would  perhaps  be  open.  But  it  is  an  agreement 
to  build  by  a  certain  day,  or  afterwards  pay  a  sum  of  money.  When 
the  day  for  building  had  gone  by,  it  was  then  merely  a  covenant  to 
pay  money.  It  was  necessary,  in  declaring,  to  allege  that  the  houses 
were  not  built — not,  however,  because  that  part  of  the  contract  was 
any  longer  in  force — but  by  way  of  showing  that  the  event  had  hap- 
pened which  the  defendant  agreed  to  pay  the  money.  It  had  now  be- 
come a  simple  covenant  to  pay  money;  and  like  other  cases  where 
there  is  an  agreement  to  pay  a  gross  sum  of  money,  that  sum,  with  in- 
terest from  the  time  it  became  payable,  forms  the  measure  of  damages. 

Let  us  reverse  the  order  of  these  stipulations,  and  suppose  that  the 
defendant  had  agreed  to  pay  the  intestate  four  thousand  dollars  by 
a  particular  day,  or  in  default  of  so  doing  that  he  would  afterwards 
build  the  houses.  The  defendant  might  then  have  discharged  him- 
self by  the  payment  of  the  money  by  the  day;  or  he  might  at  his 
election,  suffer  the  day  to  pass,  and  then  build  the  houses.  If  he  did 
neither,  the  intestate  would  have  an  action;  but  the  question  of 
damages  would  turn  wholly  upon  the  agreement  to  build.  The  en- 
quiry would  be,  either  how  much  it  was  worth  to  build,  or  how  much 
has  the  intestate  lost  by  the  neglect.  The  day  for  paying  the  four 
thousand  dollars  having  gone  by,  that  clause  of  the  covenant  could 


BT    PERFORMANCE.  617 

have  no  possible  influence  upon  the  question  of  damages.  The  re- 
covery might  be  either  more  or  less  than  that  sum.  In  short,  the  in- 
testate  would  recover  damages  for  not  building,  whatever  those  dam- 
ages might  appear  to  be.  So  here  taking  the  stipulations  in  the 
order  in  which  they  stand  in  the  contract,  the  question  of  damages 
turns  wholly  upon  the  agreement  to  pay  the  four  thousand  dollars  in 
a  certain  event.  The  event  having  happened,  the  plaintiffs  are  en- 
titled to  that  sum,  without  any  reference  to  the  fact  that  the  defendant 
might  at  one  time  have  discharged  himself  by  building  the  houses. 

We  have  no  right  to  call  this  sum  of  four  thousand  dollars  a  penalty, 
or  say  that  it  was  inserted  in  the  contract  for  the  purpose  of  ensuring 
the  erection  of  the  houses.  There  is  nothing  in  the  covenant  which 
will  warrant  such  an  inference.  We  are  to  read  the  covenant  as  the 
parties  have  made  it ;  and  then  it  appears  that  this  sum  of  four  thou- 
sand dollars  was  not  inserted  for  the  benefit  of  the  intestate,  but  as 
a  privilege  to  the  defendant.  The  intestate  had  no  option,  but  the 
defendant  had.  He  was  at  liberty  to  discharge  himself  from  the 
covenant  by  building  the  houses,  if  he  deemed  that  course  most  for  his 
interest  or  convenience;  or  he  might  elect,  as  he  has  done,  to  omit 
building  and  pay  the  money.  So  far  as  we  can  judge  from  his  acts, 
he  deems  that  course  most  beneficial  to  himself. 

Whether  the  plaintiffs,  or  the  persons  whom  they  represent  will 
be  better  off  if  they  get  the  money,  than  they  would  have  been  had 
the  houses  been  put  up,  must,  from  the  nature  of  the  case,  be  a  difficult 
question  to  decide;  and  that  is  one  reason  why  the  parties  should  be 
left  to  settle  the  matter  for  themselves,  as  they  have  done  by  the 
contract.  But  if  we  could  see  clearly,  that  the  building  of  the  houses 
would  have  been  of  little  importance  to  the  plaintiffs,  that  could  not 
alter  the  case.  Astley  v.  Weldon,  2  Bos.  &  Pul.  346;  Daikin  v. 
Williams,  12  Wendell,  447. 

Although  I  have  said  something  on  that  subject,  we  are  not,  I  think, 
at  liberty  to  speculate  upon  the  probable  consequence  of  holding  par- 
ties to  their  agreement.  So  long  as  they  keep  within  the  boundaries 
of  the  law,  and  practice  no  fraud,  our  business  is  to  see  that  their 
contracts  are  enforced.  We  have  no  dispensing  power. 

Judgment  affirmed. 


Substantial  performance. 

NOLAN  et  al.  v.  WHITNEY. 
88  NEW  YORK,  648.— 1882. 

In  July,  1877,  Michael  Nolan,  the  plaintiffs'  testator,  entered  into 
an  agreement  with  the  defendant  to  do  the  mason  work  in  the  erection 


618  DISCHARGE   OF   CONTRACT. 

of  two  buildings  in  the  city  of  Brooklyn  for  the  sum  of  $11,700,  to  be 
paid  to  him  by  her  in  instalments  as  the  work  progressed.  The  last 
instalment  of  $2700  was  to  be  paid  thirty  days  after  completion  and 
acceptance  of  the  work.  The  work  was  to  be  performed  to  the  satis- 
faction and  under  the  direction  of  M.  J.  Morrill,  architect,  to  be 
testified  by  his  certificate,  and  that  was  to  be  obtained  before  any 
payment  could  be  required  to  be  made.  As  the  work  progressed,  all 
the  instalments  were  paid  except  the  last,  and  Nolan,  claiming  that 
he  had  fully  performed  his  agreement,  commenced  this  action  to  re- 
cover that  instalment.  The  defendant  defended  the  action  upon  the 
ground  that  Nolan  had  not  fully  performed  his  agreement  according 
to  its  terms  and  requirements,  and  also  upon  the  ground  that  he  had 
not  obtained  the  architect's  certificate,  as  required  by  the  agreement. 

Upon  the  trial  the  defendant  gave  evidence  tending  to  show  that 
much  of  the  work  was  imperfectly  done,  and  that  the  agreement  had 
not  been  fully  kept  and  performed  on  the  part  of  Nolan;  the  latter 
gave  evidence  tending  to  show  that  the  work  was  properly  done,  that 
he  had  fairly  and  substantially  performed  his  agreement,  and  that  the 
architect  had  refused  to  give  him  the  certificate,  which,  by  the  terms 
of  hi's  agreement,  would  entitle  him  to  the  final  payment.  The  referee 
found  that  Nolan  completed  the  mason  work  required  by  the  agree- 
ment according  to  its  terms ;  that  he  in  good  faith  intended  to  comply 
with,  and  did  substantially  comply  with,  and  perform  the  require- 
ments of  his  agreement;  but  that  there  were  trivial  defects  in  the 
plastering  for  which  a  deduction  of  $200  should  be  made  from  the 
last  instalment,  and  he  ordered  judgment  in  favor  of  Nolan  for 
the  last  instalment,  less  $200. 

EARL,  J.  It  is  a  general  rule  of  law  that  a  party  must  perform  his 
contract  before  be  can  claim  the  consideration  due  him  upon  perfor- 
mance ;  but  the  performance  need  not  in  all  cases  be  literal  and  exact. 
It  is  sufficient  if  the  party  bound  to  perform,  acting  in  good  faith, 
and  intending  and  attempting  to  perform  his  contract,  does  so  sub- 
stantially, and  then  he  may  recover  for  his  work,  notwithstanding 
slight  or  trivial  defects  in  performance,  for  which  compensation  may 
be  made  by  an  allowance  to  the  other  party.  Whether  a  contract  has 
been  substantially  performed  is  a  question  of  fact  depending  upon 
all  the  circumstances  of  the  case  to  be  determined  by  the  trial  court. 
Smith  v.  Brady,  17  N.  Y.  189;  Thomas  v.  Fleury,  26  Id.  26;  Glacius 
v.  Black,  50  Id.  145 ;  Johnson  v.  De  Peyster,  50  Id.  666 ;  Phillip  v. 
Gallant,  62  Id.  256;  Bowery  Nat.  Bank  v.  The  Mayor,  63  Id.  336. 
According  to  the  authorities  cited,  under  an  allegation  of  substantial 
performance,  upon  the  facts  found  by  the  referee,  Nolan  was  entitled 
to  recover  unless  he  is  barred  because  he  failed  to  get  the  architect's 
certificate,  which  the  referee  found  was  unreasonably  and  improperly 
refused.  But  when  he  had  substantially  performed  his  contract,  the 


BY   PERFORMANCE.  619 

architect  was  bound  to  give  him  the  certificate,  and  his  refusal  to  give 
it  was  unreasonable,  and  it  is  held  that  an  unreasonable  refusal  on  the 
part  of  an  architect  in  such  a  case  to  give  the  certificate  dispenses  with 
its  necessity.  All  concur. 

Judgment  affirmed.1 
9  Cyc.  602  (12-14). 


GILLESPIE  TOOL  CO.  v.  WILSON  et.al 
123  PENNSYLVANIA  STATE,  19.— 1888. 

Assumpsit  on  a  contract  for  drilling  a  well.  Defense,  non-per- 
formance. Nonsuit.  Plaintiff  appeals. 

Plaintiff  agreed  to  drill  for  defendants  a  gas-well  2000  feet  deep 
and  five  and  five-eighths  inches  in  diameter.  In  case  salt  water  was 
struck,  the  well  was  to  be  eight  inches  in  diameter  in  order  to  shut  off 
the  salt  water.  A  well  was  dug  to  the  depth  of  between  1500  and 
1600  feet,  when,  owing  to  an  accident,  it  had  to  be  abandoned.  An- 
other well  was  then  begun,  and  when  at  a  depth  of  800  feet  plaintiff 
was  notified  that  defendants  held  the  contract  was  for  the  first  well 
and  would  not  be  responsible  for  the  second.  Plaintiff  continued  and 
drilled  the  second  well  to  a  depth  of  2204  feet,  but  struck  salt  water 
at  a  depth  of  1729  feet,  and  to  case  this  off  reduced  the  hole  to  admit 
of  casing  four  and  one-quarter  inch  size.  Plaintiff  claimed  a  substan- 
tial performance  on  the  ground  that  the  well  was  for  testing  the  terri- 
tory, and  that  for  this  purpose  a  four  and  one-quarter  inch  hole  was 
as  good  as  a  five  and  five-eighths  inch,  and  that  it  would  have  been 
a  useless  expense  to  ream  it  out  to  the  latter  diameter  when  the  experi- 
ment proved  that  the  territory  did  not  produce  gas. 

MR.  JUSTICE  STERRETT.  Plaintiff  company  neither  proved  nor 
offered  to  prove  such  facts  as  would  have  warranted  the  jury  in  find- 
ing substantial  performance  of  the  contract  embodied  in  the  written 
proposition  submitted  to  and  accepted  by  the  defendants.  In  several 
particulars  the  work  contracted  for  was  not  done  according  to  the 
plain  terms  of  the  contract.  Nearly  one-half  of  the  well  was  not 
reamed  out,  as  required,  to  an  eight-inch  diameter  so  as  to  admit  five 
and  five-eighths  inch  casing  in  the  clear.  About  180  feet  of  the  lower 
section  of  the  well  also  was  bored  four  or  four  and  one-quarter  inches 
instead  of  five  and  five-eighths  inches  in  diameter.  In  neither  of  these 

i  In  Crouch  v.  Gutmann,  134  N.  Y.  45,  Follett,  C.  J.,  dissenting,  says:  "The 
tendency,  called  equitable,  of  courts  to  relieve  persons  from  the  performance 
of  engagements  deliberately  entered  into,  and  in  legal  effect  to  make  for  liti- 
gants new  contracts  which  they  never  entered  into,  and  which  it  cannot  be 
supposed  they  ever  would  have  entered  into,  has  been  and  is  being  carried  to 
a  length  which  cannot  be  justified  in  reason." 


620  DISCHARGE   OF    CONTRACT. 

particulars,  nor  in  any  other  respect,  was  there  any  serious  difficulty 
in  the  way  of  completing  the  work  in  strict  accordance  with  the  terms 
of  the  agreement.  To  have  done  so  would  have  involved  nothing 
more  than  additional  time  and  increased  expense.  The  fact  was 
patent,  as  well  as  proved  by  undisputed  evidence,  that  a  four  and  one- 
quarter  inch  well  would  not  discharge  as  much  gas  as  one  five  and 
five-eighths  inches  in  diameter.  It  is  no  answer  to  say  that  for  the 
purpose  of  testing  the  territory  a  four  and  one-quarter  inch  well  was 
as  good  as  a  five  and  five-eighths  inch  well;  nor  that  reaming  out  the 
well  to  the  width  and  depth  required  by  the  contract  would  have  sub- 
jected defendants  to  additional  expense  without  any  corresponding 
benefit.  That  was  their  own  affair.  They  contracted  for  the  boring 
of  a  well  of  specified  depth,  dimensions,  etc.,  and  they  had  a  right  to 
insist  on  at  least  a  substantial  performance  of  the  contract  according 
to  its  terms.  That  was  not  done,  and  the  court  was  clearly  right  in 
refusing  to  submit  the  case  to  the  jury  on  evidence  that  would  not 
have  warranted  them  in  finding  substantial  performance  of  the  con- 
tract. 

The  equitable  doctrine  of  substantial  performance  is  intended  for 
the  protection  and  relief  of  those  who  have  faithfully  and  honestly  en- 
deavored to  perform  their  contracts  in  all  material  and  substantial 
particulars,  so  that  their  right  to  compensation  may  not  be  forfeited 
by  reason  of  mere  technical,  inadvertent,  or  unimportant  omissions 
or  defects.  It  is  incumbent  on  him  who  invokes  its  protection  to  pre- 
sent a  case  in  which  there  has  been  no  wilful  omission  or  departure  from 
the  terms  of  his  contract.  If  he  fails  to  do  so,  the  question  of  substan- 
tial performance  should  not  be  submitted  to  the  jury. 

The  offers  specified  in  the  third,  fourth,  and  fifth  assignments  were 
rightly  rejected.  The  proposed  evidence  was  irrelevant  and  incom- 
petent. There  is  nothing  in  the  record  that  requires  a  reversal  of  the 
judgment. 

Judgment  affirmed.1 
9  Cyc.  603    (16-18)  ;   24  L.  R.  A.  327. 

i  "To  justify  a  recovery  upon  the  contract  as  substantially  performed,  the 
omissions  or  deviations  must  be  the  result  of  mistake  or  inadvertence,  and 
not  intentional,  much  less  fraudulent;  and  they  must  be  slight  or  susceptible 
of  remedy,  so  that  an  allowance  out  of  the  contract  price  will  give  the  other 
party  substantially  what  he  contracted  for.  They  must  not  be  substantial 
and  running  through  the  whole  work,  so  as  to  be  remediless,  and  defeat  the 
object  of  having  the  work  done  in  a  particular  manner.  And  these  are  ques- 
tions of  fact  for  the  jury  or  trial  court.  Olmstead  v.  Beale,  19  Pick.  528; 
Woodward  v.  Fuller,  80  N.  Y.  312.  It  may  seem  a  harsh  doctrine  to  hold  that 
a  man  who  has  built  a  house  shall  have  no  pay  for  it,  but  the  other  party 
can  well  say:  'I  never  made  any  such  agreement.  I  agreed  to  pay  you  if 
you  would  build  my  house  in  a  certain  manner,  which  you  have  not  done.' 
The  fault  is  with  the  one  who  voluntarily  violates  his  contract." — Mitchell, 
J.,  in  Elliott  v.  Caldwell,  43  Minn.  357,  360. 


BY    PERFORMANCE.  621 


Performance  to  satisfaction. 

BROWN  v.  FOSTER. 

113  MASSACHUSETTS,   136.— 1873. 

Contract  to  recover  the  price' of  a  suit  of  clothes. 

The  court  instructed  the  jury  as  follows  • 

"The  plaintiff  was  bound  to  make  the  clothes  of  the  material  ordered, 
in  a  workmanlike  manner,  and  to  deliver  them  at  the  time  agreed  upon 
by  the  parties.  If  the  plaintiff  agreed  to  make  the  clothes  to  the  sat- 
isfaction of  the  defendant,  he  was  bound  to  do  so,  with  these  qualifi- 
cations :  if,  when  the  clothes  were  delivered,  there  were  defects  in  the  fit 
of  them,  such  as  are  liable  to  occur  in  first-class  tailoring  establish- 
ments, but  such  as  could  be  easily  remedied,  and  a  custom  among 
tailors  has  been  proved  to  remedy  such  defects  when  they  occur,  the 
plaintiff  was  entitled  to  a  reasonable  opportunity  therefor,  and  if  he 
was  willing  and  offered  to  remedy  said  defects,  and  the  defendant  re- 
fused to  allow  him  to  do  so,  the  plaintiff  is  entitled  to  recover  if  the 
other  facts  in  the  case  are  proved/' 

The  jury  returned  a  verdict  for  the  plaintiff,  and  the  defendant 
excepted. 

DEVENS,  J.  There  was  evidence  at  the  trial  to  show  that  the  con- 
tract between  the  parties  was  an  express  contract,  and  by  the  terms  of 
it  the  plaintiff  agreed  to  make  and  deliver  to  the  defendant  upon  a 
day  certain  a  suit  of  clothes,  which  were  to  be  made  to  the  satisfac- 
tion of  the  defendant.  The  clothes  were  made  and  delivered  upon 
the  day  specified,  but  were  not  to  the  satisfaction  of  the  defendant,  who 
declined  to  accept,  and  promptly  returned  the  same.  If  the  plaintiff 
saw  fit  to  do  work  upon  articles  for  the  defendant  and  to  furnish 
materials  therefor,  contracting  that  the  articles  when  manufactured 
should  be  satisfactory  to  the  defendant,  he  can  recover  only  upon 
the  contract  as  it  was  made;  and  even  if  the  articles  furnished  by 
him  were  such  that  the  other  party  ought  to  have  been  satisfied  with 
them,  it  was  yet  in  the  power  of  the  other  to  reject  them  as  unsatis- 
factory. It  is  not  for  any  one  else  to  decide  whether  a  refusal  to 
accept  i's  or  is  not  reasonable,  when  the  contract  permits  the  defendant 
to  decide  himself  whether  the  articles  furnished  are  to  his  satisfac- 
tion. Although  the  compensation  of  the  plaintiff  for  valuable  service 

Accord:  Van  Clief  v.  Van  Vechten,  130  N.  Y.  571,  where  the  court  says: 
"While  slight  and  insignificant  imperfections  or  deviations  may  bo  over- 
looked on  the  principle  of  de  tmnimis  non  curat  lex,  the  contract  in  other 
respects  must  be  performed  according  to  its  terms.  When  the  refusal  to 
proceed  is  wilful,  the  difference  between  substantial  and  literal  performance 
is  bounded  by  the  line  of  de  minimis."  As  to  mercantile  contracts,  see 
Norrington  v.  Wright,  115  U.  S.  188,  post,  p.  671. 


622  DISCHARGE   OF    CONTRACT. 

and  materials  may  thus  be  dependent  upon  the  caprice  of  another  who 
unreasonably  refuses  to  accept  the  articles  manufactured,  yet  he 
cannot  be  relieved  from  the  contract  into  which  he  has  voluntarily 
entered.  McCarren  v.  McNulty,  7  Gray,  139. 

When  an  express  contract  like  that  shown  in  the  present  case  was 
proved  to  have  been  made  between  parties,  it  was  not  competent  to 
control  it  by  evidence  of  a  usage.  It  may  be  that  the  very  object  of  the 
express  contract  was  to  avoid  the  effect  of  such  usage,  and  no  evi- 
dence of  usage  can  be  admitted  to  contradict  the  terms  of  a  contract, 
or  control  its  legal  interpretation  and  effect.  Dickinson  v.  Gay,  7 
Allen,  29,  31.  The  evidence  admitted  was  of  this  description. 

Exception  sustained. 

9  Cyc.   619-620    (6-21);   W.  P.   51    (59). 


GWYNN  v.  HITCHNER  et  al 

O'MALLEY  v.  SAME. 
67  NEW  JERSEY  LAW,  654.— 1902. 

These  two  cases  were  tried  together.  The  plaintiffs  were  color- 
mixers,  each  under  contract  to  the  defendant  firm,  to  work  in  the 
defendants'  wall  paper  factory  until  July  1,  1900.  The  contracts 
provided  that  each  was  to  perform  his  work,  in  the  one  contract,  "to 
the  satisfaction  of  the  said  firm"  and  in  the  other  contract,  "satis- 
factory to  said  firm."  Each  workman  was  dismissed  by  his  em- 
ployers before  the  expiration  of  the  term  of  service  specified  in  his 
contract;  John  H.  Gwynn  on  April  1,  1900,  and  Thomas  J.  O'Malley 
on  April  9,  1900.  Each  workman  thereupon  brought  suit  for  breach 
of  contract.  The  declarations,  which  are  substantially  identical, 
count  on  the  contracts,  and  allege  an  unlawful  discharge  before  the 
expiration  of  the  term  of  service.  The  defendants  have  pleaded  the 
general  issue,  and  rely,  in  justification  of  the  discharge,  solely  on  dis- 
satisfaction with  the  work  done  by  the  plaintiffs. 

ADAMS,  J.  ...  In  order  to  legalize  the  discharge  of  either 
workman  before  the  expiration  of  his  term  of  service,  two  elements 
must  have  been  present  in  the  situation:  First,  the  employers  must 
have  been  dissatisfied  with  his  work ;  and,  secondly,  the  dissatisfaction 
must  have  been  the  cause  of  discharge.  Either  plaintiff,  therefore, 
would  exhibit  a  good  cause  of  action  against  the  defendants  if  it 
should  appear,  as  a  result  of  the  proof  in  the  cause,  that  there  was  a 
contract  of  employment,  that  the  plaintiff  was  discharged  before  the 
expiration  of  his  term  of  service,  and  either  that  the  defendants  were 
not  dissatisfied  with  his  work,  or  that,  however  this  may  have  been, 
they  did  not  discharge  him  because  of  dissatisfaction.  There  were 


BY   PERFORMANCE.  623 

thus,  in  each  case,  two  leading  questions  to  which,  among  others, 
proof  at  the  trial  on  both  sides  might  properly  be  addressed,  namely, 
whether  the  defendants  were  dissatisfied,  and  whether,  if  they  were 
dissatisfied,  they  discharged  the  plaintiff  for  that  reason. 

It  may  be  objected  that,  from  the  nature  of  things,  it  was  for  the 
defendants  alone  to  say  whether  they  were  dissatisfied,  and  that  their 
testimony  on  this  point  would  be  conclusive.  Here  it  is  necessary 
to  distinguish  again.  It  is  true  that  such  averment  as,  "I  believe," 
"I  doubt,"  "I  am  certain/'  "I  am  satisfied,"  relates  to  a  matter  as  to 
which  no  primary  evidence  can  be  given  except  by  him  of  whose  ex- 
perience it  is  a  part.  But,  as  me"n  are  always  acting  and  talking, 
their  acts  and  words  continually  afford  material  from  which  rational 
inferences  may  be  drawn  as  to  the  mental  state  and  attitude  of  the 
actor  and  speaker.  Proof  of  such  acts  and  words  is  therefore  ad- 
missible as  tending  either  to  prove  or  to  disprove  the  existence  of  a 
specified  condition  of  mind,  motive,  reason,  or  purpose. 

It  appears  from  the  bill  of  exceptions  that  the  testimony  and  proofs 
at  the  trial  were  directed,  on  both  sides,  to  the  critical  points.  The 
defendants  testified  that  the  plaintiffs  did  not  do  satisfactory  work, 
and  were  for  that  cause  discharged.  On  behalf  of  the  plaintiffs  there 
was  evidence  tending  to  show  that  the  defendants  had  declared  them- 
selves to  be  satisfied  with  the  work  of  each  plaintiff;  that  they  dis- 
charged Gwynn  because  they  had  hired  another  man,  and  could  not 
afford  the  expense  of  three  color-mixers;  and  that  they  discharged 
O'Malley  because,  as  they  understood,  they  had  received  notice,  both 
from  him  and  from  a  committee  of  the  Association  of  Printers  and 
Color-Mixers,  that  O'Malley  would  leave  unless  Gwynn  was  re- 
instated. This  conflict  of  proof  raised  disputed  questions  of  fact 
for  the  jury  to  decide.  The  direction  of  the  verdict  for  the  defendants 
was  therefore  legal  error. 

The  judgments  are  reversed  and  a  venire  de  novo  is  awarded  in 
each  case.1 

9  Cyc.  619-620  (6-21)  ;  W.  P.  51    (59)  ;   15  H.  L.  R.  153. 

i  In  McClure  v.  Briggs,  58  Vt.  82,  defendant  agreed  with  plaintiff  to  take 
a  Prescott  organ,  with  the  understanding  that  the  trade  should  be  thrown 
up  if  defendant  was  not  satisfied  with  the  instrument.  The  court  held:  "It 
is  to  be  noted  that  defendant  did  not  take  the  organ  to  see  whether  it  an- 
swered the  contract  or  not,  for  if  he  had,  and  it  did,  he  is  bound  to  keep 
and  pay  for  it  whether  satisfied  or  not;  but  he  took  it  to  see  whether  it 
was  satisfactory  to  him  or  not.  Neither  he  nor  any  of  his  family  were  com- 
petent to  judge  as  to  the  quality  of  the  organ,  and  so  he  called  in  an  ex- 
pert to  test  it,  and  he  told  him  the  tone  of  it  was  good,  and  better  than  that 
of  the  Estey  organ,  which  he  seemed  to  like;  but  notwithstanding  the  opinion 
of  the  expert,  he  was  so  under  the  spell  of  the  Estey  organ  vender  that  he 
still  thought  he  was  dissatisfied  with  the  tone  of  the  organ;  and  if  he 
really  thought  so  he  was  so,  for  as  a  man  'thinketh  in  his  heart,  so  is  he.' 
But  it  is  said  that  he  was  bound  to  be  satisfied,  as  he  had  no  ground  to  be 


624  DISCHARGE   OF    CONTRACT. 

DUPLEX  SAFETY  BOILEE  CO.  v.  GARDEN  et  al. 
101  NEW  YORK,  387.— 1886. 

Appeal  from  a  judgment  of  the  Supreme  Court  at  General  Term 
in  the  second  department,  affirming  a  judgment  for  plaintiff,  and 
from  an  order  denying  defendants'  motion  for  a  new  trial. 

DANFORTH,  J.  The  plaintiff  sued  to  recover  $700,  the  agreed 
price,  as  it  alleged,  for  materials  furnished  and  work  done  for  the 
defendants  at  their  request.  The  defense  set  up  was  that  the  work 
was  done  under  a  written  contract  for  the  alteration  of  certain  boilers, 
and  to  be  paid  for  only  when  the  defendants  "were  satisfied  that  the 
boilers  as  changed  were  a  success."  Upon  the  trial  it  appeared  that 
the  agreement  between  the  parties  was  contained  in  letters,  by  the 
first  of  which  the  defendants  said  to  plaintiff: 

"You  may  alter  our  boilers,  changing  all  the  old  sections  for  your  new 
pattern ;  changing  our  fire  front,  raising  both  boilers  enough  to  give  ample  fire 
space;  you  doing  all  disconnecting  and  connecting;  also  all  necessary  mason 
work  and  turning  boilers  over  to  us  ready  to  steam  up.  Work  to  be  done 
by  tenth  of  May  next.  For  above  changes  we  are  to  pay  you  $700,  as  soon 
as  we  are  satisfied  that  the  boilers  as  changed  are  a  success,  and  will  not  leak 
under  a  pressure  of  one  hundred  pounds  of  steam." 

The  plaintiff  answered,  "accepting  the  proposition,"  and  as  the  evi- 
dence tended  to  show,  and  as  the  jury  found,  completed  the  required 
work  in  all  particulars  by  the  10th  of  May,  1881,  at  which  time  the 
defendants  began  and  thereafter  continued  the  use  of  the  boilers. 

The  contention  on  the  part  of  the  appellants  is  that  the  plaintiff 
was  entitled  to  no  compensation,  unless  the  defendants  "were  satis- 
fied that  the  boilers  as  repaired  were  a  success,  and  that  this  question 
was  for  the  defendants  alone  to  determine,"  thus  making  their  obliga- 
tion depend  upon  the  mental  condition  of  the  defendants,  which  they 
alone  could  disclose.  Performance  must  of  course  accord  with  the 
terms  of  the  contract,  but  if  the  defendants  are  at  liberty  to  determine 
for  themselves  when  they  are  satisfied,  there  would  be  no  obligation, 
and  consequently  no  agreement  which  could  be  enforced.  It  cannot 
be  presumed  that  the  plaintiff  entered  upon  its  work  with  this  under- 
standing, nor  that  the  defendants  supposed  they  were  to  be  the  sole 
judge  in  their  own  cause.  On  the  contrary,  not  only  does  the  law 

dissatisfied.  He  was  bound  to  act  honestly,  and  to  give  the  instrument  a 
fair  trial,  and  such  as  the  seller  had  a  right,  in  the  circumstances,  to  expect 
he  would  give  it,  and  therein  to  exercise  such  judgment  and  capacity  as  he 
had,  for  by  the  contract  he  was  the  one  to  be  satisfied,  and  not  another  for 
him.  If  he  did  this  and  was  still  dissatisfied,  and  that  dissatisfaction  wa3 
real  and  not  feigned,  honest  and  not  pretended,  it  is  enough,  and  plaintiffs 
have  not  fulfilled  their  contract;  and  all  these  elements  are  gatherable  from 
the  report." 


BY   PERFORMANCE.  625 

presume  that  for  services  rendered,  remuneration  shall  be  paid,  but 
here  the  parties  have  so  agreed.  The  amount  and  manner  of  compen- 
sation are  fixed;  time  of  payment  is  alone  uncertain.  The  boilers 
were  changed.  Were  they,  as  changed,  satisfactory  to  the  defendants  ? 
In  Folliard  v.  Wallace  (2  Johns.  395)  W.  covenanted  that  in  case  the 
title  to  a  lot  of  land  conveyed  to  him  by  F.  should  prove  good  and 
sufficient  in  law  against  all  other  claims,  he  would  pay  to  F.  $150, 
three  months  after  he  should  be  "well  satisfied"  that  the  title  was 
undisputed.  Upon  suit  brought  the  defendant  set  up  that  he  was 
"not  satisfied,"  and  the  plea  was  held  bad,  the  court  saying,  "a  simple 
allegation  of  dissatisfaction,  without  some  good  reason  assigned  for 
it,  might  be  a  mere  pretext  and  cannot  be  regarded."  This  decision 
was  followed  in  City  of  Brooklyn  v.  Brooklyn  City  R.  R.  Co.  (47  N. 
Y.  475)  and  Miesell  v.  Globe  Mut.  L.  Ins.  Co.  (76  Id.  115). 

In  the  case  before  us  the  work  required  was  specified,  and  was  com- 
pleted; the  defendants  made  it  available  and  continued  to  use  the 
boilers  without  objection  or  complaint.  If  there  was  full  performance 
on  the  plaintiff's  part,  nothing  more  could  be  required,  and  the  time 
for  payment  had  arrived;  for  according  to  the  doctrine  of  the  above 
cases,  "that  which  the  law  will  say  a  contracting  party  ought  in 
reason  to  be  satisfied  with,  that  the  law  will  say  he  is  satisfied  with." 

Another  rule  has  prevailed,  where  the  object  of  a  contract  was  to 
gratify  taste,  serve  personal  convenience,  or  satisfy  individual  prefer- 
ence. In  either  of  these  cases  the  person  for  whom  the  article  is  made, 
or  the  work  done,  may  properly  determine  for  himself — if  the 
other  party  so  agree — whether  it  shall  be  accepted.  Such  instances 
are  cited  by  the  appellants.  One  who  makes  a  suit  of  clothes  (Brown 
v.  Foster,  113  Mass.  136),  or  undertakes  to  fill  a  particular  place 
as  agent  (Tyler  v.  Ames,  6  Lans.  280),  mold  a  bust  (Zaleski  v.  Clark, 
44  Conn.  218),  or  paint  a  portrait  (Gibson  v.  Cranage,  39  Mich.  49; 
Hoffman  v.  Gallaher,  6  Daly,  42),  may  not  unreasonably  be  expected 
to  be  bound  by  the  opinion  of  his  employer,  honestly  entertained. 
A  different  case  is  before  us,  and  in  regard  to  it  no  error  has  been 
shown. 

The  judgment  appealed  from  should  be  affirmed.     All  concur. 

Judgment  affirmed.1 

9  Cyc.  620-624  (22-44)  ;  W.  P.  51  (59)  ;  20  H.  L.  R.  572;  20  H.  L.  R.  558; 
5  C.  L.  R.  56. 

i  In  Hawkins  v.  Graham,  149  Mass.  284,  the  court  said:  "The  only  ques- 
tion in  this  case  is  whether  the  written  agreement  between  the  parties  left 
the  right  of  the  plaintiff  to  recover  the  price  of  the  work  and  materials  fur- 
nished by  him  dependent  upon  the  actual  satisfaction  of  the  defendant.  Such 
agreements  usually  are  construed  not  as  making  the  defendant's  declaration 
of  dissatisfaction  conclusive,  in  which  case  it  would  be  difficult  to  say  that 
they  amounted  to  contracts  (Hunt  v.  Livennore,  5  Pick.  395,  397),  but  as 
requiring  an  honest  expression.  In  view  of  modern  modes  of  business,  it  is 


626  DISCHARGE   OF    CONTRACT. 

not  surprising  that  in  some  cases  eager  sellers  or  selling  agents  should  be 
found  taking  that  degree  of  risk  with  unwilling  purchasers,  especially  where 
taste  is  involved.  Brown  v.  Foster,  113  Mass.  136;  Gibson  v.  Cranage,  39 
Mich.  49;  Wood  Reaping  A  Mowing  Machine  Co.  v.  Smith,  50  Mich.  565; 
Zaleski  v.  Clark,  44  Conn.  218;  McClure  Bros.  v.  Briggs,  58  Vt.  82;  Exhaust 
Ventilator  Co.  v.  Chicago,  Milwaukee  &  St.  Paul  Railway,  66  Wis.  218;  Seeley 
v.  Welles,  120  Penn.  St.  69;  Singerly  v.  Thayer,  108  Penn.  St.  291;  Andrews 
v.  Belfield,  2  C.  B.  (N.  s.)  779.  Still  when  the  consideration  furnished  is 
of  such  a  nature  that  its  value  will  be  lost  to  the  plaintiff,  either  wholly  or 
in  great  part,  unless  paid  for,  a  just  hesitation  must  be  felt,  and  clear  lan- 
guage required,  before  deciding  that  payment  is  left  to  the  will,  or  even  to  the 
idiosyncrasies,  of  the  interested  party.  In  doubtful  cases  courts  have  been 
inclined  to  construe  agreements  of  this  class  as  agreements  to  do  the  thing 
in  such  a  way  as  reasonably  ought  to  satisfy  the  defendant.  Sloan  v.  Hay- 
den,  110  Mass.  141,  143;  Braunstein  v.  Accidental  Death  Ins.  Co.,  1  B.  &  S. 
782,  799 ;  Dallman  v.  King,  4  Bing.  N.  C.  105." 

In  A.  Wood  Co.  v.  Smith,  50  Mich.  565,  the  court  said:  "The  cases  where 
the  parties  provide  that  the  promisor  is  to  be  satisfied,  or  to  that  effect,  are 
of  two  classes;  and  whether  the  particular  case  at  any  time  falls  within  the 
one  or  the  other  must  depend  on  the  special  circumstances,  and  the  question 
must  be  one  of  construction.  In  the  one  class  the  right  of  decision  is  com- 
pletely reserved  to  the  promisor,  and  without  being  liable  to  disclose  reasons 
or  account  for  his  course,  and  a  right  to  inquire  into  the  grounds  of  his  action 
and  overhaul  his  determination,  is  absolutely  excluded  from  the  promisee  and 
from  all  tribunals.  It  is  sufficient  for  the  result  that  he  willed  it.  The  law 
regards  the  parties  as  competent  to  contract  in  that  manner,  and  if  the 
facts  are  sufficient  to  show  that  they  did  so,  their  stipulation  is  the  law  of 
the  case.  The  promisee  is  excluded  from  setting  up  any  claim  for  remu- 
neration, and  is  likewise  debarred  from  questioning  the  grounds  of  decision 
on  the  part  of  the  promisor,  or  the  fitness  or  propriety  of  the  decision  itself. 
The  cases  of  this  class  are  generally  such  as  involve  the  feelings,  taste,  or 
sensibility  of  the  promisor,  and  not  those  groes  considerations  of  operative 
fitness  or  mechanical  utility  which  are  capable  of  being  seen  and  appreciated 
by  others.  But  this  is  not  always  so.  It  sometimes  happens  that  the  right 
is  fully  reserved  where  it  is  the  chief  ground,  if  not  the  only  one,  that  the 
party  is  determined  to  preserve  an  unqualified  option,  and  is  not  willing  to 
leave  his  freedom  of  choice  exposed  to  any  contention  or  subject  to  any  con- 
tingency. He  is  resolved  to  permit  no  right  in  any  one  else  to  judge  for  him 
or  to  pass  on  the  wisdom  or  unwisdom,  the  justice  or  injustice  of  his  action. 
Such  is  his  will.  He  will  not  enter  into  any  bargain  except  upon  the  condi- 
tion of  reserving  the  power  to  do  what  others  might  regard  as  unreasonable. 
The  following  cases  sufficiently  illustrate  the  instances  of  the  first  class: 
Gibson  v.  Cranage,  39  Mich.  49;  Taylor  v.  Brewer,  1  M.  &  S.  290;  McCarren 
v.  McNulty,  7  Gray,  139;  Brown  v.  Foster,  113  Mass.  136;  Zaleski  v.  Clark, 
44  Conn.  218;  Rossiter  v.  Cooper,  23  Vt.  522;  Hart  v.  Hart,  22  Barb.  606; 
Tyler  v.  Ames,  6  Lans.  280.  In  the  other  class  the  promisor  is  supposed  to 
undertake  that  he  will  act  reasonably  and  fairly,  and  found  his  determination 
on  grounds  which  are  just  and  sensible,  and  from  thence  springs  a  necessary 
implication  that  his  decision  in  point  of  correctness  and  the  adequacy  of 
the  grounds  of  it  are  open  considerations  and  subject  to  the  judgment  of 
judicial  triers.  Among  the  cases  applicable  to  this  class  are  Daggett  v.  John- 
son, 49  Vt.  345,  and  Hartford  Sorghum  Mfg.  Co.  v.  Brush,  43  Vt.  628." 


CHAPTER  III. 

DISCHARGE  OF  CONTRACT  BY  BREACH.1 

Forms  of  discharge  by  breach. 

(t.)  Discharge  by  renunciation  before  performance  due:  anticipatory 

breach. 

ROEHM  v.  HORST. 
178  UNITED  STATES,  1.— 1900. 

Action  for  breach  of  four  contracts,  judgment  for  plaintiffs  (84 
Fed.  Rep.  565)  ;  affirmed  by  Circuit  Court  of  Appeals  (91  Fed.  Rep. 
345). 

In  1893  plaintiffs  entered  into  these  four  contracts  with  defendant, 
by  the  terms  of  the  first  of  which  plaintiffs  agreed  to  sell  and  defend- 
ant to  buy  100  bales  of  hops  of  the  crop  of  1896,  at  22  cents  a  pound, 
to  be  shipped  in  specified  months  at  the  rate  of  20  bales  a  month;  by 
the  second,  100  bales  of  the  crop  of  1896,  to  be  shipped  in  other  speci- 
fied months;  by  the  third,  100  bales  of  the  crop  of  1897,  to  be 
shipped  in  specified  months;  by  the  fourth,  100  bales  of  the  crop  of 
1897,  to  be  shipped  in  other  specified  months.  (Six  other  contracts 
of  like  tenor  had  already  been  performed;  the  total  of  the  ten  con- 
tracts was  1000  bales.) 

In  October,  1896,  the  first  shipment  of  20  bales  was  duly  made 
under  the  first  contract,  but  defendant  declined  to  receive  the  hops, 
and  notified  plaintiffs  that  he  would  not  receive  any  more  under  the 
four  contracts.  In  January,  1897,  plaintiffs  began  this  action  for 
damages. 

At  the  time  of  defendant's  refusal,  plaintiffs  could  have  made  sub- 
contracts for  forward  delivery  of  the  1896  hops  at  9  cents  a  pound 
and  for  the  1897  crop  at  11  cents  a  pound,  and  judgment  was  given 
for  the  difference  between  these  prices  and  the  contract  price  of  22 
cents  a  pound,  together  with  interest  on  the  same  from  October  24, 
1896. 

MR.  CHIEF  JUSTICE  FULLER  delivered  the  opinion  of  the  court : 

It  is  conceded  that  the  contracts  set  out  in  the  finding  of  facts 
were  four  of  ten  simultaneous  contracts,  for  100  bales  each,  cover- 
ing the  furnishing  of  1000  bales  of  hops  during  a  period  of  five  years, 

iSee  Williston,  Repudiation  of  contracts,   14   H.  L.  R.   317,  421. 

627 


628  DISCHARGE   OF   CONTRACT. 

of  which  600  bales  had  been  delivered  and  paid  for.  If  the  trans- 
action could  be  treated  as  amounting  to  a  single  contract  for  1000 
bales,  the  breach  alleged  would  have  occurred  while  the  contract  was 
in  course  of  performance;  but  plaintiffs'  declaration  or  statement  of 
demand  averred  the  execution  of  the  four  contracts,  "two  for  the 
purchase  and  sale  of  Pacific  coast  hops  of  the  crop  of  1896,  and 
two  for  the  purchase  and  sale  of  Pacific  coast  hops  of  the  crop  of 
1897,"  set  them  out  in  extenso,  and  claimed  recovery  for  breach 
thereof,  and  in  this  view  of  the  case,  while  as  to  the  first  of  the  four 
contracts,  the  time  to  commence  performance  had  arrived,  and  the 
October  shipment  had  been  tendered  and  refused,  the  breach  as 
to  the  other  three  contracts  was  the  refusal  to  perform  before  the 
time  for  performance  had  arrived. 

The  first  contract  falls  within  the  rule  that  a  contract  may  be 
broken  by  the  renunciation  of  liability  under  it  in  the  course  of  per- 
formance, and  suit  may  be  immediately  instituted.  But  the  other 
three  contracts  involve  the  question  whether,  where  the  contract  is 
renounced  before  the  performance  is  due,  and  the  renunciation  goes 
to  the  whole  contract,  and  is  absolute  and  unequivocal,  the  injured 
party  may  treat  the  breach  as  complete  and  bring  his  action  at  once. 
Defendant  repudiated  all  liability  for  hops  of  the  crop  of  1896  and 
of  the  crop  of  1897,  and  notified  plaintiffs  that  he  should  make 
(according  to  a  letter  of  his  attorney  in  the  record  that  he  had  made) 
arrangements  to  purchase  his  stock  of  other  parties,  whereupon  plain- 
tiffs brought  suit.  The  question  is  therefore  presented,  in  respect 
of  the  three  contracts,  whether  plaintiffs  were  entitled  to  sue  at  once 
or  were  obliged  to  wait  until  the  time  came  for  the  first  month's 
delivery  under  each  of  them. 

It  is  not  disputed  that  if  one  party  to  a  contract  has  destroyed 
the  subject-matter,  or  disabled  himself  so  as  to  make  performance  im- 
possible, his  conduct  is  equivalent  to  a  breach  of  the  contract,  although 
the  time  for  performance  has  not  arrived ;  and  also  that  if  a  contract 
provides  for  a  series  of  acts,  and  actual  default  is  made  in  the  per- 
formance of  one  of  them,  accompanied  by  a  refusal  to  perform  the 
rest,  the  other  party  need  not  perform,  but  may  treat  the  refusal  as  a 
breach  of  the  entire  contract,  and  recover  accordingly. 

And  the  doctrine  that  there  may  be  an  anticipatory  breach  of  an 
executory  contract  by  an  absolute  refusal  to  perform  it  has  become 
the  settled  law  of  England  as  applied  to  contracts  for  services,  for 
marriage,  and  for  the  manufacture  or  sale  of  goods.  The  cases 
are  extensively  commented  on  in  the  notes  to  Cutter  v.  Powell,  2 
Smith,  Lead.  Cas.  1212,  1220,  9th  edition  by  Kichard  Henn  Collins 
and  Arbuthnot.  Some  of  these,  though  quite  familiar,  may  well  be 
referred  to. 

In  Hochster  v.  De  la  Tour  (2  El.  &  Bl.  678),  plaintiff,  in  April, 


BY   BREACH.  629 

1852,  had  agreed  to  serve  defendant,  and  defendant  had  undertaken 
to  employ  plaintiff,  as  courier,  for  three  months  from  June  1st, 
on  certain  terms.  On  the  llth  of  May,  defendant  wrote  plaintiff 
that  he  had  changed  his  mind,  and  declined  to  avail  himself  of  plain- 
tiff's services.  Thereupon,  and  on  May  22d,  plaintiff  brought  an 
action  at  law  for  breach  of  contract  in  that  defendant,  before  the 
said  1st  of  June,  though  plaintiff  was  always  ready  and  willing  to 
perform,  refused  to  engage  plaintiff  or  perform  his  promise,  and  then 
wrongfully  exonerated  plaintiff  from  the  performance  of  the  agree- 
ment, to  his  damage.  And  it  was  ruled  that  as  there  could  be  a  breach 
of  contract  before  the  time  fixed  for  performance,  a  positive  and  ab- 
solute refusal  to  carry  out  the  contract  prior  to  the  date  of  actual 
default  amounted  to  such  a  breach. 

In  the  course  of  the  argument,  Mr.  Justice  Crompton  observed: 

"When  a  party  announces  his  intention  not  to  fulfill  the  contract,  the 
other  side  may  take  him  at  his  word  and  rescind  the  contract.  That  word 
'rescind'  implies  that  both  parties  have  agreed  that  the  contract  shall  be 
at  an  end,  as  if  it  had  never  been.  But  I  am  inclined  to  think  that  the 
party  may  also  say :  'Since  you  have  announced  that  you  will  not  go  on 
with  the  contract,  I  will  consent  that  it  shall  be  at  an  end  from  this  time ;  but  I 
will  hold  you  liable  for  the  damage  I  have  sustained;  and  I  will  proceed 
to  make  that  damage  as  little  as  possible  by  making  the  best  use  I  can  of  my 
liberty.'  " 

In  delivering  the  opinion  of  the  court  (Campbell,  Ch.  J.,  Cole- 
ridge, Earle,  and  Crompton,  JJ.),  Lord  Campbell,  after  pointing 
out  that  at  common  law  there  were  numerous  cases  in  which  an  an- 
ticipatory act,  such  as  an  act  rendering  the  contract  impossible  of 
performance,  or  disabling  the  party  from  performing  it,  would  con- 
stitute a  breach  giving  an  immediate  right  of  action,  laid  it  down 
that  a  positive  and  unqualified  refusal  by  one  party  to  carry  out  the 
contract  should  be  treated  as  belonging  to  the  same  category  as  such, 
anticipatory  acts,  and  said  (p.  690)  : 

"But  it  is  surely  much  more  rational,  and  more  for  the  benefit  of  both 
parties,  that,  after  the  renunciation  of  the  agreement  by  the  defendant,  the 
plaintiff  should  be  at  liberty  to  consider  himself  absolved  from  any  future 
performance  of  it,  retaining  his  right  to  sue  for  any  damage  he  has  suffered 
from  the  breach  of  it.  Thus,  instead  of  remaining  idle  and  laying  out  money 
in  preparations  which  must  be  useless,  he  is  at  liberty  to  seek  service  under 
another  employer,  which  would  go  in  mitigation  of  the  damages  to  which 
he  would  otherwise  be  entitled  for  a  breach  of  the  contract.  It  seems  strange 
that  the  defendant,  after  renouncing  the  contract  and  absolutely  declaring  that 
he  will  never  act  under  it,  should  be  permitted  to  object  that  faith  is  given  to 
his  assertion,  and  that  an  opportunity  is  not  left  to  him  of  changing  his  mind. 
If  the  plaintiff  is  barred  of  any  remedy  by  entering  into  an  engagement  in- 
consistent with  starting  as  a  courier  with  the  defendant  on  the  1st  of  June, 
he  is  prejudiced  by  putting  faith  in  the  defendant's  assertion;  and  it  would 
be  more  consonant  with  principle  if  the  defendant  were  precluded  from  say- 


630  DISCHARGE   OF   CONTRACT. 

ing  that  he  had  not  broken  the  contract  when  he  declared  that  he  entirely 
renounced  it.  Suppose  that  the  defendant,  at  the  time  of  his  renunciation, 
had  embarked  on  a  voyage  for  Australia,  so  as  to  render  it  physically  im- 
possible for  him  to  employ  the  plaintiff  as  a  courier  on  the  continent  of  Europe 
in  the  months  of  June,  July,  and  August,  1852;  according  to  decided  cases, 
the  action  might  have  been  brought  before  the  1st  of  June;  but  the  renun- 
ciation may  have  been  founded  on  other  facts,  to  be  given  in  evidence,  which 
would  equally  have  rendered  the  defendant's  performance  of  the  contract 
impossible.  The  man  who  wrongfully  renounces  a  contract  into  which  he 
has  deliberately  entered  cannot  justly  complain  if  he  is  immediately  sued 
for  a  compensation  in  damages  by  the  man  whom  he  has  injured;  and  it 
seems  reasonable  to  allow  an  option  to  the  injured  party,  either  to  sue  im- 
mediately, or  to  wait  till  the  time  comes  when  the  act  was  to  be  done,  still 
holding  it  as  prospectively  binding  for  the  exercise  of  this  option,  which  may 
be  advantageous  to  the  innocent  party  and  cannot  be  prejudicial  to  the 
wrongdoer.  An  argument  against  the  action  before  the  1st  of  June  is  urged 
from  the  difficulty  of  calculating  the  damages;  but  this  argument  is  equally 
strong  against  an  action  before  the  1st  of  September,  when  the  three  months 
would  expire.  In  either  case,  the  jury  in  assessing  the  damages  would  be 
justified  in  looking  to  all  that  had  happened,  or  was  likely  to  happen,  to 
increase  or  mitigate  the  loss  of  the  plaintiff  down  to  the  day  of  trial.  We 
do  not  find  any  decision  contrary  to  the  view  we  are  taking  of  this  ease." 

In  Frost  v.  Knight  (L.  R.  7  Exch.  Ill),  defendant  had  promised 
to  marry  plaintiff  so  soon  as  his  (defendant's)  father  should  die. 
While  his  father  was  yet  alive  he  absolutely  refused  to  marry  plaintiff, 
and  it  was  held  in  the  Exchequer  Chamber,  overruling  the  decision 
of  the  Court  of  Exchequer  (L.  R.  5  Exch.  322),  that  for  this  breach 
an  action  was  well  brought  during  the  father's  lifetime.  Cockburn, 
Ch.  J.,  said: 

"The  law  with  reference  to  a  contract  to  be  performed  at  a  future  time, 
where  the  party  bound  to  performance  announces  prior  to  the  time  his  in- 
tention not  to  perform  it,  as  established  by  the  cases  of  Hochster  v.  De  la 
Tour,  2  El  &  Bl.  678,  and  the  Danube  &  B.  S.  Railway  &  K.  Harbour  Co.  v. 
Xenos,  13  C.  B.  N.  S.  825,  on  the  one  hand,  and  Avery  v.  Bowden,  5  El.  &  Bl. 
714;  Reid  v.  Hoskins,  6  El.  &  Bl.  953;  and  Barrick  v.  Buba,  2  C.  B.  N.  S. 
563,  on  the  other,  may  be  thus  stated.  The  promisee,  if  he  pleases,  may  treat 
the  notice  of  intention  as  inoperative,  and  await  the  time  when  the  contract 
is  to  be  executed,  and  then  hold  the  other  party  responsible  for  all  the  con- 
sequences of  nonperformance ;  but  in  that  case  he  keeps  the  contract  alive 
for  the  benefit  of  the  other  party  as  well  as  his  own;  he  remains  subject  to 
all  his  own  obligations  and  liabilities  under  it,  and  enables  the  other  party, 
not  only  to  complete  the  contract,  if  so  advised,  notwithstanding  his  previous 
repudiation  of  it,  but  also  to  take  advantage  of  any  supervening  circum- 
stance which  would  justify  him  in  declining  to  complete  it.  On  the  other 
hand,  the  promisee  may,  if  he  thinks  proper,  treat  the  repudiation  of  the 
other  party  as  a  wrongful  putting  an  end  to  the  contract,  and  may  at  once 
bring  his  action  as  on  a  breach  of  it;  and  in  such  action  he  will  be  entitled 
to  such  damages  as  would  have  arisen  from  the  nonperformance  of  the  con- 
tract at  the  appointed  time,  subject,  however,  to  abatement  in  respect  of  any 
circumstances  which  may  have  afforded  him  the  means  of  mitigating  his  loss." 


BY    BREACH.  631 

The  case  of  Danube  &  B.  S.  Railway  &  K.  Harbour  Co.  v.  Xenos 
(11  C.  B.  N.  S.  152)  is  stated  in  the  headnotes  thus:  On  the  9th 
of  July,  A,  by  his  agent,  agreed  to  receive  certain  goods  of  B  on 
board  his  ship  to  be  carried  to  a  foreign  port, — the  shipment  to  com- 
mence on  the  1st  of  August.  On  the  21st  of  July  A  wrote  to  B, 
stating  that  he  did  not  hold  himself  responsible  for  the  contract,  the 
agent  having  no  authority  to  make  it;  and  on  the  23d  he  wrote  again 
offering  a  substituted  contract,  but  still  repudiating  the  original  con- 
tract. B,  by  his  attorneys,  gave  A  notice  that  he  should  hold  him 
bound  by  the  original  contract,  and  that,  if  he  persisted  in  refusing 
to  perform  it,  he  (B)  should  forthwith  proceed  to  make  other  arrange- 
ments for  forwarding  the  goods  to  their  destination,  and  look  to 
him  for  any  loss.  On  the  1st  of  August,  A  again  wrote  to  B,  stating 
that  he  was  then  prepared  to  receive  the  goods  on  board  his  ship, 
making  no  allusion  to  the  original  contract.  B  had,  however,  in  the 
meantime  entered  into  a  negotiation  with  one  S  for  the  conveyance 
of  the  goods  by  another  ship,  which  negotiation  ended  in  a  contract 
for  that  purpose  with  S  on  the  2d  of  August.  B  thereupon  sued  A 
for  refusing  to  receive  the  goods  pursuant  to  his  contract;  and  A 
brought  a  cross  action  against  B  for  refusing  to  ship.  Upon  a  special 
case  stating  these  facts :  Held,  that  it  was  competent  to  B  to  treat  A's 
renunciation  as  a  breach  of  the  contract;  and  that  the  fact  of  such 
renunciation  afforded  a  good  answer  to  the  cross  action  of  A,  and 
sustained  B's  plea  that  before  breach  A  discharged  him  from  the 
performance  of  the  agreement. 

Earle,  Ch.  J.,  said  (p.  175)  : 

"In  Cort  v.  Ambergate,  N.  &  B.  &  E.  Junction  R.  Co.  (17  Q.  B.  127).  it 
was  held  that  upon  the  company  giving  notice  to  Mr.  Cort  that  they  would 
not  receive  any  more  of  his  chairs,  he  might  abstain  from  manufacturing 
them  and  sue  the  company  for  the  breach  of  contract  without  tendering  the 
goods  for  their  acceptance.  So,  in  Hochster  v.  De  la  Tour  ( El.  &  Bl.  678 ) , 
it  was  held  that  the  courier  whose  services  were  engaged  for  a  period  to 
commence  from  a  future  day,  being  told  before  that  day  that  they  would 
not  be  accepted,  was  at  liberty  to  treat  that  as  a  complete  breach,  and  to 
hire  himself  to  another  party.  And  the  boundary  is  equally  well  ascertained 
on  the  other  side.  Thus,  in  Avery  v.  Bowden  (5  El.  &  Bl.  714,  6  El.  &  Bl. 
953 ) ,  where  the  agent  of  the  charterer  intimated  to  the  captain  that,  in  con- 
sequence of  the  breaking  out  of  the  war,  he  would  be  unable  to  furnish  him 
with  a  cargo,  and  wished  the  captain  to  sail  away,  and  the  latter  did  not 
do  so,  it  was  held  not  to  fall  within  the  principle  already  adverted  to,  and  not 
to  amount  to  a  breach  or  renunciation  of  the  contract.  But  where  there  is  an 
explicit  declaration  by  the  one  party  of  his  intention  not  to  perform  the 
contract  on  his  part,  which  is  accepted  by  the  other  as  a  breach  of  the  con- 
tract, that  beyond  all  doubt  affords  a  cause  of  action." 

The  case  was  heard  on  error  in  the  Exchequer  Chamber  before  Cock- 
burn,  Ch.  J.,  Pollock,  C.  B.,  Wightman,  J.,  Crompton,  J.,  Channell, 


632  DISCHARGE   OF   CONTRACT. 

B.,  and  Wilde,  B. ;  and  the  judgment  of  the  Common  Pleas  was 
unanimously  affirmed.     13  C.  B.  N.  S.  825. 

In  Johnstone  v.  Milling  (L.  R.  16  Q.  B.  Div.  467)  Lord  Esher, 
Master  of  the  Rolls,  puts  the  principle  thus: 

"When  one  party  assumes  to  renounce  the  contract,  that  is,  by  anticipa- 
tion refuses  to  perform  it,  he  thereby,  so  far  as  he  is  concerned,  declares 
his  intention  then  and  there  to  rescind  the  contract.  Such  a  renunciation 
does  not,  of  course,  amount  to  a  rescission  of  the  contract,  because  one  party 
to  a  contract  cannot  by  himself  rescind  it,  but  by  wrongfully  making  such  a 
renunciation  of  the  contract  he  entitles  the  other  party,  if  he  pleases,  to 
agree  to  the  contract  being  put  an  end  to,  subject  to  the  retention  by  him 
of  his  right  to  bring  an  action  in  respect  of  such  wrongful  rescission.  The 
other  party  may  adopt  such  renunciation  of  the  contract  by  so  acting  upon 
it  as  in  effect  to  declare  that  he  too  treats  the  contract  as  at  an  end,  except 
for  the  purpose  of  bringing  an  action  upon  it  for  the  damages  sustained  by 
him  in  consequence  of  such  renunciation." 

Lord  Justice  Bowen  said  (p.  472) : 

"We  have,  therefore,  to  consider  upon  what  principles  and  under  what 
circumstances  it  must  be  held  that  a  promisee,  who  finds  himself  confronted 
with  a  declaration  of  intention  by  the  promisor  not  to  carry  out  the  contract 
when  the  time  for  performance  arrives,  may  treat  the  contract  as  broken,  and 
sue  for  the  breach  thereof.  It  would  seem  on  principle  that  the  declaration 
of  such  intention  by  the  promisor  is  not  in  itself  and  unless  acted  on  by  the 
promisee  a  breach  of  the  contract;  and  that  it  only  becomes  a  breach  when 
it  is  converted  by  force  of  what  follows  it  into  a  wrongful  renunciation  of 
the  contract.  Its  real  operation  appears  to  be  to  give  the  promisee  the  right 
of  electing  either  to  treat  the  declaration  as  brutum  fulmen,  and,  holding  fast 
to  the  contract,  to  wait  till  the  time  for  its  performance  has  arrived,  or  to 
act  upon  it  and  treat  it  as  a  final  assertion  by  the  promisor  that  he  is  no 
longer  bound  by  the  contract,  and  a  wrongful  renunciation  of  the  contractual 
relation  into  which  he  has  entered.  But  such  declaration  only  becomes  a 
wrongful  act  if  the  promisee  elects  to  treat  it  as  such.  If  he  does  so  elect, 
it  becomes  a  breach  of  contract,  and  he  can  recover  upon  it  as  such." 

The  doctrine  which  thus  obtains  in  England  has  been  almost  uni- 
versally accepted  by  the  courts  of  this  country,  althought  the  precise 
point  has  not  been  ruled  by  this  court. 

[The  court  then  discusses  Smoot's  case,  15  Wall.  36;  Lovell  v. 
Ins.  Co.,  Ill  U.  S.  264;  Dingley  v.  Oler,  117  U.  S.  490;  Cleveland 
Rolling  Mill  v.  Rhodes,  121  U.  S.  255;  Anvil  Min.  Co.  v.  Humble,  153 
U.  S.  540;  Pierce  v.  Tennessee  Co.,  173  U.  S.  1;  Hancock  v.  New 
York  L.  Ins.  Co.,  11  Fed.  Gas.  402;  Grau  v.  McVicker,  8  Biss.  13; 
and  also  cites  other  Federal  cases.] 

The  great  weight  of  authority  in  the  State  courts  is  to  the  same 
effect  as  will  appear  by  reference  to  the  cases  cited  in  the  margin.1 

i  Fox  v.  Kitton,  19  111.  518;  Kadish  v.  Young,  108  111.  170,  43  Am.  Rep. 
548;  John  A.  Roebling's  Sons'  Co.  v.  Lock-Stitch  Fence  Co.,  130  111.  660,  22 
X.  E.  518;  Lake  Shore  and  M.  S.  R.  Co.  v.  Richards,  152  111.  59,  30  L.  R.  A. 


BY   BREACH.  633 

On  the  other  hand,  in  Greenway  v.  Gaither  (Taney,  227,  Fed.  Cas. 
No.  5788),  Mr.  Chief  Justice  Taney,  sitting  on  circuit  in  Maryland, 
declined  to  apply  the  rule  in  that  particular  case.  The  cause  was 
tried  in  November,  1851,  and  more  than  two  years  after,  at  November 
term,  1853,  application  was  made  to  the  chief  justice  to  seal  a  bill 
of  exceptions.  Hochster  v.  De  la  Tour  was  decided  in  June,  1853, 
and  the  decision  of  the  Circuit  Court  had  apparently  been  contrary 
to  the  rule  laid  down  in  that  case.  The  chief  justice  refused  to  seal 
the  bill,  chiefly  on  the  ground  that  under  the  circumstances  the  appli- 
cation came  too  late,  but  also  on  the  ground  that  there  was  no  error, 
as  the  rule  was  only  applicable  to  contracts  of  the  special  character 
involved  in  that  case,  and  the  chief  justice  said  as  to  the  contract  in 
hand,  by  which  defendant  engaged  to  pay  certain  sums  of  money  on 
certain  days:  "It  has  never  been  supposed  that  notice  to  the  holder 
of  a  bond,  or  a  promissory  note,  or  bill  of  exchange,  that  the  party 
would  not  (from  any  cause)  comply  with  the  contract,  would  give  to 
the  holder  an  immediate  cause  of  action  upon  which  he  might  sue 
before  the  time  of  payment  arrived." 

The  rule  is  disapproved  in  Daniels  v.  Newton  (114  Mass.  530) 
and  in  Stanford  v.  McGill  (6  N.  D.  536,  38  L.  R.  A.  760,  72  N.  W. 
938)  on  elaborate  consideration.  The  opinion  of  Judge  Wells  in 
Daniels  v.  Newton  is  generally  regarded  as  containing  all  that  could 
be  said  in  opposition  to  the  decision  of  Hochster  v.  De  la  Tour, 
and  one  of  the  propositions  on  which  the  opinion  rests  is  that  the 
adoption  of  the  rule  in  the  instance  of  ordinary  contracts  would  neces- 
sitate its  adoption  in  the  case  of  commercial  paper.  But  we  are  un- 
able to  assent  to  that  view.  In  the  case  of  an  ordinary  money  con- 
tract, such  as  a  promissory  note,  or  a  bond,  the  consideration  has 
passed ;  there  are  no  mutual  obligations ;  and  cases  of  that  sort  do  not 
fall  within  the  reason  of  the  rule. 

In  Nichols  v.  Scranton  Steel  Co.  (137  N.  Y.  487),  Mr.  Justice 
Peckham,  then  a  member  of  the  court  of  appeals  of  New  York, 
thus  expresses  the  distinction: 

"It  is  not  intimated  that  in  the  bald  case  of  a  party  bound  to  pay  a 
promissory  note  which  rests  in  the  hands  of  the  payee,  but  which  is  not 
yet  due,  such  note  can  be  made  due  by  any  notice  of  the  maker  that  he 
does  not  intend  to  pay  it  when  it  matures.  We  decide  simply  this  case 

33,  38  N.  E.  773;  Burtis  v.  Thompson,  42  N.  Y.  246,  1  Am.  Rep.  516;  Wind- 
muller  v.  Pope,  107  N.  Y.  647,  14  N.  E.  436;  Mountjoy  v.  Metzger,  9  Phila. 
10;  Zuck  v.  McClure,  98  Pa.  541;  Hocking  v.  Hamilton,  158  Pa.  107,  27  Atl. 
836;  Dugan  v.  Anderson,  36  Md.  567,  11  Am.  Rep.  509;  Hosmer  v.  Wilson, 
7  Mich.  294,  74  Am.  Dec.  716;  Platt  v.  Brand,  26  Mich.  173;  Crabtree  v. 
Messersmith,  19  Iowa,  179;  McCormick  v.  Basal,  46  Iowa,  235;  Kurtz  v. 
Frank,  76  Ind.  594,  40  Am.  Rep.  275;  Cobb  v.  Hall,  33  Vt.  233;  Davis  V, 
Grand  Rapids  School  Furniture  Co.,  41  W.  Va.  717,  24  S.  E.  630;  and  other 
cases. 


634  DISCHARGE    OF    CONTRACT. 

where  there  are  material  provisions  and  obligations  interdependent.  In 
such  case,  and  where  one  party  is  bound,  from  time  to  time,  as  expressed, 
to  deliver  part  of  an  aggregate  and  specified  amount  of  property  to  another, 
who  is  to  pay  for  each  parcel  delivered  at  a  certain  time  and  in  a  certain 
way,  a  refusal  to  be  further  bound  by  the  terms  of  the  contract  or  to  accept 
further  deliveries,  and  a  refusal  to  give  the  notes  already  demandable  for  a 
portion  of  the  property  that  has  been  delivered,  and  a  refusal  to  give  any 
more  notes  at  any  time  or  for  any  purpose  in  the  future,  or  to  pay  moneys 
at  any  time,  which  are  eventually  to  be  paid  under  the  contract,  all  this 
constitutes  a  breach  of  the  contract  as  a  whole,  and  gives  a  present  right  of 
action  against  the  party  so  refusing  to  recover  damages  which  the  other 
may  sustain  by  reason  of  this  refusal." 

We  think  it  obvious  that  both  as  to  renunciation  after  commence- 
ment of  performance  and  renunciation  before  the  time  for  perform- 
ance has  arrived,  money  contracts,  pure  and  simple,  stand  on  a  dif- 
ferent footing  from  executory  contracts  for  the  purchase  and  sale  of 
goods. 

The  other  proposition  on  which  the  case  of  Daniels  v.  Newton  was 
rested  is  that  until  the  time  for  performance  arrives  neither  con- 
tracting party  can  suffer  any  injury  which  can  form  a  ground  of 
damages.  Wells,  J.,  said:  "An  executory  contract  ordinarily  con- 
fers no  title  or  interest  in  the  subject-matter  of  the  agreement. 
Until  the  time  arrives  when  by  the  terms  of  the  agreement  he  is  or 
might  be  entitled  to  its  performance,  he  can  suffer  no  injury  or  de- 
privation which  can  form  a  ground  of  damages.  There  is  neither 
violation  of  right,  nor  loss  upon  which  to  found  an  action." 

But  there  are  many  cases  in  which,  before  the  time  fixed  for  per- 
formance, one  of  the  contracting  parties  may  do  that  which  amounts 
to  a  breach  and  furnishes  a  ground  of  damages.  It  has  always  been 
the  law  that  where  a  party  deliberately  incapacitates  himself  or  renders 
performance  of  his  contract  impossible,  his  act  amounts  to  an  injury 
to  the  other  party,  which  gives  the  other  party  a  cause  of  action  for 
breach  of  contract;  yet  this  would  seem  to  be  inconsistent  with  the 
reasoning  in  Daniels  v.  Newton,  though  it  is  not  there  in  terms  de- 
cided "that  an  absolute  refusal  to  perform  a  contract,  after  the  time 
and  under  the  conditions  in  which  plaintiff  is  entitled  to  require 
performance,  is  not  a  breach  of  the  contract,  even  although  the  con- 
tract is  by  its  terms  to  continue  in  the  future."  Parker  v.  Russell, 
133  Mass.  74. 

In  truth,  the  opinion  goes  upon  a  distinction  between  cases  of  re- 
nunciation before  the  arrival  of  the  time  of  performance  and  those 
of  renunciation  of  unmatured  obligations  of  a  contract  while  it  is  in 
course  of  performance,  and  it  is  said  that  before  the  argument  on 
the  ground  of  convenience  and  mutual  advantage  to  the  parties  can 
properly  have  weight,  "the  point  to  be  reached  must  first  be  shown 
to  be  consistent  with  logical  deductions  from  the  strictly  legal  aspects 
of  the  case." 


BY    BREACH.  635 

We  think  that  there  can  be  no  controlling  distinction  on  this  point 
between  the  two  classes  of  cases,  and  that  it  is  proper  to  consider 
the  reasonableness  of  the  conclusion  that  the  absolute  renunciation 
of  particular  contracts  constitutes  such  a  breach  as  to  justify  im- 
mediate action  and  recovery  therefor.  The  parties  to  a  contract 
which  is  wholly  executory  have  a  right  to  the  maintenance  of  the  con- 
tractual relations  up  to  the  time  for  performance,  as  well  as  to  a 
performance  of  the  contract  when  due.  If  it  appears  that  the  party 
who  makes  an  absolute  refusal  intends  thereby  to  put  an  end  to  the 
contract  so  far  as  performance  is  concerned,  and  that  the  other 
party  must  accept  this  position,  why  should  there  not  be  speedy 
action  and  settlement  in  regard  to  the  rights  of  the  parties?  Why 
should  a  locus  pcenitentia  be  awarded  to  the  party  whose  wrongful 
action  has  placed  the  other  at  such  disadvantage?  What  reasonable 
distinction  per  se  is  there  between  liability  for  a  refusal  to  perform 
future  acts  to  be  done  under  a  contract  in  course  of  performance 
and  liability  for  a  refusal  to  perform  the  whole  contract  made  before 
the  time  for  commencement  of  performance? 

As  Lord  Chief  Justice  Cockburn  observed  in  Frost  v.  Knight, 
the  promisee  has  the  right  to  insist  on  the  contract  as  subsisting  and 
effective  before  the  arrival  of  the  time  for  its  performance,  and  its 
unimpaired  and  unimpeached  efficacy  may  be  essential  to  his  interests, 
dealing  as  he  may  with  rights  acquired  under  it  in  various  ways  for 
his  benefit  and  advantage.  And  of  all  such  advantage,  the  repudiation 
of  the  contract  by  the  other  party,  and  the  announcement  that  it 
never  will  be  fulfilled,  must  of  course  deprive  him.  While  by  acting 
on  such  repudiation  and  the  taking  of  timely  measures,  the  promisee 
may  in  many  cases  avert,  or,  at  all  events,  materially  lessen,  the  in- 
jurious effects  which  would  otherwise  flow  from  the  nonfulfillment 
of  the  contract. 

During  the  argument  of  Cort.  v.  Ambergate  Eailway  Co.  (17  Q.  B. 
127),  Erie,  J.,  made  this  suggestion:  "Suppose  the  contract  was 
that  plaintiff  should  send  a  ship  to  a  certain  port  for  cargo, 
and  defendant  should  there  load  one  on  board;  but  defendant  wrote 
word  that  he  could  not  furnish  a  cargo;  must  the  ship  be  sent  to 
return  empty?"  And  if  it  was  not  necessary  for  the  ship  owner  to 
send  his  ship,  it  is  not  perceived  why  he  should  be  compelled  to  wait 
until  the  time  fixed  for  the  loading  of  the  ship  at  the  remote  port 
before  bringing  suit  upon  the  contract. 

If  in  this  case  these  ten  hop  contracts  had  been  written  into  one 
contract  for  the  supply  of  hops  for  five  years  in  installments,  then 
when  the  default  happened  in  October,  1896,  it  cannot  be  denied 
that  an  immediate  action  could  have  been  brought  in  which  damages 
could  have  been  recovered  in  advance  for  the  breach  of  the  agreement 
to  deliver  during  the  two  remaining  years.  But  treating  the  four 


636  DISCHARGE   OF   CONTRACT. 

outstanding  contracts  as  separate  contracts,  why  is  it  not  equally  rea- 
sonable that  an  unqualified  and  positive  refusal  to  perform  them  con- 
stitute such  a  breach  that  damages  could  be  recovered  in  an  immediate 
action  ?  Why  should  plaintiff  be  compelled  to  bring  four  suits  instead 
of  one  ?  For  the  reasons  above  stated,  and  having  reference  to  the  state 
of  the  authorities  on  the  subject,  our  conclusion  is  that  the  rule  laid 
down  in  Hochster  v.  De  la  Tour  is  a  reasonable  and  proper  rule  to  be 
applied  to  this  case  and  in  many  others  rising  out  of  the  transactions  of 
commerce  of  the  present  day. 

As  to  the  question  of  damages,  if  the  action  is  not  premature,  the 
rule  is  applicable  that  plaintiff  is  entitled  to  compensation  based,  as 
far  as  possible,  on  the  ascertainment  of  what  he  would  have  suffered 
by  the  continued  breach  of  the  other  party  down  to  the  time  of  com- 
plete performance,  less  any  abatement  by  reason  of  circumstances  of 
which  he  ought  reasonably  to  have  availed  himself.  If  a  vendor  is 
to  manufacture  goods,  and  during  the  process  of  manufacture  the  con- 
tract is  repudiated,  he  is  not  bound  to  complete  the  manufacture,  and 
estimate  his  damages  by  the  difference  between  the  market  price 
and  the  contract  price,  but  the  measure  of  damage  is  the  difference 
between  the  contract  price  and  the  cost  of  performance.  Hinckley  v. 
Pittsburg  Bessemer  Steel  Co.,  121  U.  S.  264.  Even  if  in  such  cases 
the  manufacturer  actually  obtains  his  profits  before  the  time  fixed  for 
performance,  and  recovers  on  a  basis  of  cost  which  might  have  been 
increased  or  diminished  by  subsequent  events,  the  party  who  broke  the 
contract  before  the  time  for  complete  performance  cannot  complain, 
for  he  took  the  risk  involved  in  such  anticipation.  If  the  vendor  has 
to  buy  instead  of  to  manufacture,  the  same  principle  prevails,  and  he 
may  show  what  was  the  value  of  the  contract  by  showing  for  what 
price  he  could  have  made  sub-contracts,  just  as  the  cost  of  manufacture 
in  the  case  of  a  manufacturer  may  be  shown.  Although  he  may  re- 
ceive his  money  earlier  in  this  way,  and  may  gain,  or  lose,  by  the 
estimation  of  his  damage  in  advance  of  the  time  for  performance, 
still,  as  we  have  seen,  he  has  the  right  to  accept  the  situation  tendered 
him,  and  the  other  party  cannot  complain. 

In  this  case  plaintiffs  showed  at  what  prices  they  could  have  made 
sub-contracts  for  forward  deliveries  according  to  the  contracts  in 
suit,  and  the  difference  between  the  prices  fixed  by  the  contracts 
sued  on  and  those  was  correctly  allowed. 

Judgment  affirmed.1 

9  Cyc.  636-639  (19-37)  ;  W.  P.  360-361  (12-13)  ;  15  H.  L.  R.  153;  15  H. 
L.  R.  306;  15  H.  L.  R.  317;  16  H.  L.  R.  523;  20  H.  L.  R.  233;  4  C.  L.  R.  64; 
6  C.  L.  R.  589;  11  C.  L.  R.  680. 

i  See  for  an  extended  argument  to  the  contrary  Stanford  v.  McGill,  6  N. 
Dak.  536. 

In  Kelly  v.  Insurance  Co.,  186  N.  Y.  16,  the  court  declined  to  apply  the 


BY   BREACH.  637 

ZTJCK  &  HENRY  v.  McCLTJRE  &  CO. 

98  PENNSYLVANIA  STATE,  541.— 1881. 

MR.  JUSTICE  PAXSON.  This  action  was  commenced  in  the  court 
below  on  the  29th  day  of  November,  1879,  and  was  to  recover  about 

doctrine  of  anticipatory  breach  where  a  mutual  life  insurance  company  was 
alleged  to  have  wrongfully  declared  the  insurance  contract  void  and  for- 
feited. The  court  said:  "If  the  maker  of  a  promissory  note,  given  for 
borrowed  money  and  due  one  year  after  date,  notifies  the  holder  the  next 
day  that  he  repudiates  it  and  will  not  pay  it,  can  the  holder  sue  at  once? 
Can  a  mortgagor  make  his  mortgage  due  before  the  law  day  by  repudiating 
it  in  advance?  The  rule  that  renunciation  of  a  continuous  executory  con- 
tract by  one  party  before  the  day  of  performance  gives  the  other  party  the 
right  to  sue  at  once  for  damages,  is  usually  applied  only  to  contracts  of  a 
special  character,  even  in  the  jurisdictions  where  it  obtains  at  all.  It  is 
not  generally  applied  to  contracts  for  the  payment  of  money  at  a  future  time 
and  in  some  States  the  principle  is  not  recognized  in  any  way  whatever. 
Daniels  v.  Newton,  114  Mass.  530,  19  Am.  Rep.  384;  Stanford  v.  McGill,  6 
N.  D.  536,  72  N.  W.  938,  38  L.  R.  A.  760;  Carstens  v.  McDonald,  38  Neb. 
858,  57  N.  W.  757 ;  King  v.  Waterman,  55  Neb.  324,  75  N.  W.  830.  In  other 
States  and  in  the  Federal  courts  the  principle  is  adopted  but  applied  with 
caution.  Roehm  v.  Horst,  178  U.  S.  1,  17,  18,  20  Sup.  Ct.  780,  44  L.  Ed. 
953;  Schmidt  v.  Schnell,  7  Ohio  Dec.  657;  Brown  v.  Odill,  104  Tenn.  250,  56 
S.  W.  840,  52  L.  R.  A.  660;  Roebling's  Sons  v.  Fence  Co.,  130  111.  660,  22  N. 
E.  518;  Unexcelled  Fire  Works  Co.  v.  Polites,  130  Pa.  536,  18  Atl.  1058,  17 
Am.  St.  Rep.  788.  In  this  State  it  seems  to  be  limited  to  contracts  to  marry 
(Burtis  v.  Thompson,  42  N.  Y.  246,  1  Am.  Rep.  516)  ;  for  personal  services 
(Howard  v.  Daly,  61  N.  Y.  362,  19  Am.  Rep.  285)  and  for  the  manufacture 
or  sale  of  goods  (Windmuller  v.  Pope,  107  N.  Y.  674,  14  N.  E.  436;  Nichols 
v.  Scranton  Steel  Co.,  137  N.  Y.  471,  33  N.  E.  561).  At  least  we  have  not 
extended  it  to  mutual  life  insurance  policies,  perhaps  for  the  reason  that  the 
question  of  fact  opened  to  unscrupulous  persons  by  such  extension  might  un- 
dermine the  solvency  of  the  company  and  inflict  gross  injustice  upon  the 
other  policyholders." 

Renunciation  must  be  unequivocal. — In  Dingley  v.  Oler,  117  U.  S.  490,  the 
court  held:  "In  Smoot's  Case  (15  Wall.  36)  this  court  quoted  with  ap- 
proval the  qualification  stated  by  Benjamin  on  Sales  (1st  ed.  424,  2d  ed. 
§  568)  that,  'A  mere  assertion  that  the  party  will  be  unable,  or  will  refuse 
to  perform  his  contract,  is  not  sufficient;  it  must  be  a  distinct  and  une- 
quivocal absolute  refusal  to  perform  the  promise,  and  must  be  treated  and 
acted  upon  as  such  by  the  party  to  whom  the  promise  was  made;  for,  if  he 
afterwards  continue  to  urge  or  demand  a  compliance  with  the  contract, 
it  is  plain  that  he  does  not  understand  it  to  be  at  an  end.'  We  do  not  find 
any  such  refusal  to  have  been  given  or  acted  upon  in  the  present  case,  and 
the  facts  are  not  stronger  than  those  in  Avery  v.  Bowden  (5  El.  &  Bl.  714; 
S.  C.  6  El.  &  Bl.  953),  which  were  held  not  to  constitute  a  breach  or  renun- 
ciation of  the  contract.  The  most  recent  English  case  on  the  subject  is  that 
of  Johnstone  v.  Milling,  in  the  Court  of  Appeal  (16  Q.  B.  D.  460),  decided  in 
January  of  the  present  year,  which  holds  that  the  words  or  conduct  relied 
on  as  a  breach  of  the  contract  by  anticipation  must  amount  to  a  total  re- 
fusal to  perform  it,  and  that  that  does  not  by  itself  amount  to  a  breach  of 
the  contract  unless  so  acted  upon  and  adopted  by  the  other  party." 


638  DISCHARGE   OF    CONTRACT. 

$1,500  for  coke  delivered  by  the  plaintiffs  to  the  defendants  during 
the  previous  October.  There  was  no  serious  dispute  as  to  either  the 
delivery  of  the  coke  or  the  amount;  but  the  defendants  set  up  as  a 
defence  the  breach  of  a  contract  on  the  part  of  the  plaintiffs  for  future 
deliveries  of  coke.  To  state  said  contract  briefly,  the  plaintiffs  had 
agreed  to  sell  and  deliver  to  the  defendants  the  entire  product  of 
their  Eldorado  works,  comprising  forty  ovens,  at  a  fixed  price  per  ton, 
and  also  the  product  of  all  other  ovens  built  by  them  during  the  con- 
tinuance of  the  contract.  This  contract  plainly  appears  by  the  cor- 
respondence between  the  parties  and  was  finally  closed  on  Nov.  11, 
1879.  On  the  19th  of  the  same  month  the  plaintiffs  notified  the  de- 
fendants in  writing  that  they  would  not  deliver  the  coke.  On  the 
4th  of  December,  four  days  after  the  delivery  was  to  have  commenced 
under  the  contract,  the  defendants  wrote  to  the  plaintiffs  as  follows: 
"We  beg  to  draw  your  attention  to  contract  between  us  by  which  you 
agree  to  furnish  us  the  product  of  the  Eldorado  Coke  Works  (forty 
ovens) ;  also  product  of  ovens  that  may  be  built  during  the  contin- 
uance of  the  contract  from  Dec.  1,  1879,  to  May  31,  1880,  inclusive, 
and  to  advise  you  that  we  have  been  and  are  now  prepared  to  receive 
the  said  coke-  under  said  contract.  If  shipments  on  our  account  are 
not  at  once  commenced,  we  will  go  into  the  market  and  buy  an 
equal  amount  of  coke  which  you  fail  to  deliver  us,  and  will  hold  you 
responsible  for  any  difference  in  price  which  we  may  have  to  pay,  and 
will  retain  the  balance  which  we  now  have  in  our  hands  to  secure  us 
against  any  loss  or  damage  which  we  may  sustain  from  your  failure 
to  comply  with  contract." 

The  defendants  upon  the  trial  below  were  allowed  to  set  off  their 
damages  by  reason  of  the  breach  of  the  above  contract,  and  the  jury 
found  a  verdict  in  their  favor  for  $36,150.  The  single  specification 
of  error  raises  the  question  whether  there  was  any  breach  at  the  time 
the  suit  was  commenced. 

A  mere  notice  of  an  intended  breach  is  not  of  itself  a  breach  of 
the  contract.  It  may  become  so  if  accepted  and  acted  on  by  the  other 
party.  If  the  defendants  had  accepted  the  plaintiffs'  notice  of  breach 
contained  in  their  letter  of  November  19  and  acted  upon  it,  there 
would  plainly  have  been  a  breach  of  the  contract.  The  plaintiffs  in 
such  ease  could  not  have  relieved  themselves  by  commencing  to  deliver 
the  coke  on  December  1,  but  must  have  been  held  to  all  the  legal 
consequences  of  the  breach.  The  defendants,  however,  on  December  4, 
still  insist  upon  compliance.  They  say  "they  are  now  prepared  to 
receive  said  coke  under  said  contract/'  This  certainly  kept  the  con- 
tract alive  as  to  both  parties.  The  plaintiffs  could  have  gone  on  and 
delivered  the  coke  on  December  4,  in  which  case  there  would  have 
been  no  breach  and  no  damages.  The  notice  of  an  intention  not  to 
perform  the  contract,  if  not  accepted  by  the  other  party  as  a  present 


BY   BREACH.  63U 

breach,  remains  only  a  matter  of  intention,  and  may  be  withdrawn  at 
any  time  before  the  performance  is  in  fact  due;  but  if  not  in  fact 
withdrawn  it  is  evidence  of  a  continued  intention  to  refuse  perform- 
ance down  to  and  inclusive  of  the  time  appointed  for  performance. 
Eipley  v.  McClure,  4  Ex.  345 ;  Leake  on  the  Law  of  Contracts,  873. 
The  promisee  may  treat  the  notice  of  intention  as  inoperative,  and 
await  the  time  when  the  contract  is  to  be  executed,  and  then  hold  the 
other  party  responsible  for  all  the  consequences  of  non-performance. 
But  in  that  case  he  keeps  the  contract  alive  for  the  benefit  of  the  other 
party  as  well  as  his  own;  he  remains  subject  to  all  his  own  obliga- 
tions and  liabilities  under  it,  and  enables  the  other  party  not  only  to 
complete  the  contract,  if  so  advised,  notwithstanding  his  previous 
repudiation  of  it,  but  also  to  take  advantage  of  any  supervening  cir- 
cumstance which  would  justify  him  in  declining  to  complete  it.  Leake 
on  Contracts,  supra. 

It  follows  from  the  foregoing  principles  that  on  November  29 
when  the  action  was  commenced  below,  there  was  no  breach  of  the 
contract  which  the  defendants  could  set  up  as  a  set-off  to  the  plain- 
tiffs claim.  Nor  does  it  help  the  defendants  that  when  the  cause 
was  tried  the  breach  was  complete.  The  date  of  the  commencement 
of  the  suit  is  the  obvious  test  in  such  cases.  Morrison  v.  Morelsnd, 
15  S.  &  E.  61 ;  Carpenter  v.  Butterfield,  3  Johns.  Cases,  144. 

There  was  error  in  not  affirming  the  plaintiffs'  eighth  point. 

Judgment  reversed  and  a  venire  facias  de  novo  awarded. 

9  Cyc.  637  (30-31) ;  W.  P.  361   (13)  ;  367  (39). 


(it.)  Impossibility  created  by  one  party  before  performance  due. 
WOLF  v.  MAESH. 

54  CALIFORNIA,  228.— 1880. 

Action  on  an  instrument  in  writing.  Judgment  for  plaintiff.  De- 
fendant appeals. 

The  instrument  was  as  follows : 

"MABTINEZ,  November  24th,   1866. 

"For  value  received,  I  promise  to  pay  to  S.  Wolf,  or  order,  four  hun- 
dred and  forty-nine  dollars,  with  interest  at  one  per  cent  per  month  from 
date  until  paid,  principal  and  interest  payable  in  United  States  gold  coin. 
This  note  is  made  with  the  express  understanding  that  if  the  coal  mines  in 
the  Marsh  Ranch  yield  no  profits  to  me,  then  this  note  is  not  to  be  paid, 
and  the  obligation  herein  expressed  shall  be  null  and  void. 

"C.  P.  MABBH." 

On  November  1,  1871,  defendant  conveyed  his  interest  in  the  ranch 
to  one  Williams.  Up  to  that  date  the  mines  had  yielded  defendant 
no  profits. 


640  DISCHABGE   OF   CONTRACT. 

SHARPSTEIN,  J.  .  .  .  Before  the  mines  had  yielded  any  profits  to 
the  defendant,  he  sold  and  conveyed  his  interest  in  them  to  a  stranger. 
By  so  doing  he  voluntarily  put  it  out  of  his  power  ever  to  realize 
any  profits  from  the  mines.  However  great  the  yield  of  profits  from 
them  might  be  after  that,  they  could  yield  none  to  him.  And  the 
principle  is  elementary,  that,  "if  one  voluntarily  puts  it  out  of  his 
power  to  do  what  he  has  agreed,  he  breaks  his  contract,  and  is  im- 
mediately liable  to  be  sued  therefor,  without  demand,  even  though 
the  time  specified  for  performance  has  not  expired."  Bishop  on  Cont., 
§  690  (1426). 

That  this  case  is  within  that  principle,  we  do  not  entertain  a  doubt. 
When  the  note  was  executed,  the  defendant  was  a  half  owner  of  the 
mines,  which  were  leased  on  such  terms  that  the  production  of  coal 
from  them  must  have  yielded  him  a  profit.  After  making  the  note, 
he  voluntarily  committed  an  act  which  made  it  impossible  for  the 
contingency  upon  which  the  note  would  become  due  and  payable  ever 
to  arise.  When  he  did  that,  he  violated  hi's  contract,  and  the  note  at 
once  became  due  and  payable;  and  as  this  action  was  commenced 
within  four  years  after  that,  it  follows  that  the  judgment  and  order 
of  the  court  appealed  from  must  be  affirmed. 

9  Cyc.  639-^41    (39-48)  ;  W.  P.  361    (13-15)  ;  8  H.  L.  R.  112. 


DELAMATER  v.  MILLER. 

1  CO  WEN   (N.  Y.),  75.— 1823. 

Assumpsit  by  Miller  against  Delamater;  for  that  the  former  had 
exchanged  his  horse  with  one  Schermerhorn  for  his  (S.'s)  watch, 
which  was  in  Delamater's  possession  at  his  (D.'s)  house;  and  which 
he,  being  present  at  the  contract,  agreed  to  keep  and  deliver  to  Miller, 
who  said  he  should  call  for  it  on  the  Saturday  following.  Miller 
did  not  demand  it  till  the  Sunday  following,  when  Delamater  refused 
to  deliver  it,  assuming  to  retain  it  for  a  dollar  due  him  from 
Schermerhorn;  and  he  afterwards  gave  up  the  watch  to  Schermer- 
horn, who  sold  it.  Judgment  for  plaintiff. 

Curia.  The  defendant  was  not  bound  to  regard  the  demand  on 
Sunday  (vid.  Cowen's  Treatise,  135,  and  the  cases  there  cited)  ;  but, 
as  the  defendant  parted  with  the  watch,  and  thereby  put  it  out  of 
his  power  to  perform  the  contract,  the  plaintiff  was  excused  from  the 
necessity  of  making  any  demand.  Sir  Anthony  Main's  Case,  5  Rep. 
21, — the  2d  resolution  in  that  case. 

And  the  judgment  was  affirmed. 

9  Cyc.  639-641    (39^8). 


BY    BREACH.  641 

(n't.)  Renunciation  in  the  course  of  performance. 
HALE  et  al.  v.  TROUT  et  al. 

35   CALIFORNIA,   229.— 1868. 

Action  for  contract  price  of  lumber  delivered,  and  for  damages 
for  breach  of  contract  by  defendants  in  declaring  the  contract  at  an 
end  and  refusing  to  receive  any  more  lumber  under  it.  Judgment  for 
plaintiffs  for  lumber  delivered,  but  not  for  breach.  Plaintiffs  appeal. 

SAWYER,  C.  J.  .  .  .  Conceding  a  breach  to  have  occurred  on  the 
part  of  the  defendants,  it  is  claimed  on  their  behalf  that  the  plaintiffs 
had  but  one  of  three  courses  to  pursue :  firstly,  to  rescind  the  contract 
and  sue  for  the  value  of  the  lumber  delivered;  secondly,  proceed  to 
manufacture  and  tender  the  lumber,  and  sue  upon  the  contract  from 
month  to  month  for  a  corresponding  amount  of  the  contract  price; 
or,  thirdly,  proceed  to  manufacture  and  tender  the  lumber  according 
to  the  terms  of  the  contract,  till  the  whole  two  million  feet  should  be 
delivered  or  tendered,  and  then  sue  for  the  entire  amount  at  once. 
And  the  court  below  must  either  have  adopted  this  theory,  or  have 
rendered  judgment  upon  the  hypothesis  that  the  only  breach  on  the 
part  of  the  defendants  consisted  in  not  paying  for  a  part  of  the 
lumber  delivered  and  accepted,  and  that  such  non-payment  did  not 
constitute  a  breach  of  the  contract  entitling  the  plaintiffs  to  damages 
beyond  the  price  of  the  amount  of  lumber  delivered  and  received,  but 
not  paid  for.  But  if  it  be  conceded  that  plaintiffs  were  entitled 
to  go  on  manufacturing  and  tendering  the  lumber,  and  then  sue  for 
the  contract  price,  as  suggested,  as  to  which  there  may  be  some  doubt 
(see  Clark  v.  Marsiglia,  1  Den.  318;  Derby  et  al.  v.  Johnson  et  al., 
21  Vt.  22),  it  is  clear,  both  on  principle  and  authority,  that  the  plain- 
tiffs were  entitled  to  pursue  another  course,  the  one  adopted  in  this 
action;  that  is  to  say,  to  treat  the  contract  as  wholly  broken  by  the 
defendants,  and  sue  to  recover,  firstly,  the  contract  price  for  the 
lumber  actually  delivered  and  received  under  the  contract;  and,  sec- 
ondly, upon  the  breach  to  recover  the  entire  damages  resulting  from 
the  breach  on  the  part  of  defendants  in  putting  an  end  to  and  refusing 
to  receive  any  more  lumber  under  the  contract. 

It  may  be  that  the  monthly  payments  called  for  by  the  contract 
were  absolutely  necessary  to  enable  the  plaintiffs  to  perform  their  cove- 
nants, and  that  without  such  payments  it  would  have  been  impossible 
for  them  to  proceed.  It  would  require  a  large  amount  of  capital  for 
plaintiffs  to  proceed  in  the  manufacture  of  lumber  for  a  period  of  three 
years  without  receiving  payments.  Besides,  they  were  compelled  to 
erect,  and  did  erect,  a  new  mill  for  the  express  purpose  of  enabling 
them  to  •  fulfill  their  contract.  It  would  be  equally  onerous  to  be 
compelled  to  sue  each  month,  and  recover  the  amount  of  the  several 


642  DISCHARGE   OF    CONTRACT. 

monthly  payments  at  the  end  of  a  protracted  law  suit.  They  were 
not  bound  to  do  so  under  the  terms  of  their  contract.  There  was 
not  merely  a  neglect  of  payment,  but  they  were  notified  by  the  de- 
fendants that  they  should  treat  the  contract  as  at  an  end,  and  would 
receive  no  more  lumber  under  it.  Defendants  thereby  prevented  the 
plaintiffs  from  fulfilling  their  contract.  The  plaintiffs,  after  this, 
even  if  they  would  be  justified  in  so  doing,  could  not  be  required, 
as  a  condition  precedent  to  obtaining  adequate  relief  for  the  breach, 
to  go  on  manufacturing  lumber  at  the  risk  of  finding  no  market  for 
it,  or  of  being  unable  to  collect  from  the  defendants  the  amounts 
that  might  become  due  under  the  contract.  There  was  a  total  breach 
of  an  entire  contract,  and  the  plaintiffs  were  entitled  to  sue  upon  the 
breach  immediately,  and  recover  the  entire  damages  resulting  from 
it,  without  waiting  for  the  time  for  full  performance  to  elapse.  The 
following  authorities  sustain  this  view:  Shaffer  v.  Lee,  8  Barb.  415; 
Masterton  v.  Mayor  of  Brooklyn,  7  Hill,  61 ;  Clark  v.  Mayor  of  N. 
Y.,  4  N.  Y.  (4  Comst.)  343;  Royalton  v.  R.  and  W.  Turnpike  Co., 
14  Vt.  311;  Derby  v.  Johnson,  21  Vt.  22;  Jones  v.  Judd,  4  N.  Y. 
414 ;  Phil.,  Wil.  and  Bait.  R.  R.  Co.  v.  Howard,  13  Howard,  U.  S. 
313,  314,  344;  Fish  v.  Folley,  6  Hill,  55;  Shannon  v.  Comstock,  21 
Wend.  460;  Seaton  v.  Second  Municipality  of  New  Orleans,  3  La. 
Ann.  R.  45 ;  Rogers  v.  Parham,  8  Cobb,  Ga.  190 ;  Planche  v.  Colburn, 
8  Bing.  15 ;  Clossman  v.  Lacoste,  28  Eng.  L.  and  Eq.  141. 

The  case  of  Masterton  v.  Mayor  of  Brooklyn,  supra,  was  similar  in 
principle  to  this.  The  suit  was  for  a  breach  of  a  contract,  whereby 
the  plaintiff  covenanted  to  furnish  for  a  specified  price,  all  the  marble 
required  to  build  the  city  hall  in  the  city  of  Brooklyn,  to  be  delivered 
from  time  to  time,  as  required  by  the  superintendent,  and  paid  for  in 
instalments  as  the  work  progressed.  After  the  delivery  of  some- 
thing over  fourteen  thousand  feet,  which  was  paid  for,  the  defendants 
suspended  the  work,  and  like  the  defendants  in  this  case,  "refused 
to  receive  any  more  materials  from  the  plaintiffs,  though  the  latter 
were  ready,  and  offered  to  perform."  At  the  time  of  the  suspension 
of  the  work,  the  entire  quantity  of  marble  remaining  to  be  delivered, 
in  order  to  fulfill  the  contract,  was  about  eighty-nine  thousand  feet. 
Plaintiff  claimed,  and,  in  an  action  for  damages  on  the  breach,  was 
allowed  to  prove,  against  the  objection  of  the  defendants,  the  difference 
between  the  cost  of  furnishing  the  marble  and  the  contract  price. 
This  ruling  presented  one  of  the  questions  for  determination  on  appeal, 
and  it  was  decided  in  favor  of  the  plaintiff.  Mr.  Chief  Justice  Nel- 
son, in  discussing  the  question,  says : 

"When  the  contract,  as  in  this  case,  is  broken  before  the  arrival  of  the  time 
for  full  performance,  and  the  opposite  party  elects  to  consider  it  in  that  light, 
the  market  price  on  the  day  of  the  breach  is  to  govern  in  the  assessment  of 
damages.  ...  If  there  was  a  market  value  of  the  article  in  this  case,  the 


BY    BREACH.  643 

question  would  be  a  simple  one.  As  there  is  none,  however,  the  parties  will 
be  obliged  to  go  into  an  inquiry  as  to  the  actual  cost  of  furnishing  the  article 
at  the  place  of  delivery."  7  Hill,  71,  72. 

And  this  is  what  was  done  in  the  case  now  under  consideration. 
And  Mr.  Justice  Beardsley  says: 

"The  plaintiffs  were  not  bound  to  wait  till  the  period  has  elapsed  for  the 
complete  performance  of  the  agreement,  nor  to  make  successive  offers  of 
performance  in  order  to  recover  all  their  damages.  They  might  regard 
the  contract  as  broken  up,  so  far  aa  to  absolve  them  for  making  further 
efforts  to  perform,  and  give  a  right  to  recover  full  damages,  as  for  a  total 
breach."  Id.  75. 

In  the  case  of  the  Town  of  Koyalton  v.  E.  &  W.  Turnpike  Co.,  there 
was  a  contract,  by  the  terms  of  which  the  defendant  covenanted  to 
support  and  keep  in  repair  for  the  term  of  twenty  years  a  bridge  which 
the  plaintiff  was  bound  to  maintain,  in  consideration  of  which  the 
plaintiff  covenanted  to  pay  the  defendant  the  sum  of  twenty-five 
dollars  per  annum  for  the  entire  period  of  time.  The  defendant  sup- 
ported the  bridge  for  a  period  of  eight  years,  and  then  committed 
a  breach  by  suffering  it  to  go  to  decay,  and  refusing  to  support  it 
longer.  The  suit  was  upon  the  contract  for  the  breach,  and  it  was  held 
that  the  plaintiff  was  entiled  to  recover  full  damages,  covering  the 
entire  twelve  years  yet  unexpired,  at  the  time  of  the  commencement 
of  the  suit.  The  court,  by  Bedfield,  J.,  say : 

"The  rule  of  damages  in  this  case  should  have  been  to  give  the  plaintiffs 
the  difference  between  what  they  were  to  pay  the  defendant  and  the 
probable  expense  of  performing  the  contract,  and  thus  assess  the  entire 
damages  for  the  remaining  twelve  years."  14  Vt.  324. 

So  in  Phil.,  Wil.  and  Bait.  E.  E.  Co.  v.  Howard,  upon  a  contract 
for  grading  and  doing  certain  work  on  a  railroad,  in  which  it  was  pro- 
vided that  "in  case  the  party  of  the  second  part  at  any  time  be  of 
opinion  that  this  contract  is  not  duly  complied  with  by  the  party  of 
the  first  part,  or  that  it  is  not  in  due  progress  of  execution,  or  that 
the  said  party  of  the  first  part  is  irregular  or  negligent,  then  and  in 
such  case  he  shall  be  authorized  to  declare  this  contract  forfeited, 
and  thereupon  the  same  shall  be  null."  13  How.  319.  Subse- 
quently, on  the  statement  of  the  engineer  that  the  contract  was  "not 
in  due  progress  of  execution,"  after  reciting  that  the  party  of  the 
first  part  had  not  complied  with  the  contract,  it  was  by  the  company 
"resolved  that  the  said  contract  be  and  the  same  is  hereby  declared  to 
be  forfeited."  Id.  313.  Plaintiff  sued,  and  one  of  the  breaches  relied 
on  was  for  "fraudulently  declaring  the  contract  forfeited,  and  thereby 
depriving  plaintiff  of  the  gains  which  would  otherwise  have  accrued 
to  him  on  the  completion  of  the  contract."  Id.  313.  The  court  in- 
structed the  jury  to  the  effect  that  if  the  company  annulled  the  con- 


644  DISCHARGE   OF   CONTRACT. 

tract,  not  for  the  reasons  stated,  but  for  the  purpose  of  having  the 
remaining  work  done  cheaper  than  the  contract  price,  the  plaintiff 
was  entitled  to  recover  damages  for  the  loss  of  profit  sustained  by 
the  refusal  of  the  company  to  permit  him  to  finish  the  work  contracted 
to  be  performed.  In  considering  the  rule  of  damages,  the  Supreme 
Court,  per  Curtis,  J.,  say: 

"Actual  damages  clearly  include  the  direct  and  actual  loss  which  plaintiff 
sustains  propter  rem  ipsam  non  habitant.  And  in  case  of  a  contract  like 
this  that  loss  is,  among  other  things,  the  difference  between  the  cost  of 
doing  the  work  and  the  price  paid  for  it.  This  difference  is  the  inducement 
and  real  consideration  which  causes  the  contractor  to  enter  into  the  con- 
tract. For  this  he  expends  his  time,  exerts  his  skill,  uses  his  capital,  and 
assumes  the  risks  which  attend  the  enterprise.  And  to  deprive  him  of  it, 
when  the  other  party  has  broken  the  contract,  and  unlawfully  put  an  end 
to  the  work,  would  be  unjust.  There  is  no  rule  of  law  which  requires  us  to 
inflict  this  injustice.  .  .  .  We  hold  it  to  be  a  clear  rule  that  a  gain  or  profit 
of  which  the  contractor  was  deprived  by  the  refusal  of  the  company  to 
allow  him  to  proceed  with  and  complete  the  work  was  a  proper  subject  of 
damages."  Id.  344. 

In  Clark  v.  Mayor  of  New  York  (4  New  York,  343)  the  court  say: 

"But  when  the  contract  is  terminated  by  one  party  against  the  consent 
of  the  other,  the  latter  will  not  be  confined  to  the  contract  price,  but  may 
bring  his  action  for  a  breach  of  the  contract,  and  recover  as  damages  all  that 
he  may  lose  by  way  of  profits  in  not  being  allowed  to  fulfill  the  contract;  or 
he  may  waive  the  contract  and  bring  his  action  on  the  common  counts  for 
work  and  labor  generally,  and  recover  what  the  work  done  is  actually  worth. 
But  in  the  latter  case,  he  will  not  be  allowed  to  recover  as  damages  anything 
for  speculative  profits,  but  the  actual  value  of  the  work  and  materials  must 
be  the  rule  of  damages.  ...  If  the  party  seeks  to  recover  more  than  the 
actual  worth  of  this  work,  in  a  case  where  he  is  prevented  from  performing 
the  entire  contract,  he  must  resort  to  his  action  directly  upon  the  contract." 

And  in  Jones  v.  Judd  (4  N.  Y.  414)  the  court  say: 

"If  the  performance  had  been  arrested  by  the  act  or  omission  of  the  de- 
fendants, the  plaintiff  would  have  had  his  election  to  treat  the  contract  as 
rescinded,  and  recover,  on  a.  quantum  meruit,  the  value  of  his  labor,  or  he 
might  sue  upon  the  agreement  and  recover  for  the  work  completed,  according 
to  the  contract,  and  for  the  loss  in  profits  or  otherwise  which  he  had  sus- 
tained by  the  interruption." 

Now,  what  was  done  and  what  was  said  might  be  done  in  the  cases 
cited,  is  precisely  what  was  done  in  the  case  under  consideration. 
The  plaintiffs  sued  directly  upon  the  contract,  to  recover  the  contract 
price  for  the  lumber  delivered  and  received,  and  directly  upon  the  con- 
tract for  the  breach  in  declaring  the  contract  at  an  end  and  refusing 
to  take  any  more  lumber  under  it.  And  the  foregoing  cases  show  that 
they  may  so  sue  and  recover  the  whole  damage  sustained  in  conse- 
quence of  the  breach,  without  waiting  for  the  time  of  performance  to 


BY   BREACH.  645 

elapse  or  repeating  an-  offer  to  perform  from  month  to  month,  as  the 
time  for  delivery  arrives,  and  that  the  rule  of  damages  upon  the  breach 
is  the  clear  profit  which  the  plaintiffs  would  have  made,  that  is  to  say, 
the  difference  between  the  contract  price  and  what  it  would  have  cost 
the  plaintiffs  to  manufacture  and  deliver  the  lumber  according  to  the 
terms  of  the  contract. 

The  cases  cited  by  defendants  are  not  in  conflict  with  the  authori- 
ties referred  to  in  this  opinion.  Most  of  them  do  not  touch  the  precise 
question,  and  are  therefore  not  in  point.  The  case  of  Eogers  v.  Par- 
ham  (8  Cobb,  190)  is  against  the  respondents,  and  sustains  the  views 
here  taken.  The  same  may  be  said  of  Girard  v.  Taggart  (5  S.  &  E.  19) 
so  far  as  it  bears  upon  the  question.  There  was  a  sale  of  teas  at  auc- 
tion, to  be  paid  for  in  sixty,  ninety,  and  one  hundred  and  twenty  days, 
the  purchaser,  on  delivery  of  the  teas,  to  give  notes  with  approved 
indorsers.  The  purchaser  finally  refused  to  take  the  teas  or  give  the 
notes.  Thereupon  the  vendor  sold  the  teas  again  at  a  much  lower 
price,  and  sued  at  once  to  recover  the  difference.  In  the  language  of 
the  chief  justice,  the  action  was  "special,  on  the  breach  of  the  con- 
tract/' Upon  the  question  as  to  when  the  action  could  be  brought, 
and  the  measure  of  damages,  Mr.  Justice  Gibson  said : 

"The  breach  having  put  an  end  to  every  idea  of  further  performance  by 
either  is  a  violation  of  the  contract  in  all  its  parts,  for  which  the  seller  may 
recover  whatever  damages  he  can  prove  he  has  sustained.  The  buyer,  after 
having  disaffirmed  the  sale,  so  far  as  he  could  by  acts  of  his  own,  must  not 
be  permitted  to  treat  the  contract  as  still  existing,  for  the  purpose  of  being 
performed  by  him  specifically.  But  the  seller  may,  if  he  please,  consider  it 
existing  only  for  the  purpose  of  giving  a  remedy  for  the  breach."  5  S.  & 
R.  33. 

See  also  opinion  of  Mr.  Justice  Duncan  in  same  case  (Id.  543) ; 
also  Derby  et  al.  v.  Johnson  et  al.,  21  Vt.  22.  Some  principles  stated 
in  Fowler  v.  Armour  (24  Ala.  194)  seem  to  be  favorable  to  respond- 
ents' view,  but  if  so  they  are  wholly  against  the  current  of  authorities 
brought  to  our  notice. 

In  this  case  the  difference  between  the  contract  price  and  cost  of 
performance,  or  the  clear  profits  upon  the  amount  of  lumber  remaining 
undelivered,  the  court  found  to  be  $6304.79,  which  sum  should  have 
been  added  to  the  amount  for  which  judgment  was  rendered. 

Judgment  reversed,  and  the  District  Court  directed  to  enter  judg- 
ment upon  the  findings  in  accordance  with  the  views  expressed  in  this 
opinion.1 

9  Cyc.  688  (16). 

i  "When  a  party  injured  by  the  stoppage  of  a  contract  elects  to  rescind  it, 
then,  it  is  true,  he  cannot  recover  any  damages  for  a  breach  of  the  contract, 
either  for  outlay  or  for  loss  of  profits;  he  recovers  the  value  of  his  services 
actually  performed  as  upon  a  quantum  meruit.  There  is  then  no  question  of 


646  DISCHARGE   OF    CONTRACT. 

DEEBY     et  al.  v.  JOHNSON  et  al. 

21  VERMONT,  17.— 1848. 

Book  account.  Judgment  for  plaintiffs.  Exceptions  by  defend- 
ants. 

Plaintiffs  contracted  to  do  the  stone  work,  masonry  and  blasting 
on  three  miles  of  railroad,  defendants  to  pay  specified  prices  per  cubic 
yard.  After  working  a  month,  plaintiffs  were  directed  by  defendants 
to  cease  further  work,  and  complied.  Plaintiffs  presented  an  account 
of  days'  labor  and  material  furnished  by  them,  which  was  allowed  on 
the  basis  of  reasonable  value. 

HALL,  J.  It  is  insisted,  in  behalf  of  the  defendants,  that  the  re- 
quest and  direction  of  the  defendants  to  the  plaintiffs,  to  cease  work 

losses  or  profits.  But  when  he  elects  to  go  for  damages  for  the  breach  of  the 
contract,  the  first  and  most  obvious  damage  to  be  shown  is,  the  amount  which 
he  has  been  induced  to  expend  on  the  faith  of  the  contract,  including  a  fair 
allowance  for  his  own  time  and  services.  If  he  chooses  to  go  further,  and 
claims  for  the  loss  of  anticipated  profits,  he  may  do  so,  subject  to  the  rules 
of  law  as  to  the  character  of  profits  which  may  be  thus  claimed.  It  does 
not  lie,  however,  in  the  mouth  of  the  party,  who  has  voluntarily  and  wrong- 
fully put  an  end  to  the  contract,  to  say  that  the  party  injured  has  not  been 
damaged  at  least  to  the  amount  of  what  he  has  been  induced  fairly  and  in  good 
faith  to  lay  out  and  expend  (including  his  own  services),  after  making  allow- 
ance for  the  value  of  materials  on  hand ;  at  least  it  does  not  lie  in  the  mouth  of 
the  party  in  fault  to  say  this,  unless  he  can  show  that  the  expenses  of  the 
party  injured  have  been  extravagant,  and  unnecessary  for  the  purpose  of 
carrying  out  the  contract.  ...  It  is  to  be  observed  that  when  it  is  said  in 
some  of  the  books,  that  when  one  party  puts  an  end  to  the  contract,  the  other 
party  cannot  sue  on  the  contract,  but  must  sue  for  the  work  actually  done 
under  it,  as  upon  a  quantum  meruit,  this  only  means  that  he  cannot  sue  the 
party  in  fault  upon  the  stipulations  contained  in  the  contract,  for  he  himself 
has  been  prevented  from  performing  his  own  part  of  the  contract  upon  which 
the  stipulations  depend.  But  surely,  the  wilful  and  wrongful  putting  an  end 
to  a  contract,  and  preventing  the  other  party  from  carrying  it  out,  is  itself  a 
breach  of  the  contract  for  which  an  action  will  lie  for  the  recovery  of  all 
damage  which  the  injured  party  has  sustained.  The  distinction  between  those 
claims  under  a  contract  which  result  from  a  performance  of  it  on  the  part  of 
the  claimant,  and  those  claims  under  it  which  result  from  being  prevented  by 
the  other  party  from  performing  it,  has  not  always  been  attended  to.  The 
party  who  voluntarily  and  wrongfully  puts  an  end  to  a  contract  and  prevents 
the  other  party  from  performing  it,  is  estopped  from  denying  that  the  injured 
party  has  not  been  damaged  to  the  extent  of  his  actual  loss  and  outlay  fairly 
incurred."— United  States  v.  Behan,  110  U.  S.  338,  345-7.  See  also  Danforth 
v.  Tennessee  &c.  Ry.  Co.,  93  Ala.  614;  Nichols  v.  S.  S.  Co.,  137  N.  Y.  471. 

That  there  may  be  such  conduct  on  the  part  of  the  defendant  as  to  warrant 
the  plaintiff  in  rescinding  the  contract  and  recovering  on  a  quantum  meruit, 
and  yet  not  warrant  him  in  regarding  the  contract  as  renounced  by  the  de- 
fendant so  as  to  sustain  an  action  for  damages  for  a  breach,  see  Wharton  v. 
Winch,  140  N.  Y.  287. 


BY    BREACH.  647 

and  abandon  the  execution  of  the  contract,  is  to  be  considered  in  the 
light  of  a  proposition  to  the  plaintiffs,  which  they  were  at  liberty  to 
accede  to,  or  disregard,  and  that,  having  acquiesced  in  it  by  quitting 
the  work,  the  contract  is  to  be  treated  as  having  been  relinquished  by 
the  mutual  consent  of  the  parties.  But  we  do  not  look  upon  it  in 
that  light.  The  direction  of  the  defendants  to  the  plaintiffs  to  quit 
the  work  was  positive  and  unequivocal ;  and  we  do  not  think  the  plain- 
tiffs were  at  liberty  to  disregard  it.  In  Clark  v  Marsiglia  (1  Denio, 
317)  it  was  held,  that  the  employer,  in  a  contract  for  labor,  had  the 
power  to  stop  the  completion  of  it  if  he  chose, — subjecting  himself 
thereby  to  the  consequences  of  a  violation  of  his  contract;  and  that 
the  workman,  after  notice  to  quit  work,  had  not  the  right  to  continue 
his  labor  and  claim  pay  for  it.  And  this  seems  to  be  reasonable. 
For  otherwise  the  employer  might  be  entirely  ruined,  by  being  com- 
pelled to  pay  for  work,  which  an  unexpected  change  of  circumstances, 
after  the  employment,  would  render  of  no  value  to  him.  If,  for  in- 
stance, in  this  case  the  location  of  the  railroad  had  been  changed  from 
the  place  where  the  work  was  contracted  to  be  done,  or  if  the  plain- 
tiffs' [defendants'?]  employers  had  become  wholly  insolvent  after  the 
making  of  the  contract,  the  injury  to  them,  if  they  had  no  power 
to  stop  the  work,  might  be  immense  and  altogether  without  remedy. 
Eather  than  an  injury  so  greatly  disproportioned  to  that  which  could 
possibly  befall  the  workman  should  be  inflicted  on  the  employers,  it 
seems  better  to  allow  them  to  stop  work,  taking  upon  themselves,  of 
course,  all  the  consequences  of  such  a  breach  of  their  contract.  Such, 
we  think,  is  and  ought  to  be  the  law.  We  are  therefore  satisfied  that 
the  plaintiffs  were  prevented  from  executing  their  contract  by  the 
act  of  the  defendants,  and  that  the  contract  is  not  to  be  treated  as 
having  been  mutually  relinquished. 

Treating  the  plaintiffs  as  having  been  prevented  from  executing 
their  part  of  the  contract  by  the  act  of  the  defendants,  we  think  the 
plaintiffs  are  entitled  to  recover,  as  upon  a  quantum  mermi,  the  value 
of  the  services  they  had  performed  under  it,  without  reference  to  the 
rate  of  compensation  specified  in  the  contract.  They  might  doubtless 
have  claimed  the  stipulated  compensation,  and  have  introduced  the 
contract  as  evidence  of  the  defendants'  admission  of  the  value  of  the 
services.  And  they  might,  in  addition,  in  another  form  of  action, 
have  recovered  their  damages  for  being  prevented  from  completing 
the  whole  work.  In  making  these  claims  the  plaintiffs  would  be  act- 
ing upon  the  contract  as  still  subsisting  and  binding ;  and  they  might 
well  do  so ;  for  it  doubtless  continued  binding  on  the  defendants.  But 
we  think  the  plaintiffs,  upon  the  facts  stated  in  the  report  of  the 
auditor,  were  at  liberty  to  consider  the  contracts  as  having  been  re- 
scinded from  the  beginning,  and  to  claim  for  the  services  they  had  per- 
formed, without  reference  to  its  terms. 


648  DISCHARGE   OF   CONTRACT. 

The  defendants,  by  their  voluntary-  act,  put  a  stop  to  the  execution 
of  the  work,  when  but  a  fractional  part  of  that  which  had  been  con- 
tracted for  had  been  done,  and  while  a  large  portion  of  that  which  had 
been  entered  upon  was  in  such  an  unfinished  condition  as  to  be  in- 
capable of  being  measured  and  its  price  ascertained  by  the  rate  specified 
in  the  contract.  Under  these  circumstances,  we  think  the  defendants 
have  no  right  to  say  that  the  contract,  which  they  have  thus  repu- 
diated, shall  still  subsist  for  the  purpose  of  defeating  a  recovery  by 
the  plaintiffs  of  the  actual  amount  of  labor  and  materials  they  have 
expended. 

In  Tyson  v.  Doe  (15  Vt.  571),  where  the  defendant,  after  a  part 
performance  of  a  contract  for  delivering  certain  articles  of  iron  cast- 
ings, prevented  the  plaintiff  from  farther  performing  it,  the  contract 
was  held  to  be  so  far  rescinded  by  the  defendant  as  to  allow  the  plain- 
tiff to  sustain  an  action  on  book  for  the  articles  delivered  under  it, 
although  the  time  of  credit  for  the  articles,  by  the  terms  of  the  contract, 
had  not  expired.  The  court  in  that  case  say,  "that  to  allow  the  de- 
fendant to  insist  on  the  stipulation  in  regard  to  the  time  of  payment, 
while  he  repudiates  the  others,  would  be  to  enforce  a  different  contract 
from  that  which  the  parties  entered  into."  The  claim  now  made  in 
behalf  of  the  defendants,  that  the  rate  of  compensation  specified  in 
the  contract  should  be  the  only  rule  of  recovery,  would,  if  sustained, 
impose  upon  the  plaintiffs  a  contract  which  they  never  made.  They 
did,  indeed,  agree  to  do  all  the  work  of  a  certain  description  on  three 
miles  of  road,  at  a  certain  rate  of  compensation  per  cubic  yard;  but 
they  did  not  agree  to  make  all  their  preparations  and  do  but  a  six- 
teenth part  of  the  work  at  that  rate;  and  it  is  not  to  be  presumed 
that  they  would  have  made  any  such  agreement.  We  are  not  there- 
fore disposed  to  enforce  such  an  agreement  against  them. 

The  case  of  Koon  v.  Greenman  (7  Wend.  121)  is  much  relied  upon 
by  the  counsel  for  the  defendants.  In  that  case  the  plaintiff  had 
contracted  to  do  certain  mason  work  at  stipulated  prices,  the  defend- 
ant finding  materials.  After  a  part  of  the  work  had  been  done,  the 
defendant  neglecting  to  furnish  materials  for  the  residue,  the  plaintiff 
quit  work  and  brought  his  action  of  general  assumpsit.  The  court 
held  he  was  not  entitled  to  recover  the  value  of  the  work,  but  only 
according  to  the  rate  specified.  The  justice  of  the  decision  is  not 
very  apparent ;  and  it  does  not  appear  to  be  sustained  by  the  authori- 
ties cited  in  the  opinion,  they  being  all  cases,  either  of  deviations 
from  the  contract  in  the  manner  of  the  work,  or  delays  of  performance 
in  point  of  time.  But  that  case,  if  it  be  sound  law,  is  distinguishable 
from  this  in  at  least  two  important  particulars.  In  that  case  the 
plaintiff  was  prevented  from  completing  his  contract  by  the  mere 
negligence  of  the  defendant;  in  this  by  his  voluntary  and  positive 


BY   BREACH.  649 

command.  In  that  case  there  does  not  appear  to  have  been  any  diffi- 
culty in  ascertaining  the  amount  to  which  the  plaintiff  would  be  en- 
titled, according  to  the  rate  specified  in  the  contract;  whereas  in  this 
it  is  altogether  impracticable  to  ascertain  what  sum  would  be  due  the 
plaintiffs,  at  the  stipulated  prices,  for  the  reason  that  when  the  work 
was  stopped  by  the  defendants,  a  large  portion  of  it  was  in  such  an 
unfinished  state  as  to  be  incapable  of  measurement.  That  case  is  there- 
fore no  authority  against  the  views  we  have  already  taken. 

The  judgment  of  the  County  Court  is  therefore  affirmed.1 
9  Cyc.  688   (16);  W.  P.  337   (28);  349   (69);  550   (39). 


CONNOLLY  v.  SULLIVAN. 

173  MASSACHUSETTS,  1.— 1899. 

Contract,  to  recover  a  balance  alleged  to  be  due  plaintiff  for  work 
and  labor  in  excavating  a  lot  for  defendant.  There  was  an  express 
contract  under  which  plaintiff  agreed  to  do  the  work  for  $750.  After 

i  "When  the  contract  is  terminated  by  one  party  against  the  consent  of  the 
other,  the  latter  will  not  be  confined  to  the  contract  price,  but  may  bring  his 
action  for  a  breach  of  the  contract,  and  recover  as  damages  all  that  he  may 
lose  by  way  of  profits  in  not  being  allowed  to  fulfill  the  contract;  or  he  may 
waive  the  contract  and  bring  his  action  on  the  common  counts  for  work  and 
labor  generally,  and  recover  what  the  work  done  is  actually  worth.  ...  If 
the  party  seeks  to  recover  more  than  the  actual  worth  of  his  work,  in  a  case 
where  he  has  been  prevented  from  performing  the  entire  contract,  he  must 
resort  to  his  action  directly  upon  the  contract;  but  when  he  elects  to  consider 
the  contract  rescinded,  and  goes  upon  quantum  meruit,  the  actual  value  is  the 
rule  of  damages." — Pratt,  J.,  in  Clark  v.. Mayor,  4  Comstock  (4  N.  Y.),  338. 
Contra:  Doolittle  v.  McCullough,  12  Ohio  St.  360,  where  it  is  held  that  the 
plaintiff  suing  in  quantum  meruit  is  restricted  in  his  recovery  to  the  contract 
rate,  and  Clark  v.  Mayor  is  criticised.  But  see  Wellston  Coal  Co.  v.  Frank- 
lin Co.,  57  Oh.  St.  182. 

Where  the  work  is  performed  on  the  plaintiff's  own  material,  in  which  the 
defendant  has  no  interest,  the  only  remedy  is  on  the  special  contract  in  an 
action  for  damages  for  breach.  Curtis  v.  Smith,  48  Vt.  116. 

In  cases  where  the  plaintiff  has  fully  performed  his  part  of  the  contract,  but 
the  defendant  refuses  to  perform  his,  the  value  of  what  the  defendant  promised 
(money,  property,  or  services),  and  not  the  value  of  the  plaintiff's  services  or 
property,  is  the  measure  of  the  recovery.  Bradley  v.  Levy,  5  Wis.  400 ;  Ander- 
son v.  Rice,  20  Ala.  239;  Porter  v.  Dunn,  61  Hun,  310;  S.  C.  131  N.  Y.  314. 
Contra:  Hudson  v.  Hudson,  87  Ga.  678,  where  the  court  says:  "It  seems  the 
fairest  and  best  way  of  adjusting  these  matters  is  to  allow  the  son  to  recover 
of  the  administrator,  upon  a  quantum  meruit,  the  actual  value  of  his  services, 
but  the  amount  must  in  no  event  exceed  the  value  of  the  home  place" 
[promised].  A  fortiori,  the  plaintiff  cannot  recover  for  part  performance  an 
amount  in  excess  of  that  stipulated  for  full  performance.  McClair  v.  Austin, 
17  Col.  576. 


650  DISCHABGE   OF    CONTRACT. 

the  work  was  partly  done  defendant  directed  plaintiff  to  stop.  The 
plaintiff  (who  was  losing  largely  under  his  contract)  did  not  object 
to  stopping  work  and  acquiesced  in  the  direction.  The  work  then 
done  was  fairly  worth  $1200;  to  complete  it  was  worth  $925.  De- 
fendant had  paid  plaintiff  $250.  The  worth  of  the  work  done  if  meas- 
ured by  the  contract  price  was  $425.  The  auditor  found  that  if 
plaintiff  was  prevented  by  defendant  from  completing  the  contract  he 
was  entitled  to  $950  ($1200  less  $250  paid)  ;  if  he  stopped  voluntarily 
with  defendant's  consent  he  was  entitled  to  $175  ($425  less  $250 
paid).  At  the  trial  the  judge  directed  a  verdict  for  $950.  Defend- 
ant alleged  exceptions. 

MORTON,,  J.  The  exceptions  in  this  case  were  not  only  to  the  refusal 
of  the  court  to  give  the  rulings  which  were  requested,  but  to  the  ruling 
by  which  the  jury  were  directed  to  return  a  verdict  for  the  plaintiff, 
irrespective  of  the  contract  price,  for  a  sum  which  the  auditor  had 
found  was  the  fair  market  value  of  all  the  work  and  labor  performed 
and  furnished,  less  what  the  defendant  had  paid  on  account ;  that  is, 
as  we  understand  the  exceptions,  the  court  ruled,  in  effect,  as  matter 
of  law,  against  the  objection  of  the  defendant,  that,  on  the  auditor's 
report,  the  plaintiff  was  entitled  to  recover  the  amount  for  which  the 
jury  were  directed  to  return  a  verdict,  without  regard  to  the  contract 
price.  The  auditor's  report  was  the  only  evidence  in  the  case.  It 
not  only  stated  the  general  conclusions  to  which  the  auditor  came, 
but  it  stated  particular  facts  and  Circumstances  relating  to  those  con- 
clusions, and  we  think  that  the  defendant  was  entitled  to  go  to  the 
jury,  if  he  so  desired,  on  the  question  whether,  upon  the  auditor's 
report,  the  plaintiff  was  prevented  by  the  defendant  from  going  on 
with  the  contract,  or  whether  it  was  terminated  with  his  consent,  mani- 
fested in  such  a  manner  that  the  defendant  was  justified  in  acting  upon 
it.  Peaslee  v.  Ross,  143  Mass.  275 ;  Emerson  v.  Patch,  129  Mass.  299 ; 
Marland  v.  Stanwood,  101  Mass.  470,  478. 

If  the  former  was  the  case,  then  the  plaintiff  would  be  entitled  to 
recover,  independently  of  the  contract  price,  the  value  of  the  labor  and 
materials  furnished,  and  of  which  the  defendant  had  had  the  benefit ; 
and  the  contract  price  would  be  important  or  admissible  only  so  far 
as  it  might  tend  to  throw  light,  if  at  all,  on  the  value  of  the  labor  and 
materials  actually  furnished.  Fitzgerald  v.  Allen,  128  Mass.  232. 

If  the  latter  was  the  case,  then  we  think  that  the  plaintiff's  right 
of  recovery  would  be  limited  by  the  contract  price,  and  the  amount 
recoverable  would  depend  on  the  ratio  of  the  value  of  the  labor  and 
material  actually  furnished  to  what  should  be  found  to  be  the  total 
cost  of  the  work  when  completed  according  to  the  contract.  See 
Veazie  v.  Hosmer,  11  Gray,  396 ;  Atkins  v.  Barnstable,  97  Mass.  428 ; 
Hayward  v.  Leonard,  7  Pick.  181;  Koon  v.  Greeman,  7  Wend.  121. 


BY    BREACH.  651 

In  other  words,  in  that  event  we  think  that  the  rule  adopted  by  the 
auditor  would  be  substantially  correct. 

Exceptions  sustained. 
9  Cyc.  688  (16)  ;  W.  P.  337   (24-28). 


CLARK  v.  MAKSIGLIA. 

1  DENIO   (N.  Y.),  317.— 1845. 

Assumpsit  for  work,  labor,  and  material.  Plea,  non-assumpsit. 
Judgment  for  plaintiff.  Defendant  brings  error. 

Defendant  delivered  a  number  of  paintings  to  plaintiff  to  be  cleaned 
and  repaired  at  a  specified  price  for  each.  After  plaintiff  had  begun 
work  on  them  defendant  directed  him  to  stop,  but  plaintiff  persisted 
and  claims  to  recover  for  the  whole.  The  court  charged  that  as  plain- 
tiff had  begun  the  work,  he  had  a  right  to  finish  and  defendant  could 
not  revoke  the  order. 

Per  Curiam.  The  question  does  not  arise  as  to  the  right  of  the  de- 
fendant below  to  take  away  these  pictures,  upon  which  the  plaintiff  had 
performed  some  labor,  without  payment  for  what  he  had  done,  and  his 
damages  for  the  violation  of  the  contract,  and  upon  that  point  we  ex- 
press no  opinion.  The  plaintiff  was  allowed  to  recover  as  though 
there  had  been  no  countermand  of  the  order;  and  in  this  the  court 
erred.  The  defendant,  by  requiring  the  plaintiff  to  stop  work  upon 
the  paintings,  violated  his  contract,  and  thereby  incurred  a  liability 
to  pay  such  damages  as  the  plaintiff  should  sustain.  Such  damages 
would  include  a  recompense  for  the  labor  done  and  materials  used, 
and  such  further  sum  in  damages  as  might,  upon  legal  principles,  be 
assessed  for  the  breach  of  the  contract ;  but  the  plaintiff  had  no  right, 
by  obstinately  persisting  in  the  work,  to  make  the  penalty  upon  the 
defendant  greater  than  it  would  otherwise  have  been. 

To  hold  that  one  who  employs  another  to  do  a  piece  of  work  is 
bound  to  suffer  it  to  be  done  at  all  events,  would  sometimes  lead  to 
great  injustice.  A  man  may  hire  another  to  labor  for  a  year,  and 
within  the  year  his  situation  may  be  such  as  to  render  the  work  en- 
tirely useless  to  him.  The  party  employed  cannot  persist  in  working, 
though  he  is  entitled  to  the  damages  consequent  upon  his  disappoint- 
ment. So  if  one  hires  another  to  build  a  house,  and  subsequent 
events  put  it  out  of  his  power  to  pay  for  it,  it  is  commendable  in  him 
to  stop  the  work,  and  pay  for  what  has  been  done  and  the  damages 
sustained  by  the  contractor.  He  may  be  under  a  necessity  to  change 
his  residence;  but  upon  the  rule  contended  for,  he  would  be  obliged 
to  have  a  house  which  he  did  not  need  and  could  not  use.  In  all  such 
cases  the  just  claims  of  the  party  employed  are  satisfied  when  he  is 


652  DISCHARGE   OF   CONTRACT. 

fully  recompensed  for  his  part  performance  and  indemnified  for  his 
loss  in  respect  to  the  part  left  unexecuted;  and  to  persist  in  accumu- 
lating a  larger  demand  is  not  consistent  with  good  faith  towards  the 
employer.  The  judgment  must  be  reversed,  and  a  venire  de  novo 
awarded. 

Judgment  reversed.1 
9  Cyc.  638   (34-35)  ;  W.  P.  349   (69). 


(iv.)  Impossibility  created  by  one  party  in  the  course  of  performance. 
WOODBERRY  v.  WARNER. 

53  ARKANSAS,  488.— 1890. 

Action  upon  a  quantum  meruit  for  services.  Judgment  for  plain- 
tiff. Defendant  appeals. 

Defendant  was  the  owner  of  a  steamboat,  the  Allen,  and  on  Jan- 
uary 1,  1886,  employed  plaintiff  as  pilot,  agreeing  to  pay  him  $720  a 
year,  and,  when  the  net  earnings  of  the  boat  should  amount  to  $8000, 
to  make  over  to  him  a  fourth  interest  in  the  boat.  A  few  months 
later  defendant  bought  another  boat  which  he  ran  in  opposition  to 
the  Allen,  thus  reducing  her  profits.  On  May  31,  1888,  defendant 
sold  the  Allen  without  plaintiff's  consent,  and  before  she  had  earned 
the  net  profits  specified  in  the  contract.  Plaintiff  claimed  his  services 
were  worth  $1000  a  year,  or  $280  a  year  more  than  he  had  received. 

i  "The  person  who  has  not  broken  his  part  of  the  compact  may,  at  his 
option,  extend  to  the  person  who  has  signified  his  purpose  to  violate  the  agree- 
ment, an  opportunity  for  repentance,  measured  by  the  time  to  elapse  between 
the  refusal  to  perform  and  the  date  when  performance  is  to  commence.  .  .  . 
The  party  keeping  the  contract  need  not  mitigate  the  damages  by  treating  as 
final  a  premature  repudiation  thereof;  but  this  is  far  from  establishing  the 
proposition  that  he  may  increase  the  amount  to  be  paid  by  the  other  party  by 
completing  the  contract  after  notice  of  repudiation,  made  on  the  day  of  per- 
formance, or  made  before  that  day,  and  never  withdrawn,  but,  on  the  con- 
trary, constantly  insisted  upon  down  to  and  including  that  day.  .  .  .  The 
question  in  all  cases  is  whether  one  party  has  prevented  performance  by  the 
other  party  at  the  time  when  performance  by  him  is  due.  This  can  be  done 
as  well  by  preventing  the  taking  of  those  preliminary  steps,  without  which 
the  final  step  cannot  be  taken,  as  by  preventing  the  taking  of  such  final  step. 
These  preliminary  steps  must  often  precede  by  many  days  the  time  of  perform- 
ance, and  it  therefore  must  follow  that  notice  of  refusal  to  carry  out  the  con- 
tract, in  such  a  case,  given  before  the  time  of  performance,  will  operate  as 
a  breach  of  the  contract  in  case  the  time  has  arrived  at  which  the  person 
willing  to  keep  th«  contract  may  enter  upon  the  work  under  the  contract." — 
Corliss,  C.  J.,  in  Davis  v.  Bronson,  2  N.  Dak.  300.  See  also  for  the  distinc- 
tion between  repudiation  before  the  time  for  performance  begins  and  repudia- 
tion after  such  time,  Kadish  v.  Young,  108  111.  170;  Roebling's  Sons'  Co.  v. 
Lock  Stitch  Fence  Co.,  130  111.  660. 


BY   BREACH.  653 

Defendant  contended  that  plaintiff  could  not  sue  in  quantum  meruit, 
but  must  sue  for  breach  of  contract  and  recover  as  damages  the  value 
of  one-fourth  of  the  boat  at  such  time  as  her  net  earnings  should  have 
amounted  to  $8000. 

Per  Curiam.  1.  The  defendant  having  put  it  beyond  his  power  to 
perform  the  contract  according  to  its  terms,  the  plaintiff^vas  entitled 
to  recover  the  value  of  his  services  over  and  above  the  amount  he  had 
received  under  the  contract. 

2.  The  terms  of  the  contract,  as  alleged  in  the  complaint,  required 
the  defendant  to  devote  his  personal  services  to  the  business  of  the 
steamer  Allen.  As  the  bill  of  exceptions  does  not  purport  to  set 
forth  the  substance  of  all  the  testimony,  the  verdict  is  conclusive  that 
the  contract  was  such  as  the  plaintiff  alleged.  Evidence  therefore 
was  admissible  which  tended  to  show  that  the  defendant's  conduct 
in  devoting  his  services  to  another  steamer  decreased  the  earnings 
of  the  Allen,  and  thereby  prevented  the  plaintiff  from  earning  the  in- 
terest in  the  Allen  called  for  by  the  contract. 

No  other  questions  are  argued  by  counsel,  and  there  being  no  error 
as  to  these,  the  judgment  is  affirmed. 

9  Cyc.  639   (39)  ;  W.  P.  354   (86)  ;   18  H.  L.  R.  64. 


(v.)  Breach  by  failure  of  performance  of  a  term  in  the  contract. 

a.  Conditional  and  unconditional  performance,  in  general. 

NORTHRUP  v.  NORTHRUP. 

6  COWEN,  (N.  Y.),  296.— 1826. 

Declaration  on  covenant.     Demurrer  to  plea,  and  joinder. 

Defendant  covenanted  to  pay  certain  rent  due  and  in  arrears  on  a 
certain  farm,  to  one  Tomlinson,  and  to  pay  all  that  should  become  due 
on  March  25,  1825,  the  whole  to  be  paid  on  that  day.  Plaintiff 
covenanted,  that  on  defendant's  so  paying  the  rent,  he,  plaintiff,  would 
give  up  and  discharge  a  certain  bond  and  mortgage.  The  action  was 
for  the  non-payment  of  the  rent. 

Defendant  pleaded  that  plaintiff  did  not,  on  March  25,  give  up 
and  discharge  the  bond  and  mortgage,  nor  tender  nor  offer  to  do  so, 
on  that  day,  or  before,  or  since. 

SAVAGE,  C.  J.  The  plea  is  bad.  The  payment  of  the  money  to 
Tomlinson,  on  the  day  specified,  is  clearly  a  condition  precedent. 
The  performance  by  the  plaintiff  of  his  part  of  the  agreement  is  not 
necessarily  simultaneous;  but  was  naturally  to  be  subsequent.  A 
general  averment  of  his  readiness  to  perform  is  all  that  can  be 
necessary  or  proper.  To  aver  a  tender  was  certainly  not  necessary. 

Lord  Mansfield,  in  Jones  v.  Barkley   (Doug.  690),  makes  three 


654  DISCHARGE   OF   CONTRACT. 

classes  of  covenants.  1.  Such  as  are  mutual  and  independent,  where 
separate  actions  lie  for  breaches  on  either  side.  2.  Covenants  which 
are  conditions,  and  dependent  on  each  other,  in  which  the  performance 
of  one  depends  on  the  prior  performance  of  the  other.  3.  Covenants 
which  are  mutual  conditions  to  be  performed  at  the  same  time,  as  to 
which  the  party  who  would  maintain  an  action  must,  in  general,  offer 
or  tender  performance. 

I  consider  the  plaintiff's  covenant  as  clearly  belonging  to  the 
second  class.  The  defendant's  covenant  was  absolute.  The  cases 
cited  by  the  defendant's  counsel  relate  to  the  third  class. 

The  plaintiff  must  have  judgment,  with  leave  to  the  defendant  to 
amend  on  payment  of  costs.  Judgment  for  the  plaintiff.1 

9  Cyc.  642   (52);  645   (61);  720  (46-47). 


HILL  v.  GRIGSBY  et.al 

35  CALIFORNIA,  656.— 1868. 

Action  upon  nine  promissory  notes  made  jointly  by  defendants  to 
plaintiff.  Defense,  that  plaintiff,  as  a  consideration  for  said  notes, 
agreed  to  convey  to  defendants  a  half  interest  in  certain  property ;  that 
the  amount  sued  for  was  the  whole  purchase  money  remaining  unpaid ; 
that  before  the  commencement  of  the  action  plaintiff  had  conveyed  the 

i  "The  whole  doctrine  of  implied  dependency  of  mutual  covenants  and 
promises  is  a  modern  one.  Indeed,  not  a  trace  of  it  is  to  be  found  prior 
to  the  time  of  Lord  Mansfield.  In  early  times  the  question  could  arise  only 
with  reference  to  mutual  covenants,  as  mutual  promises  were  not  binding 
in  law.  As  to  mutual  covenants  it  was  well  settled  from  an  early  period  that 
they  were  to  be  deemed  separate  contracts  and  wholly  independent  of  each 
other,  unless  one  of  them  was  made  expressly  dependent  on  the  other.  .  .  . 
As  to  mutual  promises,  it  was  no  sooner  decided  that  such  promises  were 
a  sufficient  consideration  for  each  other,  than  it  was  held  to  follow  as  a  con- 
sequence that  they  were  independent  of  each  other.  .  .  .  The  case  of  Martin- 
dale  v.  Fisher  (1  Wils.  88),  shows  that  the  old  rule  was  regarded  as  still 
in  full  force  as  late  as  1745."— Langdell,  Cont.,  pp.  177-178,  179-180,  181. 
Lord  Mansfield  in  Kingston  v.  Preston  ( 1773,  cited  in  Jones  v.  Barkley,  Dougl. 
684 ) ,  "held  that  performance  by  the  plaintiff  was  a  condition  precedent  to 
performance  by  the  defendant,  i.  e.,  that  the  defendant's  covenant  was  depend- 
ent upon  the  plaintiff's  by  implication.  Lord  Mansfield  did  not  intimate  that 
he  was  deciding  contrary  to  what  had  been  held  for  law  from  time  immemo- 
rial, but  such  was  the  fact.  The  decision  has  been  uniformly  acquiesced  in, 
however,  from  that  day  to  this,  and  hence  in  effect  it  overruled  a  long  line  of 
decisions,  and  established  the  doctrine  of  general  dependency  by  implication 
as  it  exists  at  the  present  day.  ...  In  Rawson  v.  Johnson  (1  East,  203, 
1801),  mutual  promises  for  the  purchase  and  sale  of  goods  were  held  to  be 
mutually  dependent,  though  each  promise  was  absolute  in  terms,  and  no  time 
was  appointed  for  the  performance  of  either.  With  this  case,  therefore,  the 
doctrine  of  mutual  dependency  was  completely  established  as  it  has  ever  since 
remained."— Langdell,  Cont.,  pp.  183,  184,  185,  186. 


BY    BREACH. 

property  to  another,  and  had  not  offered  to  perform  by  tendering  a 
deed  of  the  property  to  defendants.  On  motion  the  court  struck  out 
the  answer.  Judgment  for  plaintiff.  Defendants  appeal. 

RHODES,  J.  The  leading  question  is,  whether  plaintiff  is  entitled 
to  recover  upon  certain  promissory  notes  representing  the  unpaid  por- 
tion of  the  purchase  money  for  certain  real  estate,  sold  by  the  plain- 
tiff to  defendants,  without  conveying  or  offering  to  convey  the 
property.  The  solution  of  the  question  depends  upon  the  construction 
to  be  given  to  the  bond  or  covenant  of  the  plaintiff.  The  bond,  after 
reciting  the  purchase  and  the  terms  of  payment,  proceeds  as  follows : 

"Now,  therefore,  the  said  Hill  agrees  and  binds  himself,  on  condition  that 
the  said  Grigsby  and  Smittle  shall  pay  the  sum  of  $18,000,  less  $8200  hereto- 
fore paid,  with  interest,  as  aforesaid,  to  execute  and  deliver  to  the  said 
Smittle  and  Grigsby  a  good  deed,  conveying  all  his  right,  title,  and  interest 
of,  in,  and  to  the  one  undivided  half  interest  in  said  mill  and  premises  herein 
as  aforesaid,  which,  if  he  shall  well  and  truly  do,  the  above  obligation  to  be 
null  and  void  and  of  no  effect;  otherwise  the  above  obligation  to  be  and  re- 
main in  full  force  and  effect.  The  said  deed  to  be  executed  by  the  said  Hill 
as  soon  as  the  full  sum  of  $18,000  and  interest,  as  above  provided,  is  paid, 
and  to  be  sufficient  to  convey  to  said  Grigsby  and  Smittle  one  undivided  half 
interest  in  and  to  said  mill,  free  from  all  incumbrance." 

In  the  first  clause  the  plaintiff  covenants  to  convey  on  condition 
that  the  defendants  pay  the  price.  These  acts  were  plainly  intended 
to  be  simultaneous,  that  is  to  say,  the  payment  in  full  and  conveyance. 
The  words  "on  condition"  are  susceptible  of  no  other  interpretation. 
The  second  clause  was  added  as  if  to  put  the  matter  beyond  ques- 
tion. There  the  covenant  is,  to  convey  as  soon  as  the  full  sum  is  paid. 
The  conveyance  must,  of  necessity,  be  executed  concurrently  with  or 
before  payment  in  full,  or  it  will  not  be  executed  as  soon  as  such  pay- 
ment is  made. 

Neither  argument  nor  illustration  will  make  the  meaning  of  the 
covenants  in  respect*  to  the  time  for  their  performance  more  appar- 
ent. 

When  the  meaning  of  the  terms  employed  in  the  covenants  is  ascer- 
tained, the  application  of  the  rules  of  law  governing  the  performance 
of  the  covenants  is  not  difficult.  In  a  contract  for  the  sale  of  real 
estate,  where  the  purchaser  covenants  to  pay  the  purchase  money,  and 
the  vendor  covenants  to  convey  the  premises  at  the  time  of  payment, 
or  upon  the  time  of  payment  of  the  money,  or  as  soon  as  it  is  paid, — 
and  they  all  mean  the  same  thing, — the  covenants  are  mutual  and  de- 
pendent, and  neither  can  sue  without  showing  a  performance,  or  an 
offer  to  perform,  on  his  part ;  and  performance,  or  the  offer  to  perform, 
on  the  one  part,  is  a  condition  precedent  to  the  right  to  insist  upon  a 
performance  on  the  other  part.  Barren  v.  Frink,  30  Cal.  486. 

When  the  purchase  money  is  payable  in  instalments,  and  the  con- 
veyances to  be  executed  on  the  last  day  of  payment,  or  upon  the 


656  DISCHARGE   OF    CONTRACT. 

payment  of  the  whole  price,  or  at  any  previous  day,  the  covenants 
to  pay  the  instalments  falling  due  before  the  time  appointed  for  the 
execution  of  the  conveyance  are  independent  covenants,  and  suit  may 
be  brought  thereon  without  conveying  or  offering  to  convey. 

The  covenants  to  pay  the  instalments  falling  due  on  or  after  the  day 
appointed  for  the  conveyance  are  dependent  covenants,  and  the  vendor,, 
in  his  suit  to  recover  the  same,  whether  he  sues  for  those  alone  or  joins 
instalments  that  became  due  before  the  time,  must  show  a  conveyance 
or  offer  to  convey.  In  these  respects,  contracts  of  all  kinds  are 
governed  by  the  same  rule  as  covenants. 

Questions  covering  the  greater  portion,  if  not  the  entire  ground 
occupied  by  those  presented  here,  were  considered  at  an  early  day  in 
this  court,  and  the  decisions  accord  with  the  views  here  expressed. 
Osborne  v.  Elliott,  1  Cal.  337 ;  Folsom  v.  Bartlett,  2  Cal.  163.  See  also 
Barren  v.  Frink,  30  Cal.  486.  It  is  very  correctly  said  in  Bank  of 
Columbia  v.  Hagner  (1  Pet.  455)  that  "in  contracts  of  this  description 
the  undertakings  of  the  respective  parties  are  always  considered  de- 
pendent unless  a  contrary  intention  clearly  appears";  and  the  reason 
assigned,  as  well  as  the  rule,  would  be  applicable  here  were  the  words 
of  the  covenant  of  doubtful  import.  "A  different  construction  would 
in  many  cases  lead  to  the  greatest  injustice,  and  a  purchaser  might  have 
payment  of  the  purchase  money  enforced  upon  him,  and  yet  be  dis- 
abled from  procuring  the  property  for  which  he  paid  it."  The 
authorities  in  support  of  these  principles  are  very  numerous,  and 
there  is  a  greater  degree  of  uniformity  among  them  than  is  usual  on 
a  question  presented,  as  this  has  been,  in  so  many  different  aspects. 
Pordage  v.  Cole,  \  Wm.  Saund.  320;  Jones  v.  Gardner,  10  Johns. 
266 ;  Gazley  v.  Price,  16  Johns.  267 ;  Parker  v.  Parmele,  20  Johns.  130 ; 
Williams  v.  Healey,  3  Den.  367;  Johnson  v.  Wygant,  11  Wend.  48; 
Bean  v.  Atwater,  4  Conn.  3 ;  Lester  v.  Jewett,  11  N".  Y.  (1  Kern.  453)  ; 
Hunt  v.  Livermore,  5  Pick.  395 ;  Kane  v.  Hood,  13  Pick.  281 ;  1  Pars, 
on  Cont.  42;  2  Smith  L.  C.  17.  ... 

It  is  unnecessary  to  consider  the  remaining  questions,  because  if 
the  plaintiff  had  not  delivered  or  tendered  the  conveyance  according 
to  his  covenant,  he  cannot  prevail  in  the  action. 

We  are  of  opinion  that  the  portion  of  the  answer  setting  up  the  con- 
tract of  sale,  and  alleging  the  failure  of  the  plaintiff  to  convey,  or  offer 
to  convey,  to  the  defendants  the  interest  in  the  premises  sold  to  them,  is 
a  good  defense  to  the  action,  and  that  the  order  striking  it  out  was 
erroneous. 

Judgment  reversed,  and  cause  remanded  for  further  proceedings.1 

9  Cyc.  642  (52);  645  (63);  39  Cyc.  1305-1308  (37-57);  W.  P.  323  (8). 
For  citation  of  cases  on  necessity  of  tender  in  equity,  see  Ames,  Cases  in 
equity,  342  (3). 

i  "The  law  is  firmly  established  in  this  State  that  in  a  contract  for  the  pur- 


BY   BREACH.  657 

SHEEREN  v.  MOSES  et  al 
84  ILLINOIS,  448.— 1877. 

SHELDON,  C.  J.,  delivered  the  opinion  of  the  court. 

This  was  a  suit  brought  on  June  10th,  1876,  by  the  executors  of  the 
estate  of  Robert  McCracken,  deceased,  against  Patrick  Sheeren,  upon 
three  promissory  notes,  under  seal,  made  by  the  latter,  for  the  sums, 
respectively,  of  $500,  $500,  and  $1000,  bearing  date  September  17th, 
1870,  payable  to  Robert  McCracken,  the  first  on  December  10th,  1870, 
the  second  on  December  10th,  1873,  the  third  on  December  10th,  1875, 
all  with  6  per  cent  interest  from  June  10th,  1870,  and  10  per  cent 
interest  after  due. 

The  only  question  raised  is  as  to  the  sufficiency  of  two  pleas,  to 
which  demurrers  were  sustained  by  the  court  below. 

One  plea  sets  up  that  the  notes  were  given  as  the  consideration  of 
an  agreement  entered  into  between  the  plaintiffs'  testate,  Robert 
McCracken,  of  the  first  part,  and  the  defendant,  Patrick  Sheeren, 
of  the  second  part,  as  follows : 

"The  party  of  the  first  part  doth  sell  to  the. party  of  the  second 
part  an  eighty-acre  lot  of  land,  known  and  described  as  follows — viz. : 
The  west  half  of  the  southeast  quarter  of  section  three  (3),  township 
thirteen  (13),  range  eleven  (11)  west,  containing  eighty  (80)  acres, 

chase  of  lands  or  for  the  sale  of  chattels,  the  covenant  to  convey  or  to  deliver 
possession  and  the  covenant  to  pay  the  purchase  money,  when  concurrent  in 
time,  are  dependent  (Glenn  v.  Rossler,  156  N.  Y.  161;  Vandegrift  v.  Cowles 
Engineering  Co.,  161  N.  Y.  435)  ;  and  that  even  in  case  the  purchase  money 
is  payable  in  installments,  if  the  vendor  awaits  the  maturity  of  the  last 
installment  upon  the  payment  of  which  a  conveyance  is  due,  he  cannot  main- 
tain an  action  to  recover  any  installment  without  first  putting  the  vendee  in 
default  by  tendering  him  a  deed.  (Beecher  v.  Conradt,  13  N.  Y.  108;  Morange 
v.  Morris,  3  Keyes,  48;  Thomson  v.  Smith,  63  N.  Y.  301;  Eddy  v.  Davis,  11G 
N.  Y.  247.)"— Ewing  v.  Wightman,  167  N.  Y.  107. 

In  Dunham  v.  Pettee,  8  N.  Y.  508,  the  court  said:  "Under  the  contract  of 
sale,  the  delivery  of  the  iron  and  the  payment  of  the  money  were  things  to 
be  done  at  one  and  the  same  time.  The  plaintiffs  were  not  bound  to  deliver 
the  iron  unless  the  defendants  at  the  same  time  paid  the  money;  and  the 
defendants  were  not  bound  to  pay  the  price  unless  the  plaintiffs  at  the  same 
time  delivered  the  thing  sold,  or  was  ready  to  deliver  it.  The  obligations  to 
deliver  on  the  one  part  and  to  pay  on  the  other,  were  mutual  and  dependent. 
If  the  buyer  in  a  case  of  this  sort  fails  to  pay  or  offer  to  pay  within  the  time 
specified  for  mutual  performance,  the  seller  is  discharged  from  liability  to 
answer  in  damages  for  not  delivering  the  thing  sold.  But  it  does  not  follow 
that  the  seller,  in  such  case,  is  entitled  from  the  mere  default  of  the  buyer 
to  recover  the  purchase-money.  To  entitle  the  seller  to  recover  the  price,  he 
must  show  not  only  that  the  purchaser  failed  to  pay,  but  that  he  himself 
was  ready  and  offered  to  deliver  the  goods.  12  Johns.  209;  Porter  v.  Rose, 
20  Johns.  130." 


658  DISCHARGE   OF    CONTRACT. 

in  Scott  County,  and  State  of  Illinois;  and  for  and  in  consideration 
of  said  land,  and  a  clear  deed  for  the  same,  as  soon  as  the  last  pay- 
ments are  made,  the  party  of  the  second  part  engages  to  pay  the  party 
of  the  first  part  $25  per  acre,  in  the  following  payments — viz.:  In 
six  months  from  this  date,  five  hundred  dollars  ($500)  :  five  hundred 
dollars  in  three  years  from  date,  and  one  thousand  dollars  in  six  years 
from  date,  with  interest  commencing  from  this  date,  to  be  paid  yearly 
ion  all  the  notes,  at  6  per  cent,  and  when  the  cash  payment  is  made,  the 
party  of  the  first  part,  his  heirs  or  assigns,  shall  execute  a  clear  deed 
for  said  land,  this  10th  June,  1870;  and  the  party  of  the  second  part 
is  to  pay  the  taxes/' 

(Signed  by  the  parties.) 

The  plea  averring  the  defendant,  in  pursuance  of  the  agreement, 
had  ever  been  ready  and  willing  to  pay  the  notes,  but  there  had  never 
been  any  offer  or  tender  to  him  of  a  deed  for  the  land  described  in 
the  agreement. 

The  other  plea  alleges  that  the  notes  were  given  as  the  considera- 
tion for  the  purchase  of  the  above  described  tract  of  land;  that  pre- 
vious to  the  making  of  the  notes  there  had  been  made,  and  at  that 
time  existed,  between  the  defendant  and  Robert  McCracken,  an  agree- 
ment in  writing,  setting  it  out  as  above,  and  that  on  September  17th, 
1870,  in  pursuance  of  such  agreement,  the  defendant  executed  the  notes 
declared  upon;  that  the  first  one  was  correctly  drawn,  but  that  the 
second  and  third  notes  were,  by  the  scrivener,  incorrectly  and  im- 
properly drawn  as  to  their  times  of  payment,  in  this,  that  the  scrivener 
drew  the  last  two  notes  as  maturing  on  December  10th,  1873,  and  on 
December  10th,  1875,  when  the  same  should  have  been  written  to 
mature  as  by  the  terms  of  the  above  agreement,  and  as  was  the  inten- 
tion of  the  parties — viz.,  on  June  10th,  1873,  and  on  June  10th,  1876, 
respectively;  that  the  defendant,  in  pursuance  of  the  agreement,  had 
entered  into  the  possession  of  said  premises,  but  there  had  never  been 
offered  or  tendered  to  him  a  clear  deed  to  the  land,  although  the  de- 
fendant had  always  been  ready  and  willing  to  pay  the  notes. 

The  notes  appear,  by  the  averments  of  the  pleas,  to  have  been 
given  for  the  moneys  due  and  payable  by  the  agreement  of  June  10th, 
1870.  They  were  given,  then,  for  the  purchase  money  of  land,  the 
deed  for  the  land  to  be  given  as  we  understand  the  agreement,  upon 
making  the  last  payment,  which  is  represented  by  the  last  note.  The 
payment  of  the  last  note,  and  the  making  of  the  deed,  we  must  regard 
as  mutual  and  dependent  acts,  and  that  to  maintain  an  action  upon 
that  note  there  should  have  been  a  tender  of  a  deed  before  bringing  suit. 
Headley  v.  Shaw,  39  111.  354 ;  Hunter  v.  Bilyeu,  39  111.  368 ;  Johnson 
v.  Wygant,  11  Wend.  48. 

But  it  is  different  with  the  two  other  notes.  They  were  to  be  paid 
before  the  time  fixed  for  the  conveyance  of  the  land,  and  as  respects 


BY    BREACH.  659 

them,  the  agreements  were  independent  of  each  other,  and  tender  of 
a  deed  before  suit  was  not  necessary.  If  a  day  be  appointed  for  pay- 
ment of  money,  or  part  of  it,  or  for  doing  any  other  act,  and  the  day  is 
to  happen,  or  may  happen,  before  the  thing  which  is  the  considera- 
tion of  the  money  or  other  act  is  to  be  performed,  an  action  may  be 
brought  for  the  money,  or  for  not  doing  such  other  act,  before  per- 
formance, for  it  appears  that  the  party  relied  upon  his  remedy,  and  did 
not  intend  to  make  the  performance  a  condition  precedent.  1  Saund. 
320,  note  4.  The  obligation  of  the  defendant  to  pay  the  first  two  notes 
at  the  times  stipulated,  was  absolute  and  unconditional.  A  cause  of 
action  accrued  upon  each  note  as  soon  as  it  became  payable,  and  there 
is  nothing  in  the  agreement  to  defeat  the  right  of  action  afterward. 

By  neglecting  to  enforce  payment  of  the  first  two  notes  when  they 
became  due,  and  by  waiting  until  the  last  note  became  due  and  the 
time  for  making  the  conveyance  had  elapsed,  the  promises  to  pay  the 
first  two  notes,  once  absolute  and  independent,  did  not  become  mu- 
tual and  dependent.  This  was  so  expressly  decided  in  Duncan  et  al.  v. 
Charles,  4  Scam.  561. 

That  was  a  parallel  case,  and  decided  the  exact  point  made  upon 
these  pleas.  Under  its  authority,  the  first  two  notes,  here,  are  recover- 
able without  a  tender  of  a  conveyance,  and  the  pleas  must  be  held  bad, 
as  respects  them. 

The  demurrers  to  the  pleas  were,  then,  properly  sustained,  and  the 
judgment  is  affirmed. 

Judgment  affirmed.1 

39  Cyc.  1306   (42,  47);  1307   (52);   1308   (53);  W.  P.  323    (8). 

i  Rules  on  conditions. — "For  the  learning  on  this  subject  on  the  English 
side  we  are  usually  referred  to  the  valuable  notes  of  Serjeant  Williams  ap- 
pended to  his  edition  of  Saunders'  Reports  and  to  the  still  more  elaborate 
dissertation  contained  in  Smith's  Leading  Cases.  Saunders  was  Lord  Chief 
Justice  in  the  reign  of  Charles  II.  and  his  reports  of  the  cases  of  Pordage  V, 
Cole  (1  Saunders,  319  1.,  1669),  and  Peeters  v.  Opie  (2  Saunders,  349  br 
1671),  are  used  by  Williams  as  pegs  on  which  to  hang  a  historical  and 
critical  review  of  the  whole  subject.  This  is  continued  and  extended  by 
Smith,  who  uses  the  case  of  Cutter  v.  Powell  (6  T.  R.  320,  1795),  for  a 
similar  purpose,  (Smith's  L.  C.  llth.  ed.,  vol.  ii.,  p.  1).  Williams  prefaces  his 
note  to  Pordage  v.  Cole  by  the  following  statement:  'Almost  all  the  old 
cases  and  many  of  the  modern  ones  on  this  subject  are  decided  upon  dis- 
tinctions so  nice  and  technical  that  it  is  very  difficult,  if  not  impracticable, 
to  deduce  from  them  any  certain  rule  or  principle  by  which  it  can  be  ascer- 
tained what  covenants  are  independent  and  what  dependent.'  (Williams' 
Saunders,  i.  549.)  The  substance  is  always  presented  through  the  medium 
of  form,  hence  the  question  to  be  answered  in  each  case  is  whether  or  not  the 
plaintiff  must  aver  in  his  declaration  that  he  has  performed  or  is  ready  to 
perform  all  his  counter  obligations.  If  no  such  averment  is  required,  the 
covenant  is  independent,  and  may  be  pursued  to  judgment,  leaving  to  the 
defendant  his  separate  remedy,  if  he  has  any,  for  the  breach  of  another  in- 
dependent part  of  the  contract.  If,  on  the  other  hand,  the  plaintiff  must 


660  DISCHARGE  OF   CONTRACT. 

BRUSIE  v.  PECK  BROS.  &  CO. 

14   UNITED   STATES    APPEALS,    21.— 1893. 

Action  at  law  to  recover  the  amount  of  royalties  alleged  to  be  due 
for  the  manufacture  of  sprinklers.  Judgment  for  defendant.  Plain- 
tiff brings  error. 

Plaintiff  granted  defendant  the  exclusive  right  to  manufacture  and 
sell  a  lawn  sprinkler  patented  by  plaintiff,  the  defendant  agreeing  to 
pay  plaintiff  a  royalty  of  two  dollars  for  each  sprinkler,  and  not  to 
sell  them  for  less  than  fifteen  dollars,  except  by  joint  agreement,  and 
to  manufacture  sprinklers  for  plaintiff  at  a  profit  of  twenty-five  per 

aver  performance  or  readiness  to  perform,  it  follows  that  the  defendant  may 
call  upon  him  to  prove  and  act  upon  his  averment  as  a  condition  precedent. 
Williams,  after  an  examination  of  authorities,  concludes  that  the  intention 
of  parties  is  to  guide  us  in  determining  whether  a  contract  is  dependent  or 
independent.  This  however,  only  removes  the  difficulty  a  stage  further  back, 
and  he  therefore  puts  forward  certain  rules  for  ascertaining  intention.  One 
of  the  earliest  cases  cited  by  Williams  is  Thorp  v.  Thorp  (12  Mod.  455,  1701), 
where  Holt,  C.  J.,  delivered  a  lengthy  and  learned  judgment,  and  laid  down 
two  rules  afterwards  adopted  by  Williams  as  the  first  two  of  the  set  pro- 
pounded by  him.  All  these  rules  may  be  serviceable  in  their  way,  though  they 
do  not  go  far  to  reconcile  conflicting  judgments." — Eichard  Brown,  Law  of 
contract  in  England  and  Scotland,  15  Juridical  Review,  398. 

The  sets  of  rules  on  conditions,  formulated  by  Serjeant  Williams,  Professor 
Langdell,  and  Professor  Costigan,  respectively,  are  published  in  Costigan, 
Performance  of  contracts  (Chicago,  1911).  LangdelPs  Rules,  with  modifica- 
tions, are  also  given  in  Ashley,  Contract,  §§  60-69.  See  also  Costigan,  "Con- 
ditions in  contracts,"  7  Col.  Law  Rev.  151. 

In  Cadwell  v.  Blake,  6  Gray  (Mass.),  402,  Shaw,  C.  J.,  said:  "In  con- 
struing a  mutual  agreement,  in  which  there  are  several  stipulations  on  both 
sides,  the  question  whether  one  is  absolute  and  independent,  or  conditional 
and  made  to  depend  on  something  first  to  be  done  on  the  other  side,  does 
not  depend  on  any  particular  form  of  words,  or  upon  any  collocation  of  the 
different  stipulations;  but  the  whole  instrument  is  to  be  taken  together,  and 
a  careful  consideration  had  of  the  various  things  to  be  done  to  decide  correctly 
the  order  in  which  they  are  to  be  done." 

In  Loud  v.  Pomona  Co.,  153  U.  S.  564,  the  court  said:  "The  question 
whether  covenants  are  dependent  or  independent  must  be  determined  in 
each  case  upon  the  proper  construction  to  be  placed  on  the  language  em- 
ployed by  the  parties  to  express  their  agreement.  If  the  language  is 
clear  and  unambiguous  it  must  be  taken  according  to  its  plain  meaning 
as  expressive  of  the  intention  of  the  parties,  and  under  settled  principles 
of  judicial  decision  should  not  be  controlled  by  the  supposed  inconvenience 
or  hardship  that  may  follow  such  construction.  If  parties  think  proper, 
they  may  agree  that  the  right  of  one  to  maintain  an  action  against  another 
shall  be  conditional  or  dependent  upon  the  plaintiff's  performance  of  cove- 
nants entered  into  on  his  part.  On  the  other  hand,  they  may  agree  that 
the  performance  by  one  shall  be  a  condition  precedent  to  the  performance 
by  the  other.  The  question  in  each  case  is,  which  intent  is  disclosed  by 
the  language  employed  in  the  contract?" 


BY    BREACH.  661 

cent  on  the  cost,  which  plaintiff  might  sell  in  competition  with  de- 
fendant. Differences  arising  between  the  parties,  plaintiff  forbade 
defendant  to  manufacture  the  sprinklers  and  himself  began  to  manu- 
facture and  sell  them. 

The  court  charged  that  if  the  plaintiff,  without  any  justification  aris- 
ing from  the  previous  conduct  of  the  defendant,  entered  upon  the 
market  as  a  competitor  with  it  in  making  and  selling  the  sprinklers, 
he  was  not  entitled  to  recover,  and  submitted  to  the  jury  whether  plain- 
tiff violated  the  contract  without  justification  arising  from  defendant's 
non-performance. 

SHIPMAN,  CIRCUIT  JUDGE.  .  .  .  This  part  of  the  case  depends  upon 
the  question  whether  the  respective  undertakings  of  the  two  parties 
to  the  contract  shall  be  construed  to  be  independent,  so  that  a  breach 
by  one  party  is  not  an  excuse  for  a  breach  by  the  other,  and  either  party 
may  recover  damages  for  the  injury  he  has  sustained,  or  are  dependent 
so  that  a  breach  by  one  relieves  the  other  from  the  duty  of  performance. 
Kingston  v.  Preston,  Doug.  689.  "Where  the  agreements  go  to  the 
whole  of  the  consideration  on  both  sides,  the  promises  are  dependent, 
and  one  of  them  is  a  condition  precedent  to  the  other.  If  the  agree- 
ments go  to  a  part  only  of  the  consideration  on  both  sides,  and  a 
breach  may  be  paid  for  in  damages,  the  promises  are  so  far  independ- 
ent." 2  Parsons  on  Contracts  (8th  ed.),  792.  By  the  contract  which 
is  the  foundation  of  this  suit  Brusie  granted  to  the  defendant  the  sole 
and  exclusive  right  to  manufacture  the  patented  sprinkler,  and  the 
sole  right  to  sell,  except  that  Brusie  could  sell  sprinklers  manufactured 
by  the  defendant,  paying  it  twenty-five  per  cent  profit  upon  the  cost  of 
such  manufacture.  The  defendant  promised  to  manufacture  sprinklers 
of  good  material,  to  use  its  best  endeavors  to  introduce  the  same,  to 
pay  a  royalty  of  two  dollars  upon  each  machine  sold,  and  not  to  sell 
below  fifteen  dollars,  unless  the  price  was  changed  by  joint  agreement. 
Brusie  having  manufactured  and  sold  at  reduced  prices,  calls  upon 
the  defendant  to  pay  a  royalty  of  two  dollars  upon  every  machine 
which  it  sold,  and  to  recover  damages  for  his  own  violation  of  the 
contract  in  a  separate  action. 

The  contention  of  the  plaintiff  would  have  weight,  if  Brusie's  ful- 
fillment of  his  part  of  the  contract  had  not  been  vital  to  the  ability  of 
the  defendant  to  fulfill  any  part  of  its  contract.  The  plaintiff  bound 
the  defendant  not  to  sell  at  a  price  less  than  fifteen  dollars,  unless  the 
price  should  be  changed  by  joint  agreement.  He  thereby  impliedly 
promised  that  the  price  imposed  upon  the  defendant  should  be  main- 
tained, unless  altered  by  joint  consent.  The  defendant's  ability  to 
pay  the  royalty  depended  upon  Brusie's  abstinence  from  competition 
at  reduced  prices.  He  could  not  become,  as  he  did,  the  defendant's 
active  competitor,  lower  prices  without  consent,  and  still  compel  the 
defendant  to  sell  at  not  less  than  fifteen  dollars,  and  pay  a  royalty 


662  DISCHARGE   OF   CONTRACT. 

of  two  dollars  per  machine.  This  breach  by  Brusie  of  his  undertakings, 
when  found  to  be  unjustifiable  by  reason  of  any  previous  conduct  of 
the  defendant,  relieved  it  from  the  obligation  which  it  had  assumed. 
There  was  no  error  in  the  charge,  and  the  judgment  of  the  Circuit 
Court  is 

Affirmed.1 

9   Cyc.  642    (52)  ;    721    (53). 


NELSON  v.  PLIMPTON  ELEVATING  CO. 
55   NEW   YORK,  480.— 1874. 

ALLEN,  J.  The  contract  between  the  parties  to  the  action  was 
mutual,  and  neither  could  recover  against  the  other  for  a  breach  of 
its  terms,  or  put  the  other  in  default,  without  a  tender  of  performance, 
or  at  least  proof  of  a  readiness  and  willingness  to  perform.  An  actual 
tender  of  performance  may  be  excused  when  there  is  a  willingness  and 
an  ability  to  perform,  and  actual  performance  has  been  prevented  or 
expressly  waived  by  the  parties  to  whom  performance  is  due.  (Fran- 
chot  v.  Leach,  5  Cow.  506 ;  Traver  v.  Halsted,  23  Wend.  66 ;  Cort  v. 
Ambergate,  etc.,  R.  Co.,  17  A.  &  E.  [N.  S.]  127;  Rochester  v.  De  la 
Tour,  2  E.  &  B.  678.) 

The  plaintiffs  agreed  to  furnish  to  the  defendant,  at  its  elevator  in 
Buffalo,  to  be  elevated  and  stored,  between  the  dates  mentioned,  500,- 
000  bushels  of  grain,  and  to  pay  for  the  elevating  and  storage  thereof 
a  specified  rate  per  bushel;  and  the  defendant  agreed  to  receive  and 
store  the  grain,  as  should  be  required  by  the  plaintiffs,  for  the  stipu- 
lated compensation.  The  breach  of  the  contract  alleged  is,  that  the 
defendant  refused  to  receive  and  store  grain  under  the  agreement.  It 
i's  not,  however,  averred  in  the  complaint  that  the  plaintiffs  or  any 
other  person  had  grain  for  delivery  to  the  defendant  to  be  elevated  and 
stored,  or  that  the  plaintiffs  were  ready  or  willing,  or  could 
have  furnished  or  delivered  grain  to  the  defendant  under  the  con- 
tract, and  the  proof  on  the  trial  did  not  cure  the  defect  in  the  com- 
plaint. The  proof  was  that  neither  the  plaintiffs  nor  Lincoln  &  Co., 

i  Notice  to  perform  as  condition  precedent. — "Where  a  party  stipulates 
to  do  a  certain  thing  in  a  certain  specific  event  which  may  become  known 
to  him,  or  with  which  he  can  make  himself  acquainted,  he  is  not  entitled 
to  any  notice,  unless  he  stipulates  for  it;  but  when  it  is  to  do  a  thing 
which  lies  within  the  peculiar  knowledge  of  the  opposite  party,  then  notice 
ought  to  be  given  him." — Vyse  v.  Wakefield,  6  M.  &  W.  452.  So  in  Hutchin- 
son  v.  Cummings,  156  Mass.  329,  the  court  said:  "Assuming  in  favor 
of  the  plaintiff,  that  this  agreement  bound  the  defendants  to  make  all 
necessary  repairs  while  Mrs.  Dennin  continued  to  occupy,  it  must  be  implied 
that  they  were  only  to  make  repairs  upon  reasonable  notice." 


BY    BREACH.  663 

who  claimed  rights  under  the  agreement,  had  grain,  to  be  elevated  or 
stored,  in  Buffalo  at  the  time  of  the  alleged  breach  of  the  contract  by 
the  defendant,  or  at  any  time  thereafter,  or  that  they  were  prevented 
from  procuring  and  having  the  grain  by  reason  of  the  refusal  of  the 
defendant  to  receive  it.  ...  The  plaintiffs  here  were  not  in  a  condi- 
tion, or  ready,  or  willing  to  perform  the  contract  on  their  part,  or 
furnish  the  grain,  and  the  defendant  at  no  time  had  the  opportunity 
to  perform  on  its  part.  The  proof  did  not  sustain  the  allegation  of 
the  complaint,  that  the  defendant  refused  to  receive  and  store  the 
grain.  The  referee  has  found,  in  accordance  with  the  evidence,  that 
the  defendant  refused  to  accept  or  recognize  an  order  from  the  plain- 
tiffs, in  favor  of  Lincoln  &  Co.,  to  store  100,000  bushels  of  grain.  The 
defendant  was  not  required,  by  the  terms  of  the  contract,  to  accept  such 
order  or  to  come  under  any  obligation  other  or  different  in  form  from 
the  contract  itself,  and  whether  the  reason  assigned  was  true  in  fact 
was  not  material.  The  refusal  was  to  do  that  which  neither  the 
plaintiffs  nor  Lincoln  &  Co.  had  a  right  to  demand,  and  constituted 
no  breach  of  the  contract.  No  cause  of  action  is  averred  in  the  com- 
plaint or  was  proved  on  the  trial.  .  .  . 

The  judgment  must  be  reversed  and  a  new  trial  granted.  All 
concur.  Judgment  reversed.1 

i  Averment  of  offer  or  tender  of  performance. — In  Gray  v.  Smith,  83 
Fed.  824,  the  court  said:  "It  is  contended  by  the  plaintiff  in  error  that 
the  refusal  of  Mills  to  be  bound  by  his  contract,  before  the  time  for  its 
completion  had  arrived,  excuses  the  plaintiff  from  showing  or  proving 
that  he  had  the  ability  to  perform  the  contract  upon  his  part.  It  is  true 
that  where  the  vendor  of  property,  before  the  arrival  of  the  time  for  the 
completion  of  his  contract  of  sale  or  conveyance,  disables  himself  from 
performing  by  disposing  of  the  property  to  another,  the  purchaser  may 
at  once  bring  his  action,  and  he  need  not  aver  or  prove  tender  of  the  pur- 
chase money  upon  his  part,  nor  his  ability  to  carry  out  the  contract;  and 
where  either  party  to  a  contract  gives  notice  to  the  other  that  he  will  not 
comply  with  its  terms,  the  other  is  excused  from  averring  or  proving  a 
tender  of  performance.  But,  in  any  case  of  action  upon  a  contract,  the 
elements  of  the  plaintiff's  damage  must  be  certain,  and  the  facts  must 
exist  from  which  it  may  be  deduced  that  he  has  suffered  loss.  One  who 
makes  a  contract  to  sell  property  of  which  he  has  no  title,  nor  the  certain 
means  of  procuring  title,  presents  no  facts  upon  which  damage  to  him  may 
be  predicated  if  the  purchaser  withdraws  from  the  contract.  ...  So  far 
as  the  performance  of  his  contract  was  concerned,  he  was  in  no  better  atti- 
tude than  one  who  has  disabled  himself  from  carrying  out  a  contract  of 
sale  by  selling  the  property  to  another." 

In  Loud  v.  Pomona  Co.,  153  U.  S.  564,  the  court  said:  "If  the  acts  to 
be  performed  by  the  land  company  and  the  purchaser,  respectively,  are  de- 
pendent and  concurrent,  neither  party  would  be  entitled  to  an  action  against 
the  other  without  the  averment  of  performance,  or  the  tender  of  perform- 
ance on  his  part.  If,  however,  the  payment  of  the  purchase-price  for  the 
lands  is  a  condition  precedent  to  the  land  company's  covenant  to  convey, 
then  it  is  entitled  to  enforce  payment  without  conveyance  or  tender  of  con- 


664  DISCHARGE   OF    CONTRACT. 

McEAVEN  v.  CRISLER. 

53   MISSISSIPPI,  542.— 1876. 

Action  on  a  note  for  the  purchase  price  of  land.  Demurrer  to 
plea  sustained. 

CHALMERS,  J.  The  suit  was  upon  a  note  for  $3840  given  by  the 
appellant  to  the  appellee's  intestate  for  the  purchase  money  of  a 

veyance,  and  the  allegation  of  its  readiness  and  willingness  to  convey,  upon 
payment  of  the  purchase  money,  was  sufficient." 

In  Smith  v.  Lewis,  26  Conn.  119,  the  court  said:  "Some  misapprehen- 
sion or  confusion  appears  to  have  arisen  from  the  mode  of  expression  used 
in  the  books  in  treating  of  the  necessity  of  a  tender  or  offer  by  the  parties 
as  applicable  to  the  case  of  mutual  and  concurrent  promises.  The  word 
'tender,'  as  used  in  such  a  connection,  does  not  mean  the  same  kind  of 
offer  as  when  it  is  used  with  reference  to  the  payment  or  offer  to  pay  an 
ordinary  debt  due  in  money,  where  the  money  is  offered  to  a  creditor  who  is 
entitled  to  receive  it,  and  nothing  further  remains  to  be  done,  but  the 
transaction  is  completed  and  ended;  but  it  only  means  a  readiness  and  will- 
ingness, accompanied  with  an  ability  on  the  part  of  one  of  the  parties,  to 
do  the  acts  which  the  agreement  requires  him  to  perform,  provided  the 
other  will  concurrently  do  the  things  which  he  is  required  by  it  to  do,  and 
a  notice  by  the  former  to  the  latter  of  such  readiness.  Such  readiness, 
'ability,  and  notice  are  sufficient  evidence  of,  and,  indeed,  constitute  and  imply, 
an  offer  or  tender  in  the  sense  in  which  those  terms  are  used  in  reference 
to  the  kind  of  agreements  which  we  are  now  considering.  It  is  not  an 
absolute,  unconditional  offer  to  do  or  transfer  anything  at  all  events,  but  it 
is,  in  its  nature,  conditional  only,  and  dependent  on,  and  to  be  performed 
only  in  case  of,  the  readiness  of  the  other  party  to  perform  his  part  of  the 
agreement." 

In  Vandegrift  v.  Cowles  Engineering  Co.,  161  N.  Y.  435,  the  court  said: 
"Where,  by  the  terms  of  a  contract,  the  acts  are  to  be  concurrent,  it  is  the 
duty  of  him  who  seeks  to  maintain  an  action  for  its  breach,  either  by  way 
of  damages  for  its  non-performance,  or  for  the  recovery  of  money  paid 
thereon,  not  only  to  be  ready  and  tender  performance  upon  his  part,  but  he 
must  demand  performance  from  the  other  party.  (Ziehen  v.  Smith,  148  N.  Y. 
558;  Higgins  v.  Eagleton,  155  N.  Y.  466;  Glenn  v.  Rossler,  156  N.  Y.  161;  Ben- 
jamin on  Sales  [7th  ed.],  §  592;  Gazley  v.  Price,  16  Johns.  267.)  While  there 
are  qualifications  to  this  rule  where  a  formal  tender  or  demand  becomes  un- 
necessary, such  as  a  refusal  in  advance  to  comply  with  the  terms  of  the  con- 
tract, or  where  its  performance  is  proved  to  have  been  impossible,  yet  they  have 
no  application  here  as  neither  of  those  facts  was  established  upon  the  trial." 

In  Cadwell  v.  Blake,  6  Gray  (Mass.),  402,  Shaw,  C.  J.,  said:  "When,  in 
the  order  of  events,  the  act  to  be  done  by  the  one  party  must  necessarily  be 
done  before  the  other  can  be  done,  it  is  necessarily  a  condition  precedent, 
although  there  be  a  stipulation  for  liquidated  damages  for  the  breach  on 
each  side,  and  although  there  be  a  fixed  future  time  for  payment  sufficiently 
distant  to  have  the  work  done  in  the  meantime.  Suppose  B.  agrees  to 
build,  at  his  own  shop,  a  carriage  for  A.,  of  A.'s  materials;  A.  stipulates 
seasonably  to  furnish  materials,  and  to  pay  B.  in  four  months;  and  each, 
upon  failure,  stipulates  to  pay  a  sum  as  liquidated  damages.  The  furnish- 
ing or  tendering  the  materials  by  A.  is  a  condition  precedent.  Without  it 


BY    BREACH.  665 

tract  of  land.  The  note  undertook  to  recite  the  land  for  the  price 
of  which  it  was  executed,  but  the  land  was  misdescribed.  This  being 
discovered  by  the  payee  some  months  after  its  execution,  he  took  it 
to  one  Harris,  who  had  acted  as  draughtsman  for  both  parties  in 
drawing  it,  and  procured  him  to  interline  and  alter  it,  so  as  properly 
to  describe  the  land. 

In  suing  upon  the  note,  several  counts  were  laid  in  the  declaration : 
1.  Upon  the  note;  2.  Upon  a  special  contract  to  pay  the  sum  agreed 
upon,  and  a  delivery  and  retention  of  possession  of  the  land  there- 
under; 3.  The  common  counts  for  money  paid  out  and  expended,  etc. 

To  the  count  upon  the  note  there  was  a  plea  of  non  est  factum 
under  oath;  and  the  view  which  we  take  of  this  count  and  the  plea 
thereto  renders  an  examination  of  the  subsequent  pleadings  unneces- 
sary, in  so  far  as  they  relate  to  an  ultimate  right  of  recovery.  We 
doubt  whether  the  alteration  in  the  description  of  the  land  was  a 
material  alteration  of  the  note,  and,  if  not,  of  course  the  latter  was 
not  affected  by  it.  Bridges  r.  Winters,  42  Miss.  135. 

But  even  if  it  be  deemed  a  material  alteration,  we  think  it  is 
equally  clear  that  it  did  not  vitiate  the  note.  It  was  but  the  cor- 
rection of  a  mistake  so  as  to  conform  the  note  to  the  intention  of 
both  the  parties  to  it,  and  it  was  made  in  such  manner  as  clearly  to 
negative  any  fraud  upon  the  part  of  the  payee,  or  any  intention  to 
obtain  an  advantage.  That  under  these  circumstances  alterations  in 
notes  will  not  vitiate  them,  we  think,  is  well  settled.  The  only  ques- 
tions in  such  cases  are,  does  the  alteration  actually  conform  to  the 
true  intention  of'  both  parties  to  the  instrument  ?  and  was  it  honestly 
made  to  correct  the  mistake,  and  with  no  intent  of  procuring  an 
advantage?  Where  these  questions  are  answered  in  the  affirmative, 
the  law  will  presume  or  dispense  with  the  assent  of  the  maker  of  the 
note  to  its  alteration.  2  Parsons  on  Bills  and  Notes,  569,  570 ;  Chitty 
on  Bills  and  Notes,  184,  185;  Bayley  on  Bills  and  Notes,  90;  Ker- 
shaw  v.  Cox,  3  Esp.  246 ;  Knill  v.  Williams,  10  East,  431 ;  Brutt  v. 
Picard,  Ey.  &  Mood.  37;  Clute  v.  Small,  17  Wend.  238;  Hervey  v. 
Harvey,  15  Me.  357;  Bowers  v.  Jewell,  2  N.  H.  543;  Boyd  v.  Brother- 
son,  10  Wend.  93. 

The  point  was  ruled  otherwise  in  Miller  v.  Gilleland  (19  Penn. 
St.  119)  by  a  divided  court;  but  we  think  the  dissenting  opinion  of 
Justices  Lowrie  and  Woodward  (to  be  found  in  1  Am.  Law  Reg. 

B.  cannot  perform.  He  must  build  it  of  A.'s  materials.  Even  building  it 
of  his  own  would  not  be  a  performance.  B.  has  his  shop,  his  tools,  and 
his  workmen  all  ready,  but  A.  does  not  furnish  the  materials.  If  B.  sues  A., 
averring  readiness  to  perform,  he  may  recover.  But  if  A.  sues  B.  for  not 
building  the  carriage,  it  would  be  a  good  answer  that  A.  himself  had  not 
furnished  the  materials,  because  whatever  else  the  contract  may  contain,  this 
is  in  its  nature  a  condition  precedent." 


666  DISCHARGE   OF   CONTRACT. 

672)  enunciates  the  sounder  doctrine,  both  upon  reason  and  au- 
thority. 

The  judgment  in  the  case  at  bar  is  therefore  maintainable  upon 
the  first  count  in  the  declaration. 

By  the  defendant's  sixth  plea  she  averred  "that  the  original  note 
was  given  by  her  in  consideration  that  the  plaintiff  would  sell  and 
convey  to  her  by  proper  deed  of  conveyance  the  land,"  etc. ;  and  that 
no  deed  had  been  tendered  before  suit  brought.  A  deed  was  filed 
with  the  declaration,  which,  by  the  judgment  of  the  court,  was  ordered 
to  remain  on  file,  and  be  delivered  on  payment  of  the  judgment. 
Was  there  any  obligation  to  tender  it  before  the  institution  of  the 
suit?  There  was  no  written  contract  to  convey  the  land,  nor  any 
proof  of  a  parol  promise  to  do  so.  The  question  must  therefore  be 
tested  by  the  averments  of  the  plea. 

It  will  be  observed  that  there  is  no  allegation  that  the  deed  was  to 
be  made  at  or  before  the  payment  of  the  note,  nor  is  any  time  specified 
when  the  execution  of  the  deed  was  to  take  place.  The  note  was  pay- 
able one  day  after  date.  While  it  is  true  that  the  courts  will  hold 
the  covenant  to  pay  and  the  covenant  to  make  title  as  dependent, 
unless  a  contrary  intention  clearly  appears,  it  is  no  less  true  that  the 
covenants  must  be  regarded  as  independent,  where  the  time  of  pay- 
ment precedes  the  time  fixed  for  delivering  the  deed,  or  where  no 
time  for  making  title  is  specified.  Gibson  v.  Newman,  1  How. 
(Miss.)  341;  Leftwich  v.  Coleman,  3  How.  (Miss.)  167;  Hector  v. 
Price,  3  How.  (Miss.)  321;  Eobinson  v.  Harbour,  42  Miss.  795. 

The  case  of  Gibson  v.  Newman,  supra,  was  much  like  the  one  at 
bar.  In  that  case,  as  in  this,  there  was  no  written  obligation  to  con- 
vey, and  the  question  was  determined  by  the  language  of  the  plea. 
There,  as  here,  the  plea  failed  to  aver  any  period  when  the  deed  was 
to  be  made;  and  upon  this  ground  the  covenants  were  held  to  be 
independent.  That  case  is  cited  and  approved  in  Robinson  v.  Har- 
bour, ubi  supra,  the  latest  authoritative  exposition  of  this  court  on 
the  much-vexed  question  of  dependent  and  independent  covenants. 

The  demurrer  to  the  plea  in  the  case  at  bar  was  properly  sustained. 

Judgment  affirmed. 

9  Cyc.  642    (52);   643    (56);   39  Cyc.  1306    (47);   W.  P.  854    (7). 


TRACY  v.  ALBANY  EXCHANGE  CO. 
7  NEW  YORK,  472.— 1852. 

Action  for  damages  for  breach  of  a  covenant  to  renew  a  lease. 
Judgment  for  plaintiff.  Defendant  appeals. 

JEWETT,  J.  ...  As  to  the  objection  made  by  the  defendant  that 
there  was  rent  in  arrears,  and  therefore  the  plaintiff  was  not  entitled 


BY    BREACH.  667 

to  a  further  lease,  the  covenant  being  independent,  the  liability  of 
the  defendant  for  the  breach  of  the  covenant  in  question  remained. 
The  payment  of  the  rent  was  not  a  condition  precedent  to  the  right 
of  the  plaintiff  to  a  renewal  of  the  lease  under  the  covenant,  and  he 
might  bring  his  action  for  a  breach  of  it,  although  he  was  guilty  of 
a  default  in  the  payment  of  his  rent  or  performance  of  his  covenant. 
Dawson  v.  Dyer,  5  Barn.  &  Adol.  584.  .  .  . 

Judgment  affirmed. 
24  Cyc.  1002    (69-70). 


TRONSON  v.  COLBY  UNIVERSITY. 
9  NORTH   DAKOTA,  559.— 1900. 

Plaintiff  executed  and  delivered  to  McLaughlin  his  non-negotiable 
promissory  note,  and  secured  the  same  by  mortgage  upon  realty. 
McLaughlin,  in  consideration  thereof,  agreed  to  have  certain  claims 
against  plaintiff,  which  were  held  by  third  parties,  and  which  were 
liens  upon  the  realty,  satisfied  of  record,  no  time  for  performance 
being  fixed.  McLaughlin  sold  the  note  and  assigned  the  mortgage 
to  defendant,  but  failed  to  have  the  liens  satisfied  in  whole  or  in 
part.  Plaintiff  now  brings  this  action  against  defendant  to  have  the 
note  and  mortgage  cancelled.  Judgment  for  plaintiff;  defendant 
appeals. 

BARTHOLOMEW,  C.  J.  .  .  .  It  is  apparent  that  the  parties  did  not 
understand  that  the  promise  to  pay  and  the  promise  to  procure  the 
releases  of  the  liens  were  dependent  promises.  This  may  appear  in 
a  stronger  light  if  we  change  parties  defendant  and  the  cause  of  action. 
Let  us  suppose  that,  after  waiting  a  reasonable  time  for  McLaughlin 
to  procure  the  releases,  plaintiff  had  paid  the  prior  liens,  and  then 
brought  action  against  McLaughlin  to  recover  damages  for  the  breach 
of  his  agreement  to  procure  such  releases ;  would  it  be  contended  that 
McLaughlin  could  defeat  the  action  by  alleging  that  plaintiff  had  not 
paid  his  note  of  $1,000,  and  that  the  performance  of  the  promise  to 
procure  the  releases  was  dependent  upon  the  performance  of  plain- 
tiff's promise  to  pay?  And  yet,  if  those  promises  were  dependent, 
they  were  mutually  dependent.  We  conclude,  then,  that  the  promise 
to  procure  the  releases,  and  not  the  fulfilment  of  that  promise,  con- 
stituted the  consideration  of  the  note.  See,  upon  this  point,  Chap- 
man v.  Eddy,  13  Vt.  205;  Trask  v.  Vinson,  20  Pick.  105;  Earle  v. 
Angell,  157  Mass.  294,  32  N.  E.  164;  Hubon  v.  Park,  116  Mass.  541 ; 
Hodgkins  v.  Moulton,  100  Mass.  309;  Turner  v.  Rogers,  121  Mass. 
12.  ...  Respondent  insists  that,  as  the  time  for  performance  upon 
McLaughlin's  part  has  elapsed,  no  recovery  could  be  had  upon  the 
note  without  pleading  performance  upon  McLaughlin's  part.  We 


668  DISCHARGE   OF   CONTRACT. 

think  this  is  fallacious,  and  that  the  principle  invoked  cannot  be  ap- 
plied to  this  case.  No  portion  of  plaintiff's  promise  to  pay  was  ever 
made,  by  contract,  dependent  upon  performance  by  McLaughlin.  No 
time  was  ever  fixed  for  performance  by  McLaughlin.  No  demand  for 
performance  was  ever  made  upon  him,  so  far  as  the  record  shows. 
He  may  yet  perform,  for  aught  that  appears.  If  he  fail,  plaintiff  has 
his  independent  right  of  action  against  him  for  damages.  Suppose, 
to  repeat  an  illustration,  that  plaintiff  were  asserting  that  right  of 
action  against  McLaughlin  now;  could  McLaughlin  defend  by  alleg- 
ing plaintiff's  failure  to  pay  the  note  for  $1,000  ?  Clearly  not.  Per- 
formance by  McLaughlin  could  not  be  made  to  depend  upon  such 
payment.  And  if  payment  were  overdue  it  could  make  no  difference. 
These  propositions  need  no  support.  Plaintiff  cannot  recover  upon 
this  record.  Had  plaintiff  been  forced  to  pay  those  prior  liens,  or 
had  he  voluntarily  paid  them,  a  different  case  might  be  presented. 
Upon  that  we  express  no  opinion.  The  record  clearly  shows  that 
nothing  has  been  paid  upon  those  claims.  In  the  judgment  of  this 
court,  the  action  should  be  dismissed.  The  district  court  is  directed 
to  set  aside  its  judgment  entered  herein,  and  enter  judgment  dismiss- 
ing the  action.  Reversed.  All  concur.1 
9  Cyc.  642-643  (54-58)  ;  14  H.  L.  R.  543. 


b.  Divisible  and  installment  contracts. 
TIPTON  v.  FEITNER. 
20  NEW  YORK,  423.— 1859. 

Appeal  from  the  Supreme  Court.  Action  to  recover  the  price  of 
certain  slaughtered  hogs,  sold  by  the  plaintiffs  to  the  defendant.  It 
was  defended  on  the  ground  that  they  were  purchased  under  a  special 
contract  with  the  plaintiffs,  which  had  been  violated  on  their  part. 
The  case,  according  to  the  finding  of  the  referee,  before  whom  it 
was  tried,  was  as  follows:  On  the  3d  day  of  February,  1855,  at 
the  city  of  New  York,  the  plaintiffs  agreed  with  the  defendant,  by 
parol,  by  one  and  the  same  contract,  to  sell  the  defendant  eighty- 
eight  dressed  hogs,  then  at  the  slaughter-house  of  a  third  person,  in 
the  city,  at  7  cents  per  pound ;  and  also  certain  live  hogs  of  the  plain- 

i  In  Howell  v.  James  Lumber  Co.,  102  Ga.  595  (reported  by  syllabus  only,  the 
contract  not  being  set  forth),  the  court  says:  "The  covenants  below  set 
forth,  in  a  contract  whereby  the  parties  of  the  first  part  agreed  to  convey  to 
the  parties  of  the  second  part,  for  a  designated  period,  at  a  specified  price 
per  acre,  all  the  timber  on  certain  lands  for  turpentine  purposes,  and  whereby 
the  parties  of  the  second  part  agreed  to  convey  to  the  other  parties,  at  a 
specified  price  per  acre,  all  the  timber  on  certain  other  lands  for  sawmill 
purposes,  were  properly  construed  to  be  independent  covenants." 


BY    BREACH.  6G9 

tiffs,  which  were  being  driven,  and  were  then  on  their  way  from  the 
State  of  Ohio  to  New  York,  at  5y±  cents  per  pound  live  weight,  the 
defendant  agreeing  on  his  part  to  buy  the  dressed  and  live  hogs  at 
these  prices.  The  dressed  hogs  were  to  be  delivered  immediately  after 
the  sale,  and  the  live  ones  on  their  arrival  at  the  city,  where  they  were 
expected,  and  did  arrive  some  days  afterward.  The  dressed  hogs 
were  delivered  on  the  same  day,  but  were  not  paid  for  by  the  defend- 
ant. The  live  hogs  arrived  five  days  afterward;  they  were  not  de- 
livered to  the  defendant,  but  were  slaughtered  by  the  plaintiffs,  and 
by  them  sold  to  other  parties.  The  defendant  insisted  that  the  plain- 
tiffs could  not  recover  for  the  dressed  hogs,  on  the  ground  that  they 
had  failed  to  perform  their  agreement  as  to  the  live  ones.  The 
referee,  however,  held  that  the  plaintiffs  were  entitled  to  recover  the 
price  of  the  dressed  hogs,  deducting  the  damages  which  the  defendant 
had  sustained  for  the  breach  of  the  other  branch  of  the  contract; 
and  he  reported  accordingly.  The  dressed  hogs  came  to  $1,182.57; 
deducted  for  defendant's  damages,  $401,  leaving  $780.38,  for  which 
judgment  was  given,  which  was  affirmed  at  General  Term.  The  de- 
fendant appealed. 

SELDEN,  J.  It  is  said  that  the  plaintiffs  cannot  recover  for  the 
dressed  hogs  actually  delivered,  because  they  failed  to  deliver  the 
live  hogs  on  their  arrival  in  New  York,  the  delivery  of  the  latter 
being,  as  it  is  insisted,  a  condition  precedent  to  the  right  of  the  plain- 
tiffs to  claim  payment  for  the  former.  This  consequence  is  sup- 
posed to  follow,  from  the  finding  of  the  referee  that  the  plaintiffs 
agreed  to  sell  both  live  and  the  dressed  hogs  "in  one  and  the  same 
contract." 

But  it  by  no  means  follows,  because  a  party  has  agreed  to  do  several 
things  by  one  and  the  same  contract,  that  performance  of  the  con- 
tract in  all  its  parts  is  a  condition  precedent  to  any  right  to  claim 
payment  for  the  portion  which  may  have  been  done.  Were  this  so, 
there  could  be  no  such  thing  as  "independent  covenants"  in  any  con- 
tract. It  is  always  a  question  of  construction,  depending  upon  the 
terms  of  the  contract,  its  subject  matter,  and  the  circumstances  under 
which  it  was  made,  whether  there  is  a  condition  precedent  or  not. 
There  are  certain  well-established  legal  principles  which  seem  to  me 
decisive  of  this  question  in  the  present  case.  It  is  plain  of  itself 
and  well  settled  by  authority,  that  when  by  the  terms  of  a  contract 
a  payment  by  one  party  is  to  precede  some  act  to  be  done  by  the 
other,  then  the  performance  of  the  act  cannot  be  treated  as  a  condi- 
tion of  the  payment ;  as  in  the  case  of  contracts  for  the  sale  and  con- 
veyance of  lands,  where  payments  are  to  be  made  before  the  time 
fixed  for  the  conveyance. 

Again,  it  is  equally  well  settled,  that  where,  upon  the  sale  of  goods, 
no  other  time  is  fixed,  payment  is  to  be  made  when  the  goods  are 


670  DISCHARGE   OF    CONTRACT. 

delivered ;  and  the  vendor  is  under  no  obligation  to  deliver  them  with- 
out such  payment.  There  is  nothing  in  the  present  case  which  is  at 
all  indicative  of  an  intention  to  give  a  credit  to  the  defendant.  If  the 
contract  had  been  to  deliver  articles  of  a  perfectly  homogeneous  nature 
at  different  times,  but  at  a  uniform  price,  there  might  possibly  be 
some  ground  for  holding  that  the  delivery  of  the  whole  was  to  pre- 
cede any  payment  for  the  portion  delivered.  But  even  in  that  case, 
the  authorities  show  that  there  must  be  something  in  the  terms  of 
the  contract,  from  which  the  intention  to  make  the  delivery  of  the 
whole  a  condition,  may  be  implied. 

Thus,  in  the  case  of  Withers  v.  Reynolds,  2  Barn.  &  Adol.  882, 
where  the  agreement  was  to  supply  the  plaintiff  with  wheat  straw  of 
good  quality,  sufficient  for  bis  use  as  stable-keeper,  and  delivered  on 
his  premises,  at  the  rate  of  three  loads  in  a  fortnight,  up  to  a  certain 
period,  at  the  price  of  33s.  per  load  of  thirty-six  trusses ;  the  plaintiff 
agreeing  to  pay  for  each  load  at  that  rate,  it  was  held  that  the  plain- 
tiff was  bound  to  pay  for  the  loads  as  they  were  delivered.  All  the 
straw  was  to  be  delivered,  m  that  case,  under  "one  and  the  same 
contract" ;  and,  moreover,  the  defendant  had  positively  agreed  by  that 
contract,  to  supply  the  plaintiff  with  straw  for  a  certain  length  of 
time — an  agreement  which  he  refused  to  fulfil;  and  yet  it  was  held 
that  performance  in  this  respect  was  not  essential  to  his  right  to 
claim  payment  for  the  straw  actually  delivered. 

As  the  effect  of  a  condition  precedent  is  to  prevent  the  court  from 
dealing  out  justice  to  the  parties  according  to  the  equities  of  the  case, 
it  is  not  surprising  that  we  find  it  so  frequently  said  that  construc- 
tions productive  of  such  conditions  are  not  to  be  encouraged.  Parties 
must  be  held  strictly  to  their  contracts;  and  where  they  have  agreed 
in  terms  or  by  plain  implication  to  a  condition  which  is  to  bar  them 
of  a  recovery  according  to  what  is  equitable  and  just,  they  must  abide 
by  the  consequences.  But  courts  are  to  see  that  such  was  the  inten- 
tion of  the  parties,  before  they  are  held  up  to  so  rigid  a  rule. 

The  contract  in  this  case,  although  "one  and  the  same,"  is  by  no 
means  indivisible.  On  the  contrary,  it  consists  of  two  distinct  parts, 
having  no  necessary  connection,  except  that  they  were  made  at  the 
same  time.  Each  portion  of  the  contract  is  complete  of  itself  with- 
out reference  to  the  other.  On  what,  then,  are  we  to  predicate  an 
assumption,  that  its  separate  branches  were  intended  to  be  dependent 
upon,  rather  than  independent  of  each  other? 

The  implication  must  be  plain  and  unmistakable  to  justify  such 
a  conclusion,  as  its  effect  would  be  to  impose  upon  the  plaintiff  a 
heavy  penalty  or  forfeiture.  If  the  time  for  the  delivery  of  the  live 
hogs  had  been  definitely  fixed,  it  might  be  more  reasonable  to  sup^ 
pose  that  the  plaintiffs  were  to  wait  for  payment  for  the  dressed 
hogs  until  that  time.  But  the  former  had  not  arrived;  their  arrival 


BY   BREACH.  671 

might  be  delayed;  they  might  never  arrive;  and  yet  the  conclusion 
contended  for  supposes  the  plaintiff  to  have  consented  to  give  this 
indefinite  kind  of  credit  for  a  marketable  article,  which  would  have 
commanded  the  money  any  day  at  the  market  price. 

It  is  urged  that  the  referee,  by  finding  that  the  whole  agreement 
was  by  "one  and  the  same  contract,"  has  virtually  found  that  the 
contract  was  entire  and  indivisible,  and  that  this  finding  settles  the 
question.  But  whether  the  contract  is  indivisble  or  not,  the  terms 
of  the  contract  being  given,  it  is  a  question  of  law,  upon  which  the 
finding  of  the  referee  is  not  conclusive.  Such,  however,  is  not  the 
true  construction  of  the  finding.  It  evidently  is  not  the  construction 
put  upon  it  by  the  referee  himself,  because  he  held  that  the  plaintiffs 
could  recover.  All  that  is  meant  by  the  finding  is,  that  the  whole 
agreement,  consisting  of  different  parts,  was  made  at  one  and  the 
same  time.  In  my  view  the  contract  was  plainly  divisible  and  the 
judgment  of  the  Supreme  Court  should  therefore  be  affirmed. 

35  Cyc.  114  (14)  ;  115   (21). 


NORRINGTON  v.  WEIGHT  et  al. 
115  UNITED  STATES,  188.— 1885. 

Action  of  assumpsit.  Judgment  for  defendants.  Plaintiff  brings 
error. 

The  action  was  on  the  following  contract: 

"Philadelphia,  January  19,  1880.  Sold  to  Messrs.  Peter  Wright  &  Sons, 
for  account  of  A.  Norrington  &  Co.,  London:  Five  thousand  (5000)  tons 
old  T  iron  rails,  for  shipment  from  a  European  port  or  ports,  at  the  rate 
of  about  one  thousand  (1000)  tons  per  month,  beginning  February,  1880,  but 
whole  contract  to  be  shipped  before  August  1st,  1880,  at  forty-five  dollars 
($45.00)  per  ton  of  2240  Ibs.  custom-house  weight,  ex  ship  Philadelphia. 
Settlement  cash  on  presentation  of  bills  accompanied  by  custom-house  certifi- 
cate of  weight.  Sellers  to  notify  buyers  of  shipments  with  vessels'  names 
as  soon  as  known  by  them.  Sellers  not  to  be  compelled  to  replace  any 
parcel  lost  after  shipment.  Sellers,  when  possible,  to  secure  to  buyers  right 
to  name  discharging  berth  of  vessels  at  Philadelphia. 

"EDWARD  J.  ETTINQ,  Metal  Broker." 

Plaintiff  shipped  under  this  contract  400  tons  by  one  vessel  in  the 
last  part  of  February,  885  tons  by  two  vessels  in  March,  1571  tons  by 
five  vessels  in  April,  850  tons  by  three  vessels  in  May,  1000  tons  by 
two  vessels  in  June,  300  tons  by  one  vessel  in  July,  and  notified 
defendants  of  each  shipment. 

Defendants  received  and  paid  for  the  February  shipment  upon  its 
arrival  in  March,  but  on  May  14,  about  the  time  of  the  arrival  of  the 
March  shipment,  having  learned  of  the  amounts  shipped  in  February, 
March,  and  April,  gave  written  notice  that  they  should  decline  to 


672  DISCHARGE   OF    CONTRACT. 

receive  the  shipments  made  in  March  and  April  because  they  were 
not  in  accordance  with  the  contract.  On  June  10,  plaintiff  offered 
defendants  a  delivery  of  exactly  1000  tons,  which  was  declined. 

At  the  trial,  the  plaintiff  contended,  1st.  That  under  the  con- 
tract he  had  six  months  in  which  to  ship  the  5000  tons,  and  any  de- 
ficiency in  the  earlier  months  could  be  made  up  subsequently,  provided 
that  the  defendants  could  not  be  required  to  take  more  than  1000 
tons  in  any  one  month.  2d.  That,  if  this  was  not  so,  the  contract 
was  a  divisible  contract,  and  the  remedy  of  the  defendants  for  a 
default  in  any  month  was  not  by  rescission  of  the  whole  contract,  but 
only  by  deduction  of  the  damages  caused  by  the  delays  in  the  ship- 
ments on  the  part  of  the  plaintiff. 

But  the  court  instructed  the  jury  that  if  the  defendants,  at  the  time 
of  accepting  the  delivery  of  the  cargo  paid  for,  had  no  notice  of  the 
failure  of  the  plaintiff  to  ship  about  1000  tons  in  the  month  of  Feb- 
ruary, and  immediately  upon  learning  that  fact  gave  notice  of  their 
intention  to  rescind,  the  verdict  should  be  for  them. 

The  plaintiff  excepted  to  this  instruction,  and,  after  verdict  and 
judgment  for  the  defendants,  sued  out  this  writ  of  error. 

MR.  JUSTICE  GRAY.  In  the  contracts  of  merchants,  time  is  of 
the  essence.  .  The  time  of  shipment  is  the  usual  and  convenient  means 
of  fixing  the  probable  time  of  arrival,  with  a  view  of  providing  funds 
to  pay  for  the  goods,  or  of  fulfilling  contracts  with  third  persons.  A 
statement  descriptive  of  the  subject  matter,  or  of  some  material  in- 
cident, such  as  the  time  or  place  of  shipment,  is  ordinarily  to 'be 
regarded  as  a  warranty,  in  the  sense  in  which  that  term  is  used  in 
insurance  and  maritime  law,  that  is  to  say,  a  condition  precedent, 
upon  the  failure  or  non-performance  of  which  the  party  aggrieved 
may  repudiate  the  whole  contract.  Behn  v.  Burness,  3  B.  &  S.  751 ; 
Bowes  v.  Shand,  2  App.  Gas.  455;  Lowber  v.  Bangs,  2  Wall.  728; 
Davison  v.  Von  Lingen,  113  U.  S.  40. 

The  contract  sued  on  is  a  single  contract  for  the  sale  and  purchase 
of  5000  tons  of  iron  rails,  shipped  from  a  European  port  or  ports  for 
Philadelphia.  The  subsidiary  provisions  as  to  shipping  in  different 
months,  and  as  to  paying  for  each  shipment  upon  its  delivery,  do  not 
split  up  the  contract  into  as  many  contracts  as  there  shall  be  ship- 
ments or  deliveries  of  so  many  distinct  quantities  of  iron.  Mersey 
Co.  v.  Naylor,  9  App.  Gas.  434,  439.  The  further  provision,  that 
the  sellers  shall  not  be  compelled  to  replace  any  parcel  lost  after 
shipment,  simply  reduces,  in  the  event  of  such  a  loss,  the  quantity  to 
be  delivered  and  paid  for. 

The  times  of  shipment,  as  designated  in  the  contract,  are  "at  the 
rate  of  about  1000  tons  per  month,  beginning  February,  1880,  but 
whole  contract  to  be  shipped  before  August  1,  1880."  These  words 
are  not  satisfied  by  shipping  one-sixth  part  of  the  5000  tons,  or  about 


BY    BREACH.  673 

833  tons,  in  each  of  the  six  months  which  begin  with  February  and 
end  with  July.  But  they  require  about  1000  tons  to  be  shipped  in 
each  of  the  five  months  from  February  to  June  inclusive,  and  allow 
no  more  than  slight  and  unimportant  deficiences  in  the  shipments 
during  those  months  to  be  made  up  in  the  month  of  July.  The  con- 
tract is  not  one  for  the  sale  of  a  specific  lot  of  goods,  identified  by 
independent  circumstances,  such  as  all  those  deposited  in  a  certain 
warehouse,  or  to  be  shipped  in  a  particular  vessel,  or  that  may  be 
manufactured  by  the  seller,  or  may  be  required  for  use  by  the  buyer, 
in  a  certain  mill — in  which  case  the  mention  of  the  quantity,  accom- 
panied by  the  qualification  of  "about,"  or  "more  or  less,"  is  regarded 
as  a  mere  estimate  of  the  probable  amount,  as  to  which  good  faith 
is  all  that  is  required  of  the  party  making  it.  But  the  contract  before 
us  comes  within  the  general  rule:  "When  no  such  independent  cir- 
cumstances are  referred  to,  and  the  engagement  is  to  furnish  goods 
of  a  certain  quality  or  character  to  a  certain  amount,  the  quantity 
specified  is  material,  and  governs  the  contract.  The  addition  of  the 
qualifying  words  'about/  'more  or  less,'  and  the  like,  in  such  cases, 
is  only  for  the  purpose  of  providing  against  accidental  variations,  aris- 
ing from  slight  and  unimportant  excesses  or  deficiencies  in  number, 
measure,  or  weight."  Brawley  v.  United  States,  96  U.  S.  168,  171, 
172. 

The  seller  is  bound  to  deliver  the  quantity  stipulated,  and  has  no 
right  either  to  compel  the  buyer  to  accept  a  less  quantity,  or  to  re- 
quire him  to  select  part  out  of  a  greater  quantity ;  and  when  the  goods 
are  to  be  shipped  in  certain  proportions  monthly,  the  seller's  failure 
to  ship  the  required  quantity  in  the  first  month  gives  the  buyer  the 
same  right  to  rescind  the  whole  contract,  that  he  would  have  had  if 
it  had  been  agreed  that  all  the  goods  should  be  delivered  at  once. 

The  plaintiff,  instead  of  shipping  about  1000  tons  in  February  and 
about  1000  tons  in  March,  as  stipulated  in  the  contract,  shipped  only 
400  tons  in  February,  and  885  tons  in  March.  His  failure  to  fulfill 
the  contract  on  his  part  in  respect  to  these  first  two  instalments  justi- 
fied the  defendants  in  rescinding  the  whole  contract,  provided  they 
distinctly  and  seasonably  asserted  the  right  of  rescission. 

The  defendants,  immediately  after  the  arrival  of  the  March  ship- 
ments, and  as  soon  as  they  knew  that  the  quantities  which  had  been 
shipped  in  February  and  in  March  were  less  than  the  contract  called 
for,  clearly  and  positively  asserted  the  right  to  rescind,  if  the  law 
entitled  them  to  do  so.  Their  previous  acceptance  of  the  single  cargo 
of  400  tons  shipped  in  February  was  no  waiver  of  this  right,  because 
it  took  place  without  notice,  or  means  of  knowledge,  that  the  stip- 
ulated quantity  had  not  been  shipped  in  February.  The  price  paid 
by  them  for  that  cargo  being  above  the  market  value,  the  plaintiff 
suffered  no  injury  by  the  omission  of  the  defendants  to  return  the 


674  DISCHARGE   OF    CONTRACT. 

iron;  and  no  reliance  was  placed  on  that  omission  in  the  correspon- 
dence between  the  parties. 

The  case  wholly  differs  from  that  of  Lyon  v.  Bertram  (20  How. 
149),  in  which  the  buyer  of  a  specific  lot  of  goods  accepted  and  used 
part  of  them  with  full  means  of  previously  ascertaining  whether  they 
conformed  to  the  contract. 

The  plaintiff,  denying  the  defendants'  right  to  rescind,  and  assert- 
ing that  the  contract  was  still  in  force,  was  bound  to  show  such  per- 
formance on  his  part  as  entitled  him  to  demand  performance  on  their 
part,  and,  having  failed  to  do  so,  cannot  maintain  this  action. 

For  these  reasons,  we  are  of  opinion  that  the  judgment  below 
should  be  affirmed.  But  as  much  of  the  argument  at  the  bar  was 
devoted  to  a  discussion  of  the  recent  English  cases,  and  as  a  diversity 
in  the  law,  as  administered  on  the  two  sides  of  the  Atlantic,  concern- 
ing the  interpretation  and  effect  of  commercial  contracts  of  this  kind, 
is  greatly  to  be  deprecated,  it  is  proper  to  add  that  upon  a  careful 
examination  of  the  cases  referred  to  they  do  not  appear  to  us  to  estab- 
lish any  rule  inconsistent  with  our  conclusion. 

In  the  leading  case  of  Hoare  v.  Rennie  (5  H.  &  N.  19),  which  was 
an  action  upon  a  contract  of  sale  of  667  tons  of  bar  iron,  to  be  shipped 
from  Sweden  in  June,  July,  August,  and  September,  and  in  about 
equal  portions  each  month,  at  a  certain  price  payable  on  delivery, 
the  declaration  alleged  that  the  plaintiffs  performed  all  things  neces- 
sary to  entitle  them  to  have  the  contract  performed  by  the  defendants, 
and  were  ready  and  willing  to  perform  the  contract  on  their  part, 
and  in  June  shipped  a  certain  portion  of  the  iron,  and  within  a  reason- 
able time  afterwards  offered  to  deliver  to  the  defendants  the  portion 
so  shipped,  but  the  defendants  refused  to  receive  it,  and  gave  notice 
to  the  plaintiffs  that  they  would  not  accept  the  rest.  The  defendants 
pleaded  that  the  shipment  in  June  was  of  about  20  tons  only,  and  that 
the  plaintiffs  failed  to  complete  the  shipment  for  that  month  accord- 
ing to  the  contract.  Upon  demurrer  to  the  pleas,  it  was  argued  for 
the  plaintiffs  that  the  shipment  of  about  one-fourth  of  the  iron  in 
each  month  was  not  a  condition  precedent,  and  that  the  defendants' 
only  remedy  for  a  failure  to  ship  that  quantity  was  by  a  cross  action. 
But  judgment  was  given  for  the  defendants,  Chief  Baron  Pollock 
saying : 

"The  defendants  refused  to  accept  the  first  shipment,  because,  as  they  say, 
it  was  not  a  performance,  but  a  breach  of  the  contract.  Where  parties  have 
made  an  agreement  for  themselves,  the  courts  ought  not  to  make  another  for 
them.  Here  they  say  that  in  the  events  that  have  happened,  one-fourth  shall 
be  shipped  in  each  month,  and  we  cannot  say  that  they  meant  to  accept  any 
other  quantity.  At  the  outset,  the  plaintiffs  failed  to  tender  the  quantity 
according  to  the  contract;  they  tendered  a  much  less  quantity.  The  defend- 
ants had  a  right  to  say  that  this  was  no  performance  of  the  contract,  and 
they  were  no  more  bound  to  accept  the  short  quantity  than  if  a  single  de- 


BY    BBEACH.  675 

livery   had  been  contracted  for.     Therefore  the  pleas  are  an  answer   to  the 
action."     5  H.  &  N.  28. 

So  in  Coddington  v.  Paleologo  (L.  E.  2  Ex.  193),  while  there  was 
a  division  of  opinion  upon  the  question  whether  a  contract  to  supply 
goods  "delivering  on  April  17,  complete  8th  May,"  bound  the  seller 
to  begin  delivering  on  April  17,  all  the  judges  agreed  that  if  it  did, 
and  the  seller  made  no  delivery  on  that  day,  the  buyer  might  rescind 
the  contract. 

On  the  other  hand,  in  Simpson  v.  Crippen  (L.  R.  8  Q.  B.  14),  under 
a  contract  to  supply  from  6000  to  8000  tons  of  coal,  to  be  taken  by 
the  buyer's  wagons  from  the  seller's  colliery  in  equal  monthly  quan- 
tities for  twelve  months,  the  buyer  sent  wagons  for  only  150  tons 
during  the  first  month ;  and  it  was  held  that  this  did  not  entitle  the 
seller  to  annul  the  contract  and  decline  to  deliver  any  more  coal, 
but  that  his  only  remedy  was  by  an  action  for  damages.  And  in 
Brandt  v.  Lawrence  (1  Q.  B.  D.  344),  in  which  the  contract  was  for 
the  purchase  of  4500  quarters,  ten  per  cent  more  or  less,  of  Russian 
oats,  "shipment  by  steamer  or  steamers  during  February,"  or,  in  case 
of  ice  preventing  shipment,  then  immediately  upon  the  opening  of 
navigation,  and  1139  quarters  were  shipped  by  one  steamer  in  time, 
and  3361  quarters  were  shipped  too  late,  it  was  held  that  the  buyer 
was  bound  to  accept  the  1139  quarters,  and  was  liable  to  an  action  by 
the  seller  for  refusing  to  accept  them. 

Such  being  the  condition  of  the  law  of  England  as  declared  in  the 
lower  courts,  the  case  of  Bowes  v.  Shand,  after  conflicting  decisions  in 
the  Queen's  Bench  Division  and  the  Court  of  x\ppeal,  was  finally 
determined  by  the  House  of  Lords.  1  Q.  B.  D.  470;  2  Q.  B.  D.  112; 
2  App.  Cas.  455. 

In  that  case,  two  contracts  were  made  in  London,  each  for  the 
eale  of  300  tons  of  "Madras  rice,  to  be  shipped  at  Madras  or  coast, 
for  this  port,  during  the  months  of  March  and,  or,  April,  1874,  per 
Rajah  of  Cochin."  The  600  tons  filled  8200  bags,  of  which  7120 
bags  were  put  on  board  and  bills  of  lading  signed  in  February;  and 
for  the  rest,  consisting  of  1030  bags  put  on  board  in  February,  and 
50  in  March,  the  bill  of  lading  was  signed  in  March.  At  the  trial  of 
an  action  by  the  seller  against  the  buyer  for  refusing  to  accept  the 
cargo,  evidence  was  given  that  rice  shipped  in  February  would  be 
the  spring  crop,  and  quite  as  good  as  rice  shipped  in  March  or  April. 
Yet  the  House  of  Lords  held  that  the  action  could  not  be  maintained, 
because  the  meaning  of  the  contract,  as  apparent  upon  its  face,  was 
that  all  the  rice  must  be  put  on  board  in  March  and  April,  or  in  one  of 
those  months. 

In  the  opinions  there  delivered  the  general  principles  underlying 
this  class  of  cases  are  most  clearly  and  satisfactorily  stated.  It  will 
be  sufficient  to  quote  a  few  passages  from  two  of  those  opinions. 


676  DISCHARGE   OF    CONTRACT. 

Lord  Chancellor  Cairns  said : 

"It  does  not  appear  to  me  to  be  a  question  for  your  Lordships,  or  for  any 
court,  to  consider  whether  that  is  a  contract  which  bears  upon  the  face  of 
it  some  reason,  some  explanation,  why  it  was  made  in  that  form,  and  why 
the  stipulation  is  made  that  the  shipment  should  be  during  these  particular 
months.  It  is  a  mercantile  contract,  and  merchants  are  not  in  the  habit  of 
placing  upon  their  contracts  stipulations  to  which  they  do  not  attach  some 
value  and  importance."  2  App.  Cas.  463.  "If  it  be  admitted  that  the  literal 
meaning  would  imply  that  the  whole  quantity  must  be  put  on  board  during 
a  specified  time,  it  is  no  answer  to  that  literal  meaning,  it  is  no  observation 
which  can  dispose  of,  or  get  rid  of,  or  displace,  that  literal  meaning,  to  say 
that  it  puts  an  additional  burden  on  the  seller,  without  a  corresponding 
benefit  to  the  purchaser;  that  is  a  matter  of  which  the  seller  and  the  pur- 
chaser are  the  best  judges.  Nor  is  it  any  reason  for  saying  that  it  would 
be  a  means  by  which  purchasers,  without  any  real  cause,  would  frequently 
obtain  an  excuse  for  rejecting  contracts  when  prices  had  dropped.  The  non- 
fulfillment of  any  term  in  any  contract  is  a  means  by  which  a  purchaser  is 
able  to  get  rid  of  the  contract  when  prices  have  dropped;  but  that  is  no 
reason  why  a  term  which  is  found  in  a  contract  should  not  be  fulfilled."  pp. 
465,  466.  "It  was  suggested  that  even  if  the  construction  of  the  contract  be 
as  I  have  stated,  still  if  the  rice  was  not  put  on  board  in  the  particular 
months,  that  would  not  be  a  reason  which  would  justify  the  appellants  in 
having  rejected  the  rice  altogether,  but  that  it  might  afford  a  ground  for  a 
cross  action  by  them  if  they  could  show  that  any  particular  damage  resulted 
to  them  from  the  rice  not  having  been  put  on  board  in  the  months  in  question. 
My  lords,  I  cannot  think  that  there  is  any  foundation  whatever  for  that 
argument.  If  the  construction  of  the  contract  be  as  I  have  said,  that  it  bears 
that  the  rice  is  to  be  put  on  board  in  the  months  in  question,  that  is  part 
of  the  description  of  the  subject  matter  of  what  is  sold.  What  is  sold  is  not 
300  tons  of  rice  in  gross  or  in  general.  It  is  300  tons  of  Madras  rice  to  be 
put  on  board  at  Madras  during  the  particular  months."  "The  plaintiff,  who 
sues  upon  that  contract,  has  not  launched  his  case  until  he  has  shown  that 
he  has  tendered  that  thing  which  has  been  contracted  for,  and  if  he  is  un- 
able to  show  that,  he  cannot  claim  damages  for  the  nonfulfillment  of  the 
contract."  pp.  467,  468. 

Lord  Blackburn  said : 

"If  the  description  of  the  article  tendered  is  different  in  any  respect,  it  is 
not  the  article  bargained  for,  and  the  other  party  is  not  bound  to  take  it.  I 
think  in  this  case  what  the  parties  bargained  for  was  rice,  shipped  at  Madras 
or  the  coast  of  Madras.  Equally  good  rice  might  have  been  shipped  a  little 
to  the  north  or  a  little  to  the  south  of  the  coast  of  Madras.  I  do  not  quite 
know  what  the  boundary  is,  and  probably  equally  good  rice  might  have  been 
shipped  in  February  as  was  shipped  in  March,  or  equally  good  rice  might 
have  been  shipped  in  May  as  was  shipped  in  April,  and  I  dare  say  equally 
good  rice  might  have  been  put  on  board  another  ship  as  that  which  was  put 
on  board  the  Rajah  of  Cochin.  But  the  parties  have  chosen,  for  reasons 
best  known  to  themselves,  to  say:  We  bargain  to  take  rice,  shipped  in  this 
particular  region,  at  that  particular  time,  on  board  that  particular  ship;  and 
before  the  defendants  can  be  compelled  to  take  anything  in  fulfillment  of 
that  contract  it  must  be  shown  not  merely  that  it  is  equally  good,  but  that 
it  is  the  same  article  as  they  have  bargained  for — otherwise  they  are  not 
bound  to  take  it."  2  App.  Cas.  480,  481. 


BY    BREACH.  677 

Soon  after  that  decision  of  the  House  of  Lords,  two  cases  were  de- 
termined in  the  Court  of  Appeal.  In  Reuter  v.  Sala  (4  C.  P.  D. 
239),  under  a  contract  for  the  sale  of  "about  twenty-five  tons  (more 
or  less)  black  pepper,  October  and,  or,  November  shipment,  from, 
Penang  to  London,  the  name  of  the  vessel  or  vessels,  marks  and  full 
particulars  to  be  declared  to  the  buyer  in  writing  within  sixty  days 
from  the  date  of  bill  of  lading,"  the  seller,  within  the  sixty  days, 
declared  twenty-five  tons  by  a  particular  vessel,  of  which  only  twenty 
tons  were  shipped  in  November,  and  five  tons  in  December;  and  it 
was  held  that  the  buyer  had  the  right  to  refuse  to  receive  any  part 
of  the  pepper.  In  Honck  v.  Muller  (7  Q.  B.  D.  92),  under  a  contract 
for  the  sale  of  2000  tons  of  pig  iron,  to  be  delivered  to  the  buyer 
free  on  board  at  the  maker's  wharf  "in  November,  or  equally  over 
November,  December,  and  January  next,"  the  buyer  failed  to  take 
any  iron  in  November,  but  demanded  delivery  of  one-third  in  De- 
cember and  one-third  in  January;  and  it  was  held  that  the  seller 
was  justified  in  refusing  to  deliver,  and  in  giving  notice  to  the  buyer 
that  he  considered  the  contract  as  canceled  by  the  buyer's  not  taking 
any  iron  in  November. 

The  plaintiff  in  the  case  at  bar  greatly  relied  on  the  very  recent 
decision  of  the  House  of  Lords  in  Mersey  Co.  v.  Naylor  (9  App.  Cas. 
434),  affirming  the  judgment  of  the  Court  of  Appeal  in  9  Q.  B.  D. 
648,  and  following  the  decision  of  the  Court  of  Common  Pleas  in 
Freeth  v.  Burr,  L.  R.  9  C.  P.  208. 

But  the  point  there  decided  was  that  the  failure  of  the  buyer  to 
pay  for  the  first  instalment  of  the  goods  upon  delivery  does  not, 
unless  the  circumstances  evince  an  intention  on  his  part  to  be  no 
longer  bound  by  the  contract,  entitle  the.  seller  to  rescind  the  contract 
and  to  decline  to  make  further  deliveries  under  it.  And  the  grounds 
of  the  decision,  as  stated  by  Lord  Chancellor  Selborne  in  moving 
judgment  in  the  House  of  Lords,  are  applicable  only  to  the  case  of  a 
failure  of  the  buyer  to  pay  for,  and  not  to  that  of  a  failure  of  the 
seller  to  deliver,  the  first  instalment. 

The  Lord  Chancellor  said  : 

"The  contract  is  for  the  purchase  of  5000  tons  of  steel  blooms  of  the  com- 
pany's manufacture;  therefore  it  is  one  contract  for  the  purchase  of  that 
quantity  of  steel  blooms.  No  doubt  there  are  subsidiary  terms  in  the  con- 
tract, as  to  the  time  of  delivery,  'Delivery  1000  tons  monthly  commencing 
January  next';  and  as  to  the  time  of  payment,  'Payment  net  cash  within 
three  days  after  receipt  of  shipping  documents';  but  that  does  not  split  up 
the  contract  into  as  many  contracts  as  there  shall  be  deliveries  for  the  purpose, 
of  so  many  distinct  quantities  of  iron.  It  is  quite  consistent  with  the  natural 
meaning  of  the  contract,  that  it  is  to  be  one  contract  for  the  purchase  of 
that  quantity  of  iron  to  be  delivered  at  those  times  and  in  -that  manner,  and 
for  which  payment  is  so  to  be  made.  It  is  perfectly  clear  that  no  particular 
payment  can  be  a  condition  precedent  of  the  entire  contract,  because  the  de- 
livery under  the  contract  was  most  certainly  to  precede  payment;  and  that 


678  DISCHARGE   OF   CONTRACT. 

being  so,  I  do  not  see  how,  without  express  words,  it  can  possibly  be  made 
a  condition  precedent  to  the  subsequent  fulfillment  of  the  unfulfilled  part  of 
the  contract,  by  the  delivery  of  the  undelivered  steel."  9  App.  Cas.  439. 

Moreover,  although  in  the  Court  of  Appeal  dicta  were  uttered 
tending  to  approve  the  decision  in  Simpson  v.  Crippin,  and  to  dis- 
parage the  decisions  in  Hoare  v.  Rennie  and  Honck  v.  Muller,  above 
cited,  yet  in  the  House  of  Lords  Simpson  v.  Crippin  was  not  even 
referred  to,  and  Lord  Blackburn,  who  had  given  the  leading  opinion 
in  that  case,  as  well  as  Lord  Bramwell,  who  had  delivered  the  lead- 
ing opinion  in  Honck  v.  Muller,  distinguished  Hoare  v.  Rennie  and 
Honck  v.  Muller  from  the  case  in  judgment.  9  App.  Cas.  444,  446. 

Upon  a  review  of  the  English  decisions,  the  rule  laid  down  in 
the  earlier  cases  of  Hoare  v.  Rennie  and  Coddington  v.  Paleologo,  as 
•well  as  in  the  later  cases  of  Reuter  v.  Sala  and  Honck  v.  Muller, 
appears  to  us  to  be  supported  by  a  greater  weight  of  authority  than 
the  rule  stated  in  the  intermediate  cases  of  Simpson  v.  Crippen  and 
Brandt  v.  Lawrence,  and  to  accord  better  with  the  general  principles 
affirmed  by  the  House  of  Lords  in  Bowes  v.  Shand,  while  it  in  nowise 
contravenes  the  decision  of  that  tribunal  in  Mersey  Co.  v.  Naylor. 

In  this  country  there  is  less  judicial  authority  upon  the  question. 
The  two  cases  most  nearly  in  point  that  have  come  to  our  notice 
are  Hill  v.  Blake  (97  N.  Y.  216),  which  accords  with  Bowes  v. 
Shand,  and  King  Philip  Mills  v.  Slater  (12  R.  I.  82),  which  approves 
and  follows  Hoare  v.  Rennie.  The  recent  cases  in  the  Supreme 
Court  of  Pennsylvania,  cited  at  the  bar,  support  no  other  conclusion. 
In  Shinn  v.  Bodine  (60  Penn.  St.  182)  the  point  decided  was  that  a 
contract  for  the  purchase  of  800  tons  of  coal  at  a  certain  price  per 
ton,  "coal  to  be  delivered  on  board  vessels  as  sent  for  during  months 
of  August  and  September/'  was  an  entire  contract,  under  which 
nothing  was  payable  until  delivery  of  the  whole,  and  therefore  the 
seller  had  no  right  to  rescind  the  contract  upon  a  refusal  to  pay  for 
one  cargo  before  that  time.  In  Morgan  v.  McKee  (77  Penn.  St. 
228)  and  in  Scott  v.  Kittanning  Coal  Co.  (89  Penn.  St.  231)  the 
buyer's  right  to  rescind  the  whole  contract  upon  the  failure  of  the 
seller  to  deliver  one  instalment  was  denied,  only  because  that  right 
had  been  waived,  in  the  one  case  by  unreasonable  delay  in  asserting 
it,  and  in  the  other  by  having  accepted,  paid  for,  and  used  a  previous 
instalment  of  the  goods.  The  decision  of  the  Supreme  Judicial 
Court  of  Massachusetts  in  Winchester  v.  Newton  (2  Allen,  492) 
resembles  that  of  the  House  of  Lords  in  Mersey  Co.  v.  Naylor. 

Being  of  opinion  that  the  plaintiff's  failure  to  make  such  ship- 
ments in  February  and  March  as  the  contract  required  prevents  his 
maintaining  this  action,  it  is  needless  to  dwell  upon  the  further 
objection  that  the  shipments  in  April  did  not  comply  with  the  con- 
tract, because  the  defendants  could  not  be  compelled  to  take  about 


BY   BREACH.  679 

1000  tons  out  of  the  larger  quantity  shipped  in  that  month,  and  the 
plaintiff,  after  once  designating  the  names  of  vessels,  as  the  contract 
bound  him  to  do,  could  not  substitute  other  vessels.  See  Busk  v. 
Spence,  4  Camp.  329 ;  Graves  v.  Legg,  9  Exch.  709 ;  Reuter  v.  Sala, 
above  cited. 

Judgment  affirmed.1 

9  Cyc.  648-649  (91-96);  35  Cyc.  117-118  (37-43);  W.  P.  331  (11);  629 
(91);  9  H.  L.  R.  148;  14  H.  L.  R.  537;  1  C.  L.  R.  317;  12  C.  L.  R.  167. 
Woodward,  Doctrine  of  divisible  contracts,  39  Amer.  Law  Register  (N.  s.)  1. 


c.     Failure  to  perform  a  vital  term,  or  condition,  and  failure  to  per- 
form a  non-vital  or  subsidiary  term, 

DAVISON  v.  VON  LINGEN. 

113  UNITED  STATES,  40.— 1885. 

[Reported    herein   at   p.  302.] 


POPE  et  al  v.  ALLIS. 
115  UNITED  STATES,  363.— 1885. 

Action  to  recover  back  money  paid  for  iron  which,  on  arrival,  was 
rejected.  Judgment  for  plaintiff  (defendant  in  error). 

i  Where  the  vendor  of  goods  to  be  delivered  and  paid  for  in  installments, 
refuses  to  deliver  an  installment,  a  breach  of  the  entire  contract  is  thereby 
established  for  which  the  vendee  if  he  so  elects  may  immediately  recover  all 
his  damages;  or  he  may  wait  until  the  expiration  of  the  time  for  the  delivery 
of  all  the  goods  and  then  recover;  he  cannot  however,  split  up  his  demand 
and  maintain  successive  actions  to  recover  for  each  default  as  it  occurs;  and 
when  he  obtains  a  judgment  for  damages  for  the  non-delivery  of  part  of  the 
goods,  it  is  a  bar  to  the  maintenance  of  a  subsequent  action  to  recover  for  the 
failure  to  deliver  the  balance. — Pakas  v.  Hollingshead,  184  N.  Y.  211  (Sylla- 
bus). See  6  C.  L.  Rev.  584;  18  H.  L.  R.  619. 

In  Gerli  v.  Poidebard  Silk  Co.,  57  N.  J.  L.  432,  the  court  said:  "On  this 
question  this  court  adopted  the  general  rule  that  when  the  seller  has  agreed 
to  deliver  the  goods  sold  in  installments,  and  the  buyer  has  agreed  to  pay 
the  price  in  installments  which  are  proportioned  to  and  payable  on  the  de- 
livery of  each  installment  of  goods,  then  default  by  either  party  with  refer- 
ence to  any  one  installment  will  not  ordinarily  entitle  the  other  party  to 
abrogate  the  contract.  We  were  led  to  the  adoption  of  this  rule  because  it 
seemed  to  be  supported  by  the  greater  strength  of  judicial  authority,  and 
to  be  most  likely  to  promote  justice.  We  see  no  sufficient  reason  for  aban- 
doning it.  The  rule  governs  the  case  in  hand,  and  maintains  the  right  of 
the  plaintiff  to  recover  damages  for  the  defendant's  refusal  to  accept  the 
third  installment  of  silk." 

Failure  to  pay  an  installment. — For  comment  and  cases  upon  the  conflict 
as  to  whether  failure  to  pay  an  installment  discharges  the  other  party,  see 
W.  P.  331-332  (11)  ;  1  C.  L.  R.  317;  6  Mich.  L.  R.  80. 


680  DISCHARGE   OF    CONTRACT. 

Plaintiff  bought  of  defendants  by  description  a  quantity  of  "No.  1 
extra  pig  iron"  to  be  shipped  from  Coplay,  Penn.  On  arrival  plain- 
tiff rejected  the  iron  because  it  did  not  answer  the  description. 

MR.  JUSTICE  WOODS.  .  .  .  The  assignment  of  error  mainly  relied 
on  by  the  plaintiffs  in  error  is  that  the  court  refused  to  instruct  the 
jury  to  return  a  verdict  for  the  defendants.  The  legal  proposition 
upon  which  their  counsel  based  this  request  was  that  the  purchaser 
of  personal  property,  upon  breach  of  warranty  of  quality,  cannot,  in 
the  absence  of  fraud,  rescind  the  contract  of  purchase  and  sale,  and 
sue  for  the  recovery  of  the  price.  And  they  contended  that,  as  the 
iron  was  delivered  to  defendant  in  error  either  at  Coplay  or  Elizabeth- 
port,  and  the  sa,le  was  completed  thereby,  the  only  remedy  of  the 
defendant  in  error  was  by  a  suit  upon  the  warranty.  It  did  not 
appear  that  at  the  date  of  the  contract  the  iron  had  been  manu- 
factured, and  it  was  shown  by  the  record  that  no  particular  iron 
was  segregated  and  appropriated  to  the  contract  by  the  plaintiffs  in 
error  until  a  short  time  before  its  shipment,  in  the  latter  part  of 
April  and  the  early  part  of  May.  The  defendant  in  error  had  no 
opportunity  to  inspect  it  until  it  arrived  in  Milwaukee,  and  conse- 
quently never  accepted  the  particular  iron  appropriated  to  fill  the 
contract.  It  was  established  by  the  verdict  of  the  jury  that  the  iron 
shipped  was  not  of  the  quality  required  by  the  contract.  Under 
these  circumstances  the  contention  of  the  plaintiffs  in  error  is  that 
the  defendant  in  error,  although  tbe  iron  shipped  to  him  was  not 
what  he  bought,  and  could  not  be  used  in  his  business,  was  bound 
to  keep  it, 'and  could  only  recover  the  difference  in  value  between 
the  iron  for  which  he  contracted  and  the  iron  which  was  delivered  to 
him. 

We  do  not  think  that  such  is  the  law.  When  the  subject  matter 
of  a  sale  is  not  in  existence,  or  not  ascertained  at  the  time  of  the  con- 
tract, an  undertaking  that  it  shall,  when  existing  or  ascertained, 
possess  certain  qualities,  is  not  a  mere  warranty,  but  a  condition, 
the  performance  of  which  is  precedent  to  any  obligation  upon  the 
vendee  under  the  contract;  because  the  existence  of  those  qualities 
being  part  of  the  description  of  the  thing  sold  becomes  essential  to 
its  identity,  and  the  vendee  cannot  be  obliged  to  receive  and  pay 
for  a  thing  different  from  that  for  which  he  contracted.  Chanter  v. 
Hopkins,  4  Mees.  &  W.  399;  Barr  v.  Gibson,  3  Mees.  &  W.  390; 
Gompertz  v.  Bartlett,  2  El.  &  Bl.  849;  Okell  v.  Smith,  1  Stark, 
N.  P.  107;  notes  to  Cutter  v.  Powell,  2  Smith's  Lead  Cas.  (7th  Am. 
ed.)  37;  Woodle  v.  Whitney,  23  Wis.  55;  Boothby  v.  Scales,  27  Wis. 
626;  Fairfield  v.  Madison  Manufg  Co.,  38  Wis.  346.  See  also 
Nichol  v.  Godts,  10  Exch.  191.  So,  in  a  recent  case  decided  by  this 
court,  it  was  said  by  Mr.  Justice  Gray :  "A  statement"  in  a  mer- 
cantile contract  "descriptive  of  the  subject  matter  or  of  some  material 


BY    BREACH.  681 

incident,  such  as  the  time  or  place  of  shipment,  is  ordinarily  to  be 
regarded  as  a  warranty  in  the  sense  in  which  that  term  is  used  in 
insurance  and  maritime  law;  that  is  to  say,  a  condition  precedent 
upon  the  failure  or  non-performance  of  which  the  party  aggrieved 
may  repudiate  the  whole  contract."  Norrington  v.  Wright,  115  U.  S. 
188,  6  Sup.  Ct.  Hep.  12.  See  also  Filley  v.  Pope,  115  U.  S.  213,  6 
Sup.  Ct.  Eep.  19.  And  so,  when  a  contract  for  the  sale  of  goods 
is  made  by  sample,  it  amounts  to  an  undertaking  on  the  part  of  the 
seller  with  the  buyer  that  all  the  goods  are  similar,  both  in  nature 
and  quality,  to  those  exhibited,  and  if  they  do  not  correspond  the 
buyer  may  refuse  to  receive  them ;  or,  if  received,  he  may  return  them 
in  a  reasonable  time  allowed  for  examination,  and  thus  rescind  the 
contract.  Lorymer  v.  Smith,  1  Barn.  &  C.  1 ;  Magee  v.  Billingsley,  3 
Ala.  679. 

The  authorities  cited  sustain  this  proposition:  that  when  a  vendor 
Bells  goods  of  a  specified  quality,  but  not  in  existence  or  ascertained, 
and  undertakes  to  ship  them  to  a  distant  buyer,  when  made  or 
ascertained,  and  delivers  them  to  the  carrier  for  the  purchaser,  the 
latter  is  not  bound  to  accept  them  without  examination.  The  mere 
delivery  of  the  goods  by  the  vendor  to  the  carrier  does  not  neces- 
sarily bind  the  vendee  to  accept  them.  On  their  arrival  he  has 
the  right  to  inspect  them  to  ascertain  whether  they  conform  to  the 
contract,  and  the  right  to  inspect  implies  the  right  to  reject  them  if 
they  are  not  of  the  quality  required  by  the  contract.  The  rulings 
of  the  Circuit  Court  were  in  accordance  with  these  views. 

We  have  been  referred  by  the  plaintiffs  in  error  to  the  cases  of 
Thornton  v.  Wynn  (12  Wheat.  184)  and  Lyon  v.  Bertram  (20  How. 
149)  to  sustain  the  proposition  that  the  defendant  in  error  in  this 
case  could  not  rescind  the  contract  and  sue  to  recover  back  the  price 
of  the  iron.  But  the  cases  are  not  in  point.  In  the  first,  there  was 
an  absolute  sale  with  warranty  and  delivery  to  the  vendee  of  a 
specific  chattel,  namely,  a  race-horse ;  in  the  second,  the  sale  was  of 
a  specified  and  designated  lot  of  flour  which  the  vendee  had  accepted, 
and  part  of  which  he  had  used,  with  ample  means  to  ascertain  whether 
or  not  it  conformed  to  the  contract. 

The  cases  we  have  cited  are  conclusive  against  the  contention  of 
the  plaintiffs  in  error.  The  jury  has  found  that  the  iron  was  not 
of  the  quality  which  the  contract  required,  and  on  that  ground  the 
defendant  in  error,  at  the  first  opportunity,  rejected  it,  as  he  had  a 
right  to  do.  His  suit  to  recover  the  price  was,  therefore,  well  brought. 

Other  errors  are  assigned,  but,  in  our  opinion,  they  present  no 
ground  for  the  reversal  of  the  judgment,  and  do  not  require  discussion. 

Judgment  affirmed. 

35  Cyc.  138   (43) ;  404   (49) ;  W.  P.  653   (3). 


682  DISCHARGE   OF    CONTRACT. 

WOLCOTT  et  al.  v.  MOUNT. 

36  NEW  JERSEY  LAW,  262.— 1873. 

Action  for  breach  of  warranty.  Judgment  for  plaintiff.  Defend- 
ants appeal. 

Plaintiff  purchased  of  defendants,  who  were  retail  merchants,  a 
quantity  of  seed  represented  and  believed  by  defendants  to  be  early 
strap-leaf  red-top  turnip  seed,  plaintiff  informing  defendants  that  he 
wanted  seed  of  that  variety  to  raise  a  crop  for  the  early  New  York 
market.  In  fact  the  seed  was  of  a  late  variety,  fit  only  for  cattle,  and 
plaintiff  lost  his  entire  crop.  The  difference  between  the  two  kinds 
of  seed  cannot  be  discovered  by  inspection. 

DEPUE,  J.  The  action  in  this  case  was  brought  on  a  contract  of 
warranty  and  resulted  in  a  judgment  against  the  defendants  in  the 
action  for  damages. 

Two  exceptions  to  the  proceedings  are  presented  by  the  brief  sub- 
mitted. The  first  touches  the  right  of  the  plaintiff  to  recover  at  all. 
The  second,  the  measure  of  damages. 

I. 

In  the  absence  of  fraud  or  a  warranty  of  the  quality  of  an  article, 
the  maxim,  caveat  emptor,  applies.  As  a  general  rule,  no  warranty 
of  the  goodness  of  an  article  will  be  implied  on  a  contract  of  sale. 

It  has  been  held  by  the  courts  of  New  York,  that  no  warranty  what- 
ever would  arise  from  a  description  of  the  article  sold.  Seixas  v. 
"Woods,  2  Caines,  48;  Snell  v.  Moses,  1  Johns,  96;  Swett  v.  Colgate, 
20  Johns.  196.  In  these  cases  the  defect  was  not  in  the  quality, 
but  the  article  delivered  was  not  of  the  species  described  in  the  con- 
tract of  sale. 

In  the  well-known  case  of  Chandelor  v.  Lopus  (Cro.  Jac.  4)  it 
was  decided  that  a  bare  affirmation  that  a  stone  sold  was  a  bezoar 
stone,  when  it  was  not,  was  no  cause  of  action. 

The  cases  cited  fairly  present  the  negative  of  the  proposition  on 
which  the  plaintiff's  right  of  action  depends.  Chandelor  v.  Lopus  was 
decided  on  the  distinction  between  actions  on  the  case  in  tort  for 
a  misrepresentation,  in  which  a  scienter  must  be  averred  and  proved 
and  actions  upon  the  contract  of  warranty.  1  Smith's  Lead.  Cas.  283. 
Chancellor  Kent,  who  delivered  the  opinion  in  Seixas  v.  Woods,  in 
his  Commentaries,  expresses  a  doubt  whether  the  maxim,  caveat 
emptor,  was  correctly  applied  in  that  case,  inasmuch  as  there  was  a 
description  in  writing  of  the  articles  sold,  from  which  a  warranty 
might  have  been  inferred.  2  Kent,  479.  And  in  a  recent  case  be- 
fore the  Commission  of  Appeals  of  New  York,  Earl,  C.,  declared  that 
Seixas  v.  Woods  had  been  much  questioned  and  could  no  longer  be 


BY   BREACH.  683 

regarded  as  authority  on  the  precise  point.  Hawkins  v.  Pemberton, 
51  N.  Y.  204.  In  the  later  English  cases  some  criticism  has  been 
made  upon  the  application  of  the  term  "warranty"  to  representations 
in  contracts  of  sale,  descriptive  of  articles  which  are  known  in  the 
market  by  such  descriptions,  per  Lord  Abinger  in  Chanter  v.  Hopkins, 
4  M.  &  W.  404;  per  Erie,  C.  J.,  in  Bannerman  v.  White,  10  C.  B. 
(N.  S.)  844.  But  in  a  number  of  instances  it  has  been  held  that 
statements  descriptive  of  the  subject  matter,  if  intended  as  a  sub- 
stantive part  of  the  contract,  will  be  regarded  in  the  first  instance  as 
conditions,  on  the  failure  of  which  the  other  party  may  repudiate 
in  toto,  by  a  refusal  to  accept  or  a  return  of  the  article,  if  that  be 
practicable,  or  if  part  of  the  consideration  has  been  received,  and  re- 
scission therefore  has  become  impossible,  such  representations  change 
their  character  as  conditions  and  become  warranties,  for  the  breach 
of  which  an  action  will  lie  to  recover  damages.  The  rule  of  law  is 
thus  stated  by  Williams,  J.,  in  Behn  v.  Burness,  as  established  on 
principle  and  sustained  by  authority.  3  B.  &  S.  755. 

In  Bridge  v.  Wain  (1  Starkie,  504)  no  special  warranty  was  proved, 
but  the  goods  were  described  as  scarlet  cuttings,  an  article  known 
in  the  market  as  peculiar  to  the  China  trade.  In  an  action  for 
breach  of  warranty,  Lord  Ellenborough  held  that  if  the  goods  were  sold 
by  the  name  of  scarlet  cuttings,  and  were  so  described  in  the  invoice, 
an  undertaking  that  they  were  such  must  be  inferred.  In  Allan  v. 
Lake  (18  Q.  B.  560)  the  defendant  sold  to  the  plaintiff  a  crop  of 
turnips,  described  in  the  note  sold  as  Skirving's  Sweedes.  The  seed 
having  been  sown,  it  turned  out  that  the  greater  part  was  not  of  that 
kind,  but  of  an  inferior  kind.  It  was  held  that  the  statement  that 
the  seeds  were  Skirving's  Sweedes,  was  a  description  of  a  known  article 
of  trade  and  a  warranty.  In  Josling  v.  Kingsford  (13  C.  B.  N".  S. 
447)  the  purchaser  recovered  damages  upon  a  contract  for  the  sale 
of  oxalic  acid,  where  the  jury  found  that  the  article  delivered  did 
not,  in  a  commercial  sense,  come  properly  within  the  description  of 
oxalic  acid,  though  the  vendor  was  not  the  manufacturer,  and  the 
vendee  had  an  opportunity  of  inspection  (the  defect  not  being  dis- 
coverable by  inspection),  and  no  fraud  was  suggested.  In  Wieler  v. 
Schilizzi  (17  C.  B.  619)  the  sale  was  of  "Calcutta  linseed."  The  goods 
had  been  delivered,  and  the  action  was  in  form  on  the  warranty  im- 
plied from  the  description.  The  jury  having  found  that  the  article 
delivered  had  lost  its  distinctive  character  as  Calcutta  linseed,  by  rea- 
son of  the  admixture  of  foreign  substance,  the  plaintiff  recovered  his 
damages  upon  the  warranty. 

The  doctrine  that  on  the  sale  of  a  chattel  as  being  of  a  particular 
kind  or  description,  a  contract  is  implied  that  the  article  sold  is  of 
that  kind  or  description,  is  also  sustained  by  the  following  English 
cases:  Powell  v.  Horton,  2  Bing.  N".  C.  668;  Barr  v.  Gibson,  3  M. 


684  DISCHARGE   OF    CONTRACT. 

&  W.  390;  Chanter  v.  Hopkins,  4  M.  &  W.  399;  Nichol  v.  Godts, 
10  Exch.  191;  Gompertz  v.  Bartlett,  2  E.  &  B.  849;  Azemar  v. 
Casella,  Law  Rep.  2  C.  P.  431,  677;  and  has  been  approved  by  some 
decisions  in  the  courts  of  this  country.  Henshaw  v.  Robins,  9  Mete. 
83;  Borrekins  v.  Bevan,  3  Rawle,  23;  Osgood  v.  Lewis,  2  Harr.  & 
Gill.  495 ;  Hawkins  v.  Pemberton,  51  N.  Y.  198. 

The  right  to  repudiate  the  purchase  for  the  non-conformity  of 
the  article  delivered,  to  the  description  under  which  it  was  sold, 
is  universally  conceded.  That  right  is  founded  on  the  engagement 
of  the  vendor,  by  such  description,  that  the  article  delivered  shall 
correspond  with  the  description.  The  obligation  rests  upon  the  con- 
tract. Substantially,  the  (description  is  warranted.  It  will  com- 
port with  sound  legal  principles  to  treat  such  engagements  as  con- 
ditions in  order  to  afford  the  purchaser  a  more  enlarged  remedy; 
by  rescission,  than  he  would  have  on  a  simple  warranty;  but  when  his 
situation  has  been  changed,  and  the  remedy,  by  repudiation  has  be- 
come impossible,  no  reason  supported  by  principle  can  be  adduced, 
why  he  should  not  have  upon  his  contract  such  redress  as  is  practicable 
under  the  circumstances.  In  that  situation  of  affairs,  the  only 
available  means  of  redress  is  by  an  action  for  damages.  Whether  the 
action  shall  be  technically  considered  an  action  on  a  warranty,  or  an 
action  for  the  non-performance  of  a  contract,  is  entirely  immaterial. 

The  contract  which  arises  from  the  description  of  an  article  on 
a  sale  by  a  dealer  not  being  the  manufacturer  is  not  in  all  respects 
coextensive  with  that  which  is  sometimes  implied  where  the  vendor  is 
the  manufacturer,  and  the  goods  are  ordered  by  a  particular  de- 
scription, or  for  a  specified  purpose,  without  opportunity  for  inspection, 
in  which  case  a  warranty,  under  some  circumstances,  is  implied  that 
the  goods  shall  be  merchantable,  or  reasonably  fit  for  the  purpose  for 
which  they  were  ordered.  In  general,  the  only  contract  which  arises 
on  the  sale  of  an  article  by  a  description,  by  its  known  designation 
in  the  market,  is  that  it  i's  of  the  kind  specified.  If  the  article  cor- 
responds with  that  description,  no  warranty  is  implied  that  it  shall 
answer  the  particular  purpose  in  view  of  which  the  purchase  was 
made.  Chanter  v.  Hopkins,  4  M.  &  W.  404;  Ollivant  v.  Bayley,  5 
Q.  B.  288;  Winsor  v.  Lombard,  18  Pick.  57;  Mixer  v.  Coburn,  11 
Mete.  559;  Gossler  v.  Eagle  &c.  Co.  103  Mass.  331.  The  cases  on 
this  subject,  so  productive  of  judicial  discussion,  are  classified  by 
Justice  Mellor,  in  Jones  v.  Just,  Law  Rep.  3  Q.  B.  197.  Nor  can 
any  distinction  be  maintained  between  statements  of  this  character 
in  written  and  in  oral  contracts.  The  arguments  founded  on  an 
apprehension  that  where  the  contract  is  oral,  loose  expressions  of 
judgment  or  opinion  pending  the  negotiations  might  be  regarded  as 
embodied  in  the  contract,  contrary  to  the  intentions  of  the  parties^ 
is  without  reasonable  foundation.  It  is  always  a  question  of  construe- 


BY    BREACH.  685 

tion  or  of  a  fact,  whether  such  statements  were  the  expression  of 
a  mere  matter  of  opinion,  or  were  intended  to  be  a  substantive  part 
of  the  contract,  when  concluded.  If  the  contract  is  in  writing,  the 
question  is  one  of  construction  for  the  court.  Behn  v.  Burness,  3  B.  & 
S.  751.  If  it  be  concluded  by  parol,  it  will  be  for  the  determination 
of  the  jury,  from  the  nature  of  the  sale,  and  the  circumstances  of 
each  particular  case,  whether  the  language  used  was  an  expression  of 
opinion,  merely  leaving  the  buyer  to  exercise  his  own  judgment,  or 
whether  it  was  intended  and  understood  to  be  an  undertaking  which 
was  a  contract  on  the  part  of  the  seller.  Lomi  v.  Tucker,  4  C.  &  P. 
15;  De  Sewhanberg  v.  Buchanan,  5  C.  &  P.  343;  Power  v.  Barbara, 
4  A.  &  E.  473.  In  the  case  last  cited,  the  vendor  sold  by  a  bill  on 
parcels,  "four  pictures,  views  in  Venice — Canaletto" ;  it  was  held  that 
it  was  for  the  jury  to  say,  under  all  the  circumstances,  what  was  the 
effect  of  the  words,  and  whether  they  implied  a  warranty  of  genuine- 
ness, or  conveyed  only  a  description  or  an  expression  of  opinion,  and 
that  the  bill  of  parcels  was  properly  laid  before  the  jury  with  the  rest 
of  the  evidence. 

The  purchaser  may  contract  for  a  specific  article,  as  well  as  for  a 
particular  quality,  and  if  the  seller  makes  such  a  contract,  he  is 
bound  by  it.  The  state  of  the  case  presented  shows  that  the  plaintiff 
inquired  for  seed  of  a  designated  kind,  and  informed  the  defendants 
that  he  wanted  it  to  raise  a  crop  for  the  New  York  market.  The 
defendants  showed  him  the  seed,  and  told  him  it  was  the  kind  he 
inquired  for,  and  sold  it  to  him  as  such.  The  inspection  and  ex- 
amination of  the  seed  were  of  no  service  to  the  plaintiff.  The  facts 
and  circumstances  attending  the  transaction  were  before  the  court 
below,  and  from  the  evidence,  it  decided  that  the  proof  was  sufficient 
to  establish  a  contract  of  warranty.  The  evidence  tended  to  support 
that  conclusion,  and  this  court  cannot,  on  certiorari,  review  the  finding 
of  the  court  below,  on  a  question  of  fact,  where  there  is  evidence  from 
which  the  conclusion  arrived  at  may  be  lawfully  inferred. 

II. 

The  second  reason  for  reversal  is,  that  the  court  was  in  error  in 
the  damages  awarded.  The  judgment  was  for  consequential  damages. 

The  contention  of  the  defendants'  counsel  was  that  the  damages 
recoverable  should  have  been  limited  to  the  price  paid  for  the  seed,  and 
that  all  damages  beyond  restitution  of  the  consideration  were  too 
speculative  and  remote  to  come  within  the  rules  for  measuring  dam- 
ages. As  the  market  price  of  the  seed  which  the  plaintiff  got,  and 
had  the  benefit  of  in  a  crop,  though  of  an  inferior  quality,  was 
probably  the  same  as  the  market  price  of  the  seed  ordered,  the  defend- 
ants' rule  of  damages  would  leave  the  plaintiff  remediless. 

The   earlier  cases,   both    in   English   and   American    courts,   gen- 


686  DISCHARGE   OF    CONTRACT. 

erally  concurred  in  excluding,  as  well  in  actions  in  tort  as  in  actions 
on  contracts,  from  the  damages  recoverable,  profits  which  might  have 
been  realized  if  the  injury  had  not  been  done,  or  the  contract  had 
been  performed.  Sedg.  on  Dam.  69. 

This  abridgment  of  the  power  of  courts  to  award  compensation 
adequate  to  the  injury  suffered  has  been  removed  in  actions  of  tort. 
The  wrong-doer  must  answer  in  damages  for  those  results  injurious 
to  other  parties,  which  are  presumed  to  have  been  within  his  con- 
templation when  the  wrong  was  done.  Crater  v.  Binninger,  4  Vroom, 
513.  Thus,  in  an  action  to  recover  damages  for  personal  injuries 
caused  by  the  negligence  of  the  defendant,  the  plaintiff  was  held  to 
be  entitled  to  recover  as  damages  the  loss  he  sustained  in  his  pro- 
fession as  an  architect,  by  reason  of  his  being  incapacitated  from  pur- 
suing his  business.  New  Jersey  Express  Co.  v.  Nichols,  4  Vroom,  435. 

A  similar  relaxation  of  this  restrictive  rule  has  been  made,  at  least 
to  a  qualified  extent,  in  action  on  contracts,  and  loss  of  profits  result- 
ing naturally  from  the  breach  of  the  contract,  has  been  allowed  to  enter 
into  the  damages  recoverable  where  the  profits  that  might  have  been 
realized  from  the  performance  of  the  contract  are  capable  of  being 
estimated  with  a  reasonable  degree  of  certainty.  In  an  action  on  a 
warranty  of  goods  adapted  to  the  China  market,  and  purchased  with  a 
view  to  that  trade,  the  purchaser  was  allowed  damages  with  reference 
to  their  value  in  China,  as  representing  the  benefit  he  would  have  re- 
ceived from  the  contract,  if  the  defendant  had  performed  it.  Bridge 
v.  Wain,  1  Starkie,  504.  On  an  executory  contract  put  an  end  to  by 
the  refusal  of  the  one  party  to  complete  it,  for  such  a  breach  the  other 
party  may  recover  such  profits  as  would  have  accrued  to  him  as  the 
direct  and  immediate  result  of  the  performance  of  the  contract.  Fox 
v.  Harding,  7  Gush.  516;  Masterton  v.  Mayor  of  Brooklyn,  7  Hill, 
61.  In  an  action  against  the  charterer  of  a  vessel  for  not  loading  a 
cargo,  the  freight  she  would  have  earned  under  the  charter  party, 
less  expenses  and  the  freight  actually  received  for  services  during 
the  period  over  which  the  charter  extended,  was  held  to  be  the  proper 
measure  of  damages.  Smith  v.  McGuire,  3  H.  &  N.  554. 

In  the  cases  of  the  class  from  which  these  citations  have  been  made, 
and  they  are  quite  numerous,  the  damages  arising  from  loss  of  profits 
were  such  as  resulted  directly  from  non-performance,  and  in  the 
ordinary  course  of  business  would  be  expected  as  a  necessary  conse- 
quence of  the  breach  of  the  contract.  In  the  two  cases  cited,  of  Fox 
v.  Harding  and  Masterton  v.  Mayor  of  Brooklyn,  it  was  said  that  the 
profits  that  might  have  been  realized  from  independent  and  collateral 
engagements,  entered  into  on  the  faith  of  the  principal  contract, 
were  too  remote  to  be  taken  into  consideration.  This  latter  qualifica- 
tion would  exclude  compensation  for  the  loss  of  the  profits  of  a  re- 
sale by  the  vendee  of  the  goods  purchased,  made  upon  the  faith  of 


BY    BREACH.  687 

his  expectation,  that  his  contract  with  his  vendor  would  be  per- 
formed. 

In  the  much  canvassed  case  of  Hadley  v.  Baxendale  (9  Exch.  341), 
Alderson,  B.,  in  pronouncing  the  judgment  of  the  court,  enunciated 
certain  principles  on  which  damages  should  be  awarded  for  breaches 
of  contracts  which  assimilated  damages  in  actions  on  contract  to 
actions  in  tort.  The  rule  there  adopted  as  resting  on  the  foundation 
of  correct  legal  principles  was,  that  the  damages  recoverable  for  a 
breach  of  contract  were  either  such  as  might  be  considered  as  arising 
naturally,  i.  e.  according  to  the  usual  course  of  things,  from  the 
breach  of  the  contract  itself;  or  such  as  might  reasonably  be  supposed 
to  have  been  in  the  contemplation  of  both  parties  at  the  time  they 
made  the  contract,  as  the  probable  results  of  the  breach  of  it;  and 
that  when  the  contract  is  made  under  special  circumstances,  if  those 
special  circumstances  are  communicated,  the  amount  of  injury  which 
would  ordinarily  follow  from  a  breach  of  the  contract,  under  such 
circumstances,  may  be  recovered  as  damages  that  would  reasonably 
be  expected  to  result  from  such  breach.  The  latter  branch  of  this 
rule  was  considered  by  Blackburn,  J.,  and  Martin,  B.,  as  analogous 
to  an  agreement  to  bear  the  loss  resulting  from  the  exceptional  state 
of  things,  made  part  of  the  principal  contract,  by  the  fact  that  such 
special  circumstances  were  communicated,  with  reference  to  which 
the  parties  may  be  said  to  have  contracted.  Home  v.  The  Midland 
Eailway  Company,  Law  Rep.  8  C.  P.  134-140.  Under  the  operation 
of  this  rule,  damages  arising  from  the  loss  of  a  profitable  sale,  or  the 
deprivation  for  a  contemplated  use,  have  been  allowed  when  special 
circumstances  of  such  sale  or  proposed  use  were  communicated  con- 
temporaneously with  the  making  of  the  contract ;  and  have  been  denied 
when  such  communication  was  not  made  so  specially,  as  that  the  other 
party  was  made  aware  of  the  consequences  that  would  follow  from  his 
non-performance.  Borries  v.  Hutchinson,  18  C.  B.  (N.  S.)  445; 
Cory  v.  Thames  Ironworks  Co.,  Law  Rep.  3  Q.  B.  181;  Home  v. 
The  Midland  Railway  Company,  L.  R.  8  C.  P.  134;  Benjamin  on 
Sales,  665-671. 

It  must  not  be  supposed  that  under  the  principle  of  Hadley  v.  Bax- 
endale mere  speculative  profits,  such  as  might  be  conjectured  to 
have  been  the  probable  results  of  an  adventure  which  was  defeated  by 
the  breach  of  the  contract  sued  on,  the  gains  from  which  are  entirely 
conjectural,  with  respect  to  which  no  means  exist  of  ascertaining, 
even  approximately,  the  probable  results,  can,  under  any  circum- 
stances, be  brought  within  the  range  of  damages  recoverable.  The 
cardinal  principle  in  relation  to  the  damages  to  be  compensated  for 
on  the  breach  of  a  contract,  that  the  plaintiff  must  establish  the 
quantum  of  his  loss,  by  evidence  from  which  the  jury  will  be  able  to 
estimate  the  extent  of  his  injury,  will  exclude  all  such  elements  of  in- 


688  DISCHARGE   OF    CONTRACT. 

jury  as  are  incapable  of  being  ascertained  by  the  usual  rules  of  evi- 
dence to  a  reasonable  degree  of  certainty. 

For  instance,  profits  expected  to  be  made  from  a  whaling  voyage, 
the  gains  from  which  depend  in  a  great  measure  upon  chance,  are 
too  purely  conjectural  to  be  capable  of  entering  into  compensation 
for  the  non-performance  of  a  contract,  by  reason  of  which  the  ad- 
venture was  defeated.1  For  a  similar  reason,  the  loss  of  the  value 
of  a  crop  for  which  the  seed  had  not  been  sown,  the  yield  from  which, 
if  planted,  would  depend  upon  the  contingencies  of  weather  and 
season,  would  be  excluded  as  incapable  of  estimation,  with  that  degree 
of  certainty  which  the  law  exacts  in  the  proof  of  damages.  But  if 
the  vessel  is  under  charter,  or  engaged  in  a  trade,  the  earnings  of 
which  can  be  ascertained  by  reference  to  the  usual  schedule  of  freights 
in  the  market,  or  if  a  crop  has  been  sowed  on  the  ground  prepared  for 
cultivation,  and  the  plaintiff's  complaint  is,  that  because  of  the  in- 
ferior quality  of  the  seed  a  crop  of  less  value  is  produced,  by  these  cir- 
cumstances the  means  would  be  furnished  to  enable  the  jury  to  make  a 
proper  estimation  of  the  injury  resulting  from  the  loss  of  profits  of 
this  character. 

In  this  case  the  defendants  had  express  notice  of  the  intended  use 
of  the  seed.  Indeed,  the  fact  of  the  sale  of  seeds  by  a  dealer  keep- 
ing them  for  sale  for  gardening  purposes,  to  a  purchaser  engaged  in 
that  business,  would  of  itself  imply  knowledge  of  the  use  which  was 
intended,  sufficient  to  amount  to  notice.  The  ground  was  prepared 
and  sowed,  and  a  crop  produced.  The  uncertainty  of  the  quantity 
of  the  crop,  dependent  upon  the  condition  of  weather  and  season, 
was  removed  by  the  yield  of  the  ground  under  the  precise  circum- 
stances to  which  the  seed  ordered  would  have  been  exposed.  The 
difference  between  the  market  value  of  the  crop  raised,  and  the 
same  crop  from  the  seed  ordered,  would  be  the  correct  criterion  of  the 
extent  of  the  loss.  Compensation  on  that  basis  may  be  recovered 
in  damages  for  the  injury  sustained  as  the  natural  consequence  of  the 

i  In  Dennis  v.  Maxfield,  10  Allen  (Mass.),  138,  an  action  on  contract  was 
brought  by  the  master  against  the  owner  of  a  ship,  to  recover  damages  for 
breach  of  a  contract  of  employment,  for  a  "whaling  voyage  of  five  years' 
duration"  from  the  sailing  of  the  ship  from  New  Bedford.  The  master  was 
to  have  a  certain  "lay"  on  the  proceeds,  and  other  compensation  depending  on 
the  amount  of  cargo.  The  service  began  May  17,  1858  and  continued  until 
Nov.  20,  1860,  when  he  was  removed  at  the  Sandwich  Islands.  The  court 
held  that  he  was  entitled  to  recover  the  wages  which  he  had  earned  previous 
to  his  removal,  as  well  as  those  which  he  was  prevented  from  earning  by 
his  wrongful  discharge.  As  to  the  latter  the  court  said:  "They  are  un- 
doubtedly in  their  nature  contingent  and  speculative  and  difficult  of  estima- 
tion; but,  being  made  by  express  agreement  of  the  parties  of  the  essence  of 
the  contract,  we  do  not  see  how  they  can  be  excluded  in  ascertaining  the 
compensation  to  which  the  plaintiff  is  entitled." 


BY    BREACH.  689 

breach  of  the  contract.  Randall  v.  Raper,  E.  B.  &  E.  84 ;  Lovegrove 
v.  Fisher,  2  F.  &  F.  128. 

From  the  state  of  the  case,  it  must  be  presumed  that  the  court 
below  adopted  this  rule  as  the  measure  of  damages,  and  the  judgment 
should  be  affirmed. 

35  Cyc.  430-432    (34-37)  ;   W.  P.  653    (3);   654    (5) 


FREYMAN  v.  KNECHT. 
78  PENNSYLVANIA  STATE,  141.— 1875. 

Action  on  the  case.     Verdict  for  plaintiff.     Defendant  brings  error. 

Defendant  sold  plaintiff  a  horse  and  warranted  it  sound.  It  turned 
out  that  the  horse  had  one  blind  eye  and  the  other  was  affected. 
Plaintiff  took  the  horse  to  defendant's  house  and  left  it  there,  but 
defendant  refused  to  receive  it,  and  it  was  sold  as  an  estray.  The 
plaintiff  was  allowed  to  recover  as  damages  the  purchase  price  with 
interest. 

MR.  JUSTICE  WILLIAMS.  It  was  clearly  competent  for  the  plain- 
tiff to  prove  that,  when  he  purchased  the  mare  in  November,  1872, 
her  eyes  were  diseased ;  and  in  order  to  show  that  the  disease  was  not 
temporary  but  permanent  and  incurable,  that  it  continued  until 
November,  1873,  when  one  of  her  eyes  became  wholly  blind  and  the 
sight  of  the  other  was  greatly  impaired.  But  evidence  as  to  the  condi- 
tion of  her  eyes  in  November,  1873,  was  not  admissible  per  se  for  the 
purpose  of  showing  that  they  were  diseased  at  the  time  of  the  sale; 
and  it  should  not  have  been  received  if  there  was  no  evidence  tending 
to  show  what  their  condition  was  during  the  ten  months  immediately 
preceding  that  date.  If  the  defendant  was  guilty  of  fraud  in  the  sale 
and  warranty  of  the  mare,  the  plaintiff  had  the  right  to  rescind  the 
contract,  and  upon  returning  or  offering  to  return  her,  to  recover  back 
the  price  paid  in  an  action  on  the  case  for  deceit,  or  in  an  action  of 
assumpsit  or  case  for  the  fraudulent  warranty.  1  Chit.  PL  137.  But 
if  there  was  no  fraud  or  deceit  in  the  sale,  the  plaintiff  had  no  right 
to  rescind  the  contract  for  the  alleged  breach  of  warranty,  and  to  re- 
turn the  mare  without  the  defendant's  consent.  Kase  v.  John,  10 
Watts,  107;  Sedgwick  on  Damages,  286-7.  It  is  true  that  he  might 
sue  either  in  assumpsit  or  case  for  the  breach  of  the  warranty  (Vanleer 
v.  Earle,  2  Casey,  277)  ;  but  the  measure  of  his  damages  would  be, 
not  the  consideration  or  price  paid,  but  the  difference  between  the 
actual  value  of  the  mare,  and  her  value,  if  sound,  with  interest  from 
the  date  of  the  sale.  Where  there  is  no  fraud  or  agreement  to  return, 
the  vendee  cannot  rescind  the  contract  after  it  has  been  executed, 
but  his  only  remedy  is  an  action  on  the  warranty. 


690  DISCHARGE    OF    CONTRACT. 

In  this  case  it  is  not  alleged  that  the  defendant  was  guilty  of  any 
fraud  or  deceit  in  the  sale  and  warranty  of  the  mare,  nor  is  there 
any  evidence  that  he  knew  or  had  any  reason  to  believe  that  her  eyefe 
were  permanently  and  incurably  diseased  at  the  time  of  the  sale. 
The  plaintiff,  therefore,  had  no  right  to  return  the  mare,  and  the  de- 
fendant was  not  bound  to  take  her  back  and  refund  the  price.  It- 
follows  that  there  was  error  in  overruling  the  defendant's  offer  to 
show  that  he  refused  to  accept  the  mare  when  she  was  returned  by 
the  plaintiff,  and  that  soon  afterwards  she  was  sold  as  a  stray  for 
about  the  same  price  the  plaintiff  paid  for  her;  and  for  not  charging, 
as  requested  in  defendant's  fourth  point,  that  the  horse,  or  the  value 
thereof,  is  to  be  considered  as  the  property  of  the  plaintiff.  The 
defendant  had  the  right  to  show  the  price  for  which  the  mare  was  sold, 
as  a  stray,  by  the  constable,  as  evidence  of  her  value  at  the  time  of  the 
sale  to  the  plaintiff;  and  he  was  entitled  to  the  instruction  prayed 
for,  in  order  to  limit  the  plaintiff's  recovery  to  the  difference  between 
the  actual  value  of  the  mare,  and  her  value,  if  sound,  as  warranted, 
with  interest  thereon  from  the  date  of  her  sale.  The  other  assign- 
ments of  error  are  not  sustained,  but  for  the  reasons  given  the  judg- 
ment must  be  reversed. 

Judgment  reversed,  and  a  venire  facias  de  novo  awarded.1 

35  Cyc.  434   (55);  W.  P.  607   (67). 


BRYANT  v.  ISBUEGH. 
13  GRAY,    (MASS.),  607.— 1859. 

Action  of  contract  to  recover  the  price  of  a  horse  sold  and  delivered 
to  the  defendant  by  the  plaintiff.  Answer,  that  the  plaintiff  warranted 
the  horse  to  be  sound  at  the  time  of  the  sale ;  that  the  horse  proved  to 
be  unsound,  and  was  returned  to  the  plaintiff.  The  plaintiff  did  not 
receive  the  horse  back,  but  declined  to  do  so.  Verdict  for  plaintiff, 
with  deduction  for  damages. 

The  court  charged  that  the  defendant  had  no  right  to  return  the 
horse  and  rescind  the  contract,  in  the  absence  of  fraud,  unless  such 
a  remedy  was  provided  for  by  the  terms  of  the  contract.  Defendant 
excepted  to  this  charge. 

METCALF,  J.  The  precise  question  in  this  case  is,  whether  a  pur- 
chaser of  personal  property,  sold  to  him  with  an  express  warranty, 
and  taken  into  possession  by  him,  can  rescind  the  contract  and  return 
the  property,  for  breach  of  the  warranty,  when  there  is  no  fraud, 
and  no  express  agreement  that  he  may  do  so.  It  appears  from  the 
cases  cited  for  the  plaintiff  that  in  the  English  courts,  and  in  some 

i  The  rule  in  New  York  was  formerly  in  accord,  but  now,  by  §  150  of  the 
New  York  Sales  Act,  the  right  of  rescission  is  given.  (§  69,  American  Uni- 
form Sales  Act.) 


BY    BREACH.  691 

of  the  courts  in  this  country,  he  cannot,  and  that  his  only  remedy  is 
on  the  warranty.  See  also  2  Steph.  N.  P.  1296;  Addison  on  Con. 
(2d  Am.  ed.)  272;  Oliphant's  Law  of  Horses,  88;  Cripps  v.  Smith,  3 
Irish  Law  K.  277. 

But  we  are  of  opinion  (notwithstanding  a  dictum  of  Parsons,  C.  J., 
in  Kimball  v.  Cunningham,  4  Mass.  505)  that,  by  the  law  of  this 
commonwealth,  as  understood  and  practiced  upon  for  more  than  forty 
years,  there  is  no  such  difference  between  the  effect  of  an  implied  and 
an  express  warranty  as  deprives  a  purchaser  of  any  legal  right  of 
rescission  under  the  latter  which  he  has  under  the  former;  and  that 
he  to  whom  property  is  sold  with  express  warranty,  as  well  as  he  to 
whom  it  is  sold  with  an  implied  warranty,  may  rescind  the  contract 
for  breach  of  warranty,  by  a  seasonable  return  of  the  property,  and 
thus  entitle  himself  to  a  full  defense  to  a  suit  brought  against  him  for 
the  price  of  the  property,  or  to  an  action  against  the  seller  to  recover 
back  the  price,  if  it  has  been  paid  to  him.  In  Bradford  v.  Manly 
(13  Mass.  139),  where  it  was  decided  that  a  sale  by  sample  was  tanta- 
mount to  an  express  warranty  that  the  sample  was  a  true  representa- 
tive of  the  kind  of  thing  sold  (and  in  which  case  there  was  no  fraud). 
Chief  Justice  Parker  said:  "If  a  different  thing  is  delivered,  he" 
(the  seller)  "does  not  perform  his  contract,  and  must  pay  the  differ- 
ence, or  receive  the  thing  back  and  rescind  the  bargain,  if  it  is  offered 
him."  This,  it  is  true,  was  only  a  dictum,  and  not  to  be  regarded 
as  a  decisive  authority.  But  in  Perley  v.  Balch  (23  Pick.  283), 
which  was  an  action  on  a  promissory  note  given  for  the  price  of  an 
ox  sold  to  the  defendant,  it  was  adjudged  that  the  jury  were  rightly 
instructed  that  if,  on  the  sale  of  the  ox,  there  was  fraud,  or  an  ex- 
press warranty  and  a  breach  of  it,  the  defendant  might  avoid  the  con- 
tract by  returning  the  ox  within  a  reasonable  time,  and  that  this  would 
be  a  defense  to  the  action.  In  Dorr  v.  Fisher  (1  Cush.  274)  it  was 
said  by  Shaw,  C.  J.,  that,  "to  avoid  circuity  of  action,  a  warranty 
may  be  treated  as  a  condition  subsequent,  at  the  election  of  the  vendee, 
who  may,  upon  a  breach  thereof,  rescind  the  contract  and  recover  back 
the  amount  of  his  purchase  money,  as  in  case  of  fraud.  But  if  he 
does  this,  he  must  first  return  the  property  sold,  or  do  everything  in 
his  .power  requisite  to  a  complete  restoration  of  the  property  to  the 
vendor;  and  without  this  lie  cannot  recover."  The  chief  justice  took 
no  distinction  between  an  express  warranty  and  an  implied  one,  but 
referred,  in  support  of  what  he  had  said  (with  other  cases),  to 
Perley  v.  Balch,  cited  above. 

In  1816,  when  the  case  of  Bradford  v.  Manly  was  before  this 
court,  and  afterwards,  until  1831,  the  law  of  England,  on  the  point 
raised  in  the  present  case,  was  supposed  to  be  as  we  now  hold  it  to  be 
here.  Lord  Eldon  had  said,  in  Curtis  v.  Hannay  (3  Esp.  R.  82),  that 
he  took  it  to  be  "clear  law" ;  and  so  it  was  laid  down  in  2  Selw.  N.  P. 


692  DISCHARGE   OF   CONTRACT. 

(1st  ed.)  586,  in  1807,  and  in  Long  on  Sales,  125,  126,  in  1821,  and 
in  2  Stark.  Ev.  (1st  ed.)  645,  in  1825.  In  1831,  in  Street  v.  Blay 
(2  B.  &  Ad.  461),  Lord  Eldon's  opinion  was  first  denied,  and  a  con- 
trary opinion  expressed  by  the  court  of  the  king's  bench.  Yet  our 
court  subsequently  (in  1839)  decided  the  case  of  Perley  v.  Balch. 
The  doctrine  of  that  decision  prevents  circuity  of  action  and  multi- 
plicity of  suits,  and  at  the  same  time  accomplishes  all  the  ends  of 
justice. 

Exceptions  sustained. 
35  Cyc.  435  (56)  ;  W.  P.  607  (67).     See  American  Uniform  Sales  Act,  §  69. 


SANBORN,  J.,  IN  KAUFFMAN  v.  KAEDEE. 
108  FEDERAL  REPORTER,  171.— 1901. 

The  considerations  which  Kauffman  agreed  to  give  to  the  defendants 
for  their  covenant  to  pay  the  rent  and  interest  were  (1)  the  use  by 
the  prospective  corporation  of  the  leased  premises  for  a  year  without 
the  payment  of  any  rent;  (2)  the  release  of  the  premises  from  Kauff- 
man's  right  to  retake  them  for  the  failure  to  pay  any  installment 
of  this  rent;  (3)  the  release  of  the  realty  company  and  of  its  proposed 
assignee,  the  Century  Company,  from  liability  to  pay  this  rent;  and 
(4)  the  assignment  and  transfer  of  the  350  shares  of  stock.  The 
single  consideration  which  the  defendants  agreed  to  give  to  the  plain- 
tiff for  all  these  covenants  was  the  payment  of  the  $35,000  and  in- 
terest on  or  before  July  1,  1898.  .  .  .  There  is  another  principle  of 
law  which  equally  prohibits  the  maintenance  of  the  theory  of  the  de- 
fendants in  this  case.  It  is  stated  by  Lord  Mansfield  in  Boone  v.  Eyre, 
1  H.  Bl.  273,  in  these  words:  "Where  mutual  covenants  go  to  the 
whole  of  the  consideration  on  both  sides,  they  are  mutual  conditions, 
the  one  precedent  to  the  other ;  but  where  they  only  go  to  a  part,  where 
a  breach  may  be  paid  for  in  damages,  there  the  defendant  has  a  remedy 
on  his  covenant,  and  shall  not  plead  it  as  a  condition  precedent." 
Ritchie  v.  Atkinson,  10  East,  295 ;  Stayers  v.  Curling,  3  Bing.  N.  C. 
355;  Lowber  v.  Bangs,  2  Wall.  728,  736,  17  L.  Ed.  768;  Hague  v. 
Ahrens,  53  Fed.  58,  3  C.  C.  A.  426,  3  U.  S.  App.  231.  The  breach  of 
a  covenant  of  the  first  class — a  dependent  covenant,  one  which  goes  to 
the  whole  consideration  of  the  contract — gives  to  the  injured  party  the 
right  to  treat  the  entire  contract  as  broken  and  to  recover  damages 
for  a  total  breach.  Leopold  v.  Salkey,  89  111.  412;  Keck  v.  Bieber 
(Pa.  Sup.),  24  Atl.  170;  Parker  v.  Russell,  133  Mass.  74;  Bail- 
road  Co.  v.  Van  Deusen,  29  Mich.  431 ;  Richmond  v.  Railroad  Co., 
40  Iowa,  264,  275.  But  a  breach  of  a  covenant  of  the  sec- 
ond class,  an  independent  covenant,  a  covenant  which  does  not  go 
to  the  whole  consideration  of  the  contract  and  is  subordinate  and 


BY  BREACH:  REMEDIES.  693 

incidental  to  its  main  purpose,  does  not  constitute  a  breach  of  the 
entire  contract,  does  not  authorize  the  injured  party  to  re- 
scind the  agreement,  but  he  is  still  bound  to  perform  his  part  of 
it,  and  his  only  remedy  is  a  recovery  of  damages  for  the 
breach.  Union  Pac.  Ey.  Co.  v.  Traveler's  Ins.  Co.,  83  Fed.  676,  679, 
28  C.  C.  A.  1,  4,  49  U.  S.  App.  752,  759;  Pordage  v.  Cole,  1  Saund. 
320,  note ;  Compbell  v.  Jones,  6  Term  R.  570,  573 ;  Surplice  v.  Farns- 
worth,  7  Man.  &  G.  576,  584;  Obermyer  v.  Nichols,  6  Bin.  159,  160, 
164;  Burnes  v.  McCubbin,  3  Kan.  221,  226;  Butler  v.  Manny,  52 
Mo.  497,  506;  Turner  v.  Mellier,  59  Mo.  527,  536;  Pepper  v.  Haight, 
20  Barb.  429,  440 ;  Appalachian  Co.  v.  Buchanan,  43  U.  S.  App.  265, 
20  C.  C.  A.  33,  73  Fed.  1007.  Now,  the  covenant  of  the  plaintiff 
to  assign  and  transfer  the  stock  to  the  defendants  did  not  go  to  the 
whole  consideration  of  the  contract,  but  was  subordinate  and  incidental 
to  its  main  purpose,  as  has  already  been  shown.  Its  breach  was  sus- 
ceptible of  compensation  in  damages.  Therefore,  even  though  the 
plaintiff  committed  a  technical  breach  of  it,  the  defendants,  who  had 
accomplished  the  main  purpose  of  their  contract,  and  had  accepted  the 
benefits  of  the  plaintiff's  performance  of  that  part  of  his  covenants 
which  went  to  the  whole  consideration  of  the  agreement,  the  use 
of  the  leased  premises  by  their  corporation  for  a  year  without  pay- 
ment of  the  rent,  and  the  release  of  the  premises,  of  the  lessee,  and 
of  its  assignee  from  liability  therefor,  were  still  bound  by  their  agree- 
ment to  pay  this  rent  and  interest,  and  their  only  remedy  for  the 
plaintiff's  breach  was  compensation  in  damages. 

9  Cyc.  650    (99);   327    (10);   343    (47);  W.  P.  327    (10);  343    (47). 


Remedies  for  breach  of  contract. 

(i.)  Damages. 

WAKEMAN,  et  al  v.  WHEELER  &  WILSON 
MANUFACTURING  COMPANY. 

101  NEW  YORK,  205.— 1886. 

EARL,  J.  This  action  was  brought  to  recover  damages  for  the 
breach  of  an  agreement  made  in  the  city  of  New  York  in  February, 
1878,  which  is  set  forth  in  the  complaint  as  follows:  "That  if  the 
plaintiffs  shall  succeed  in  placing — that  is  to  say,  selling  fifty  of  the 
defendant's  sewing-machines  to  one  firm  or  party  in  the  Republic  of 
Mexico  during  the  next  trip  of  their  agent  to  that  country  then  about 
to  be  made,  they,  the  plaintiffs,  for  every  fifty  machines  so  sold  shall 
have  the  sole  agency  for  the  sale  of  the  defendant's  sewing-machines 
in  that  locality  and  its  vicinity  in  that  republic,  and  the  defendant 


694  DISCHARGE   OF    CONTRACT. 

should  furnish  to  the  plaintiffs  machines  at  the  lowest  net  gold 
prices."  The  defendant  denied  the  agreement,  but  the  jury  found  it 
substantially  as  alleged ;  and  it  is  conceded  that  we  must  assume  here 
that  such  an  agreement  was  made.  The  plaintiffs  at  once  entered 
upon  the  performance  of  the  agreement,  purchased  a  sample  machine 
of  the  defendant,  caused  their  agent  to  be  instructed  in  its  mechanism 
and  management,  and  then  sent  him  to  Mexico.  After  reaching  there 
he  sold  fifty  machines  to  one  Mead  of  San  Luis  Potosi,  on  his  promise 
to  Mead  that  he  should  be  the  general  agent  of  the  defendant  for 
that  locality  and  its  vicinity.  The  order  for  the  fifty  machines  was 
sent  to  the  defendant  and  filled  by  it,  and  those  machines  were  for- 
warded to  Mexico  and  paid  for.  Shortly  thereafter  plaintiffs'  agent 
made  another  sale  of  fifty  machines  for  another  locality  in  Mexico, 
and  an  order  for  those  machines  was  sent  to  the  defendant,  which 
it  absolutely  refused  to  fill.  Plaintiffs'  agent  procured  another  order 
for  one  machine  and  sent  that  to  the  defendant,  which  it  also  re- 
fused to  fill;  and  then  it  refused  to  fill  any  further  orders  from  the 
plaintiffs  or  their  agents,  and  absolutely  refused  to  perform  and  re- 
pudiated its  agreement.  Upon  the  trial  of  the  action  the  plaintiffs 
made  various  offers  of  evidence  to  show  the  value  of  their  contract 
with  the  defendant,  the  most  of  which  were  excluded.  In  his  charge 
to  the  jury  the  judge  held  as  matter  of  law  that  the  plaintiffs  could 
recover  damages  only  for  the  refusal  of  the  defendant  to  fill  the  orders 
actually  given ;  and  the  plaintiffs'  profits  having  been  shown  to  be  $4  on 
a  machine,  their  recovery  was  thus  limited  to  $204.  They  excepted 
to  the  rule  of  damages  thus  laid  down,  and  the  sole  question  for  our 
determination  is  what,  upon  the  facts  of  this  case,  was  the  proper 
rule  of  damages  ?  Were  the  plaintiffs  confined  to  the  damages  suffered 
by  them  in  consequence  of  the  refusal  of  the  defendant  to  fill  the  two 
orders  for  fifty-one  machines,  or  were  they  entitled  also  to  recover  the 
damages  which  they  sustained  by  a  total  breach  of  the  agreement  on 
the  part  of  the  defendant?  The  judge  limited  the  damages,  as  stated 
in  his  charge,  because  any  further  allowance  of  damages  for  the  breach 
of  the  agreement  would,  as  he  claimed,  be  merely  speculative  and  im- 
aginary. 

It  is  frequently  difficult  to  apply  the  rules  of  damages  and  to  deter- 
mine how  far  and  when  opinion  evidence  may  be  received  to  prove  the 
amount  of  damages;  and  the  difficulty  is  encountered  in  a  marked 
degree  in  this  case.  One  who  violates  his  contract  with  another  is 
liable  for  all  the  direct  and  proximate  damages  which  result  from  the 
violation.  The  damages  must  be  not  merely  speculative,  possible, 
and  imaginary,  but  they  must  be  reasonably  certain,  and  such  only 
as  actually  follow  or  may  follow  from  the  breach  of  the  contract. 
They  may  be  so  remote  as  not  to  be  directly  traceable  to  the  breach,  or 
they  may  be  the  result  of  other  intervening  causes,  and  then  they  can- 


BY   BREACH  :    REMEDIES.  695 

not  be  allowed.  They  are  nearly  always  involved  in  some  uncer- 
tainty and  contingency;  usually  they  are  to  be  worked  out  in  the 
future,  and  they  can  be  determined  only  approximately  upon  reason- 
able conjectures  and  probable  estimates.  They  may  be  so  uncertain, 
contingent,  and  imaginary  as  to  be  incapable  of  adequate  proof,  and 
then  they  cannot  be  recovered  because  they  cannot  be  proved.  But 
when  it  is  certain  that  damages  have  been  caused  by  a  breach  of  con- 
tract, and  the  only  uncertainty  is  as  to  their  amount,  there  can  rarely 
be  good  reason  for  refusing,  on  account  of  such  uncertainty,  "any  dam- 
ages whatever  for  the  breach.  A  person  violating  his  contract  should 
not  be  permitted  entirely  to  escape  liability  because  the  amount  of 
the  damages  which  he  has  caused  is  uncertain.  It  is  not  true  that 
loss  of  profits  cannot  be  allowed  as  damages  for  a  breach  of  contract. 
Losses  sustained  and  gains  prevented  are  proper  elements  of  damage. 
Most  contracts  are  entered  into  with  the  view  to  future  profits,  and 
such  profits  are  in  the  contemplation  of  the  parties,  and  so  far  as  they 
can  be  properly  proved,  they  may  form  the  measure  of  damage.  As 
they  are  prospective  they  must,  to  some  extent,  be  uncertain  and  prob- 
lematical, and  yet  on  that  account  a  person  complaining  of  breach  of 
contract  is  not  to  be  deprived  of  all  remedy.  It  is  usually  his  right 
to  prove  the  nature  of  his  contract,  the  circumstances  surrounding  and 
following  its  breach,  and  the  consequences  naturally  and  plainly 
traceable  to  it,  and  then  it  is  for  the  jury,  under  proper  instructions 
as  to  the  rules  of  damages,  to  determine  the  compensation  to  be  awarded 
for  the  breach.  When  a  contract  is  repudiated  the  compensation  of 
the  party  complaining  of  its  repudiation  should  be  the  value  of  the 
contract.  He  has  been  deprived  of  his  contract,  and  he  should  have 
in  lieu  thereof  its  value,  to  be  ascertained  by  the  application  of  rules 
of  law  which  have  been  laid  down  for  the  guidance  of  courts  and  jurors. 
[Here  follows  an  extended  review  of  authorities.] 

It  is  quite  clear  that  the  rules  of  damages  having  the  sanction 
of  these  authorities  were  violated  upon  the  trial  of  this  action.  The 
plaintiffs  had  the  right  under  their  agreement  to  establish  agencies 
for  the  sale  of  defendant's  machines  anywhere  in  Mexico  where  they 
could  sell  fifty  machines.  An  agency,  when  thus  established,  was  to 
be  exclusive,  and  was  to  have  some  permanency.  It  could  not  be 
broken  up  at  the  will  of  the  defendant  without  some  default  on  the 
part  of  the  plaintiffs.  That  the  agreement  had  some  value  to  the 
plaintiffs  is  very  clear,  and  of  that  value,  whatever  it  was,  they  were 
deprived  by  the  act  of  the  defendant.  It  is  quite  true  that  that  value, 
or,  in  other  words,  the  damage  caused  to  the  plaintiffs  by  the  total 
breach  of  the  agreement  by  the  defendant,  is  quite  uncertain  and  diffi- 
cult to  be  estimated.  But  the  difficulty  is  not  greater  than  it  was  in 
several  of  the  cases  above  cited.  There  are  some  facts  upon  which  a 
jury  could  base  a  judgment,  not  certain  nor  strictly  accurate,  but 


696  DISCHARGE   OF    CONTRACT. 

sufficiently  so  for  the  administration  of  justice  in  such  a  case.  The 
agent  whom  plaintiffs  sent  to  Mexico  was  apparently  intelligent,  ca- 
pable, and  well  acquainted  with  Mexico.  Machines  could  be  delivered 
there,  for  about  $30  per  machine,  and  could  then  be  sold  at  retail  for 
about  $125.  The  profit  of  the  plaintiffs  on  each  machine  was  about 
$4.  Plaintiffs'  agents  readily  made  sales  of  one  hundred  and  one 
machines,  and  were  about  to  make  other  sales.  One  of  defendant's 
agents  subsequently  sold  in  a  single  city  twenty  machines  in  six 
months,  at  $125  each.  The  plaintiffs  had  established  two  agencies, 
and  to  the  value  of  such  agencies  at  least  they  were  entitled.  Mead, 
who  had  one  of  the  agencies,  testified,  that  he  had  made  arrangements 
with  several  parties  to  sell  the  machines;  that  he  had  all  the  facilities 
for  carrying  on  an  extensive  and  profitable  business,  and  was  well 
acquainted  with  the  country.  The  population  of  several  of  the  Mexi- 
can cities  in  which  plaintiffs'  agent  was  engaged  in  establishing 
agencies  was  shown.  From  all  these  and  other  facts  proved  it  cannot 
be  doubted  that  the  plaintiffs  suffered  damages  to  at  least  several 
hundred  dollars,  and  they  should  not  have  been  deprived  of  the  dam- 
ages which  they  made  to  appear  because  they  could  not  make  clear 
the  full  amount  of  their  damages.  All  the  facts  should  have  been  sub- 
mitted to  the  jury  with  proper  instructions,  and  their  verdict,  not 
based  upon  mere  speculation  and  possibilities,  but  upon  the  facts  and 
circumstances  proved,  would  have  approached  as  near  the  proper  meas- 
ure of  justice  as  the  nature  of  the  case  and  the  infirmity  which 
attaches  to  the  administration  of  the  law  will  admit.  In  1  Suther- 
land on  Damages,  113,  it  is  said :  "If  there  is  no  more  certain  method 
of  arriving  at  the  amount,  the  injured  party  is  entitled  to  submit  to 
the  jury  the  particular  facts  which  have  transpired,  and  to  show  the 
whole  situation  which  is  the  foundation  of  the  claim  and  expectation 
of  profits  so  far  as  any  detail  offered  has  a  legal  tendency  to  support 
such  claim."  .  .  . 

•  Our  conclusion,  therefore,  is  that  this  judgment  should  be  reversed 
and  a  new  trial  granted,  costs  to  abide  event.  All  concur.  Judg- 
ment reversed.1 

13  Cyc.  37-38   (1-6). 

i  The  general  rule  for  damages  for  breach  of  contract  is  thus  stated  in  the 
leading  English  case,  Hadley  v.  Baxendale,  9  Exch.  341 :  "Where  two  parties 
have  made  a  contract  which  one  of  them  has  broken,  the  damages  which 
the  other  party  ought  to  receive  in  respect  of  such  breach  of  contract  should 
be  such  as  may  fairly  and  reasonably  be  considered  either  arising  naturally 
— that  is,  according  to  the  usual  course  of  things  from  such  breach  of  con- 
tract itself,  or  such  as  may  reasonably  be  supposed  to  have  been  in  the 
contemplation  of  both  parties,  at  the  time  they  made  the  contract,  as  the 
probable  result  of  the  breach  of  it.  Now,  if  the  special  circumstances  under 
which  the  contract  was  actually  made  were  communicated  by  the  plaintiffs 
to  the  defendants,  and  thus  known  to  both  parties,  the  damages  resulting 


BY    BREACH  :    REMEDIES.  69?' 

(u.)  Specific  performance  and  injunction. 

a.  Specific  performance. 

ADAMS  v.  MESSINGER. 

147  MASSACHUSETTS,  185.— 1888. 

Bill  in  equity  for  specific  performance  and  for  an  injunction. 
Demurrer  to  bill.  Demurrer  sustained.  Plaintiff  appeals. 

The  bill  alleged  that  the  defendant  agreed  to  furnish  .to  plaintiff 
certain  steam  injectors,  and  further  agreed  that  in  case  he  took  out 

from  the  breach  of  such  a  contract,  which  they  would  reasonably  contem- 
plate, would  be  the  amount  of  injury  which  would  ordinarily  follow  from  a 
breach  of  contract  under  these  special  circumstances  so  known  and  com- 
municated. But,  on  the  other  hand,  if  these  special  circumstances  were 
wholly  unknown  to  the  party  breaking  the  contract,  he,  at  the  most,  could 
only  be  supposed  to  have  had  in  his  contemplation  the  amount  of  injury 
which  would  arise  generally,  and  in  the  great  multitude  of  cases  not  affected 
by  any  special  circumstances,  from  such  a  breach  of  contract.  For  had  the 
special  circumstances  been  known,  the  parties  might  have  specially  pro- 
vided for  the  breach  of  contract  by  special  terms  as  to  the  damages  in  that 
case;  and  of  this  advantage  it  would  be  very  unjust  to  deprive  them.  Now 
the  above  principles  are  those  by  which  we  think  the  jury  ought  to  be  guided 
in  estimating  the  damages  arising  out  of  any  breach  of  contract.  It  is  said 
that  other  cases,  such  as  breaches  of  contract  in  the  non-payment  of  money, 
or  in  the  not  making  a  good  title  to  land,  are  to  be  treated  as  exceptions 
from  this,  and  as  governed  by  a  conventional  rule.  But  as,  in  such  cases, 
both  parties  must  be  supposed  to  be  cognizant  of  that  well-known  rule,  these 
cases  may,  we  think,  be  more  properly  classed  under  the  rule  above  enun- 
ciated as  to  cases  under  known  special  circumstances,  because  there  both  par- 
ties may  reasonably  be  presumed  to  contemplate  the  estimation  of  the  amount 
of  damages  according  to  the  conventional  rule."  See  comment  on  Hadley  v. 
Baxendale,  19  H.  L.  R.  531. 

Illustrative  cases. — In  Griffin  v.  Colver,  16  N.  Y.  489,  it  was  held,  that  upon 
a  breach  of  a  contract  to  deliver  at  a  certain  day  a  steam  engine  built  and 
purchased  for  the  purpose  of  driving  a  planing  mill  and  other  machinery,  the 
purchaser  who  was  injured  by  the  delay  in  delivery  was  not  entitled  to  re- 
cover what  he  might  have  been  able  to  earn  by  the  use  of  such  engine  together 
with  his  other  machinery,  during  the  time  lost  by  the  delay.  The  court  said 
that  the  proper  rule  for  estimating  the  damage  was,  "to  ascertain  what  would 
have  been  a  fair  price  to  pay  for  the  use  of  the  engine  and  machinery  in  view 
of  all  the  hazards  and  chances  of  the  business." 

In  Gary  v.  Gruman,  4  Hill  (N.  Y.),  625,  it  was  held  that  the  proper  measure 
of  damages  for  the  breach  of  a  warranty  of  soundness  in  the  sale  of  a  horse, 
is  the  difference  between  the  value  of  the  horse  at  the  time  of  the  sale,  con- 
sidering him  as  sound,  and  his  value  with  the  defect  complained  of;  and  not 
the  difference  between  the  price  paid  for  him,  and  his  value  with  the  defect. 

In  Green  v.  Boston  &  Lowell  R.  R.  Co.,  128  Mass.  221,  the  action  was  on 
contract  against  a  common  carrier  to  recover  the  value  of  a  family  portrait. 
The  court  held  that  the  general  rule  of  damages  in  contract  for  not  delivering 
goods,  is  the  fair  market  value  of  the  goods.  But,  that  this  rule  does  not 


698  DISCHARGE  OF   CONTRACT. 

in  the  United  States  patents  for  improvements  in  such  injectors  he 
would  apply  for  patents  in  Canada,  and  on  receiving  the  same  assign 
them  to  plaintiff;  that  defendant  had  failed  and  refused  to  supply  the 
injectors,  and  had,  after  taking  out  additional  patents  in  the  United 
States,  failed  and  refused  to  apply  for  corresponding  patents  in 
Canada;  that  plaintiff  could  obtain  the  injectors  only  of  defendant, 
and  had  suffered  great  and  peculiar  damages  from  defendant's  failure 
to  deliver  them.  The  bill  prayed  that  defendant  might  be  decreed 
specifically  to  perform  the  agreement;  that  there  might  be  assessed 

apply  where  the  goods  do  not  have  a  market  value.  In  such  a  case  "the  just 
rule  of  damages  is  the  actual  value  to  him  who  owns  it,  taking  into  account 
its  cost,  the  practicability  and  expense  of  replacing  it,  and  such  other  con- 
siderations as  in  the  particular  case  affect  its  value  to  the  owner." 

In  Kountz  v.  Kirkpatrick,  72  Pa.  St.  376,  Kountz  sold  to  Kirkpatrick  A; 
Lyon,  oil,  "to  be  delivered  seller's  option  at  any  time  till  December  31st,  at 
13J  cents  per  gallon."  Kirkpatrick  &  Lyon  assigned  the  contract  to  Fisher  & 
Brothers,  and  afterwards  entered  into  a  combination  with  many  others  to  buy 
up  oil,  so  as  to  raise  the  price  in  the  market  at  the  time  Kirkpatrick  &  Lyon 
were  to  deliver.  The  court  held  that  in  the  sale  of  chattels  the  general  rule 
is,  that  the  measure  of  damages  for  non-delivery,  is  the  difference  between  the 
contract  price  and  the  price  at  the  time  and  place  of  delivery;  yet,  when  the 
market  price  is  unnaturally  inflated  by  unlawful  means,  the  question  of  dam- 
ages by  a  market  value  is  for  the  jury,  who  may  determine  from  the  price 
before  and  after  the  day  of  delivery,  and  from  other  sources,  the  actual  market 
value. 

In  Hamilton  v.  Love,  152  Ind.  641,  the  court  held  that  the  remedy  of  a 
servant  discharged  without  cause,  before  the  expiration  of  the  period  stipu- 
lated for,  is  not  for  wages,  but  is  for  the  breach  of  the  contract;  the  measure 
of  damages  is  an  amount  equal  to  the  stipulated  wages  for  the  whole  period 
covered  by  the  contract,  less  the  sum  earned,  and  which  probably  can  by  rea- 
sonable diligence  be  earned  during  the  time  covered  by  the  breach;  "It  is  not 
necessary  that  the  discharged  servant  should  allege  in  his  complaint  that  since 
his  discharge  he  has  been  unable  to  obtain  employment,  and  has  earned  noth- 
ing. If  he  has,  or  by  the  exercise  of  reasonable  diligence  could  have  obtained 
employment,  or  earned  wages  after  his  discharge,  these  facts  are  matters  of 
defence,  and  must  be  established  by  the  master."  This  case  has  been  followed 
in  New  York  in  Davis  v.  Dodge,  126  App.  Div.  469,  and  in  Cottone  v.  Mur- 
ray's, 138  App.  Div.  874.  In  the  former  case  Gaynor  J.,  said:  "Whether 
damages  for  breach  of  a  contract  of  service  for  a  fixed  term  at  a  fixed  salary 
by  the  discharge  of  the  employe  may  be  estimated  to  the  end  of  the  contract 
period  or  only  up  to  the  trial  of  the  action,  when  the  contract  period  has  not 
yet  expired,  is  unsettled  in  this  State."  For  a  case  of  constructive  service  see 
Allen  v.  Colliery  Engineers  Co.,  post.  p.  723. 

For  further  discussions  and  illustrations  of  the  measure  of  damages,  see  the 
following  cases  reported  herein:  manufacture  and  sale  of  goods,  Rochester 
Lantern  Co.  v.  Stiles,  ante  p.  504;  lost  profits,  Hale  v.  Trout,  ante  p.  641,  Wol- 
cott  v.  Mount,  ante  p.  682;  breach  of  warranty,  Freyman  v.  Knecht,  ante  p. 
689;  duty  to  mitigate  damages,  Endriss  v.  Belle  Ice  Co.,  ante  p.  216;  Clark  v. 
Marsiglia,  ante  p.  651;  liquidated  damages  and  penalty,  Streeper  v.  Williams, 
ante  p.  584 ;  installment  sales,  Rhoem  v.  Horst,  ante  p.  627. 

For  the  allowance  of  interest  as  damages  see  Gray  v.  Central  R.  R.  of  N.  J., 
157  N.  Y.  483. 


BY  BREACH:  REMEDIES.  699 

damages  growing  out   of  defendant's  neglect;  and  that  defendant 
might   be   restrained   from   alienating  his   right   to   the   patents   in 
Canada. 
The  defendant  demurred  to  the  bill  on  the  following  grounds : 

"1.  'ihat  the  plaintiff  has  not  stated  such  a  case  as  entitles  him  to  any 
relief  in  equity  against  the  defendant.  2.  That  the  plaintiff  has  a  plain  and 
adequate  remedy  at  law.  3.  That  the  agreement,  specific  performance  of 
which  the  plaintiff  prays  may  be  decreed,  is  a  contract  for  personal  services. 
4.  That  the  specific  performance,  which  the  plaintiff  prays  may  be  decreed,  re- 
quires the  exercise  of  mechanical  skill,  intellectual  ability,  and  judgment.  5. 
That  the  specific  performance  of  said  agreement  involves  the  building  of  a 
machine  embodying  a  patent.  6.  That  the  securing  of  letters  patent  in 
Canada  involves  the  action  of  officers  of  a  foreign  government,  and  can- 
not be  the  subject  of  an  order  for  specific  performance.  7.  That  it  does 
not  appear  by  said  bill  what  relief  the  plaintiff  prays  for,  and  the  plaintiff's 
bill  is  entirely  indefinite  and  uncertain." 

DEVENS,  J.  It  is  the  contention  of  the  defendant,  that  the  plain- 
tiff has  a  full,  complete,  and  adequate  remedy  at  common  law  by  an 
action  for  damages,  and  that  the  court  sitting  in  equity  cannot  grant 
the  relief  sought  by  the  prayer  of  the  bill. 

The  controversy  arises  from  the  failure  to  perform  an  executory 
written  contract.  So  far  as  this  relates  to  personal  property,  the 
objections  arising  from  the  statute  of  frauds,  which  have  sometimes 
been  found  to  exist  when  oral  contracts  were  sought  to  be  enforced, 
have  of  course  no  application.  The  general  rule  that  contracts  as  to 
the  purchase  of  personal  property  are  not  specifically  enforced,  as  are 
those  which  relate  to  real  property,  does  not  rest  on  the  ground  of 
any  distinction  between  the  two  classes  of  property  other  than  that 
which  arises  from  their  character. 

Contracts  which  relate  to  real  property  can  necessarily  be  satisfied 
only  by  a  conveyance  of  the  particular  estate  or  parcel  contracted  for, 
while  those  which  relate  to  personal  property  are  often  fully  satisfied 
by  damages  which  enable  the  party  injured  to  obtain  elsewhere  in 
the  market  property  precisely  similar  to  that  which  he  had  agreed 
to  purchase.  The  distinction  between  real  and  personal  property  is 
entirely  subordinate  to  the  question  whether  an  adequate  remedy  can 
thus  be  afforded.  If,  from  the  nature  of  the  personal  property,  it 
cannot,  a  court  of  equity  will  entertain  jurisdiction  to  enforce  the 
contract.  Story  Eq.  Jur.,  §  717 ;  Clark  v.  Flint,  22  Pick.  231.  A  con- 
tract for  bank,  railway,  or  other  corporation  stock  freely  sold  in  the 
market,  might  not  be  thus  enforced,  but  it  would  be  otherwise  where 
the  stock  was  limited  in  amount,  held  in  a  few  hands,  and  not  ordi- 
narily to  be  obtained.  White  v.  Schuyler,  1  Abb.  Pr.  (N.  S.)  300; 
Treasurer  v.  Commercial  Mining  Co.,  23  Cal.  390;  Poole  v.  Middle- 
ton,  29  Beav.  646;  Doloret  v.  Eothschild,  1  Sim.  &  Stu.  590.  See 
Chaffee  v.  Middlesex  Railroad,  146  Mass.  224. 


700  DISCHARGE   OF    CONTRACT. 

Where  articles  of  personal  property  are  also  peculiar  and-  individual 
in  their  character,  or  have  an  especial  value  on  account  of  the  associa- 
tions connected  with  them,  as  pictures,  curiosities,  family  furniture, 
or  heirlooms,  specific  performance  of  a  contract  in  relation  to  them 
will  be  decreed.  Lloyd  v.  Loaring,  6  Ves.  773 ;  Fells  v.  Eead,  3  Ves. 
Jr.  70 ;  Lowther  v.  Lowther,  13  Ves.  95 ;  Williams  v.  Howard,  3  Mur- 
phey,  74.  An  agreement  to  assign  a  patent  will  be  specifically  enforced. 
Binney  v.  Annan,  107  Mass.  94.  Nor  do  we  perceive  any  reason  why 
an  agreement  to  furnish  articles  which  the  vendor  alone  can  supply, 
either  because  their  manufacture  is  guarded  by  a  patent  or  for  any 
similar  reason,  should  not  also  be  thus  enforced.  Hapgood  v.  Rosen- 
stock,  23  Fed.  Rep.  86.  As  the  value  of  a  patent  right  cannot  be 
ascertained  by  computation,  so  it  is  impossible  with  any  approach  to 
accuracy  to  ascertain  how  much  a  vendee  would  suffer  from  not  being 
able  to  obtain  such  articles  for  use  in  his  business. 

The  contract  of  the  defendant  was  twofold,  to  furnish  and  deliver 
certain  described  working  steam  injectors  within  a  specified  time  to 
the  plaintiff,  and  also  that,  if  the  defendant  shall  make  improvements 
in  injectors  for  steam  boilers,  and  shall  take  out  patents  therefor  in 
the  United  States,  he  will  apply  for  letters  patent  in  Canada,  and  on 
obtaining  them  will  assign  and  convey  the  same  to  the  plaintiff,  and 
that  he  will  not  do  any  act  prejudicial  to  these  letters  patent  of 
Canada  or  the  monopoly  thus  secured. 

It  is  said  that  the  court  will  not  enforce  a  contract  for  personal 
services  when  such  services  require  the  exercise  of  peculiar  skill,  in- 
tellectual ability,  and  judgment,  and  therefore  that  the  defendant 
cannot  be  ordered  to  make  and  deliver  the  injectors  contracted  for. 
But  the  principle  on  which  it  is  held  that  a  court  of  equity  cannot 
decree  one  to  perform  a  personal  service  involving  peculiar  talent  or 
skill,  because  it  cannot  so  mold  its  order  and  so  supervise  the  in- 
dividual executing  it  that  it  can  determine  whether  he  has  honestly 
obeyed  it  or  not,  has  no  application  here. 

The  defendant  has  agreed  to  furnish  and  deliver  certain  injectors, 
which  the  contract  shows  to  be  patented  articles.  It  does  not  appear 
from  the  bill  that  they  were  yet  to  be  made  when  the  contract  was 
executed.  But  if  it  be  assumed  that  they  were,  there  is  nothing  from 
which  it  can  be  inferred  that  any  skill  peculiar  to  the  defendant  was 
required  to  construct  them.  For  aught  that  appears,  they  could  be 
made  by  any  intelligent  artificer  in  the  metals  of  which  they  are  com- 
posed. The  details  of  their  manufacture  are  given  by  reference  to  the 
patents  which  are  referred  to  in  the  agreement,  so  that  no  difficulty 
such  as  has  sometimes  been  experienced  could  have  been  found  in 
describing  accurately,  and  even  minutely,  the  articles  to  be  furnished. 
Nor  are  there  found  in  the  case  at  bar  any  continuous  duties  to  be 
done,  or  work  to  be  performed,  requiring  any  permanent  supervision, 


BY  BREACH:  REMEDIES.  701 

which,  as  it  could  not  be  concluded  within  a  definite  and  reasonable 
time,  has  sometimes  been  held  an  obstacle  to  the  enforcement  of  a 
contract  by  the  court. 

Agreements  to  make  an  archway  under  a  railway,  or  to  construct  a 
siding  at  a  particular  point  for  the  convenience  of  the  landowner, 
have  been  ordered  to  be  specifically  enforced.  Although  the  party 
aggrieved  might  have  obtained  damages  which  would  have  been  suffi- 
cient to  have  enabled  him  to  pay  for  constructing  them,  and  although 
the  work  to  be  done  necessarily  involved  engineering  skill  as  well  as 
labor,  he  was  not  bound  to  assume  the  responsibility  or  the  labor  of  do- 
ing that  which  the  defendant  had  agreed  to  do.  Storer  v.  Great  West- 
ern Eailway,  2  Yo.  &  Col.  Ch.  48;  Greene  v.  West  Cheshire  Kail- 
way,  L.  R.  13  Eq.  44.  The  case  at  bar  is  readily  distinguishable  from 
that  of  Wollensak  v.  Briggs  (20  Bradw.  [111.]  50),  on  which  the  de- 
fendant much  relies.  In  that  case,  the  defendant  was  to  construct 
for  the  plaintiff  certain  improved  machinery  for  a  particular  purpose, 
but  no  details  were  given  as  to  the  form,  structure,  principle,  or 
mode  of  operating  the  proposed  machine.  It  was  obviously  a  con- 
tract too  indefinite  to  enable  the  court  to  order  its  specific  enforcement. 

It  is  urged  that  specific  performance  of  a  part  only  of  a  contract  will 
not  be  ordered  when  it  is  not  in  the  power  of  the  court  to  order  the 
enforcement  of  the  whole,  and  that  it  would  not  be  possible  to  enforce 
that  portion  of  the  contract  which  relates  to  the  application  for  letters 
patent  in  Canada,  and  the  subsequent  assignment  of  them.  But 
where  two  parts  of  a  contract  are  distinctly  separable,  as  in  the  case  at 
bar,  there  is  no  reason  why  one  should  not  be  enforced  specifically, 
and  the  plaintiff  compensated  in  damages  for  the  breach  of  the  other. 

When  a  contract  relates  to  but  a  single  subject,  and  it  is  impos- 
sible for  the  defendant  to  perform  it,  except  partially,  the  plaintiff 
is  entitled  to  the  benefit  of  such  partial  performance,  and  to  compensa- 
tion, if  it  be  possible  to  compute  what  is  just,  so  far  as  it  is  unper- 
formed. It  was  therefore  held  in  Davis  v.  Parker  (14  Allen,  94), 
that  where  one  had  agreed  to  convey  land  with  release  of  dower,  and 
was  unable  to  procure  a  release  of  dower,  the  purchaser  was  entitled  to 
a  conveyance  without  such  release,  with  an  abatement  from  the  pur- 
chase money  of  the  value  of  the  wife's  interest  at  the  time  of  convey- 
ance. See  also  Milkman  v.  Ordway,  106  Mass.  232,  253;  Curran  v. 
Holyoke  Water  Power  Co.,  116  Mass.  90. 

We  have  assumed,  in  favor  of  the  defendant's  contention,  that  the 
only  relief  that  the  plaintiff  could  obtain  for  the  breach  of  that  por- 
tion of  the  agreement  which  relates  to  the  application  for  a  patent  in 
Canada,  for  the  improvements  which  the  defendant  had  made,  would 
be  in  damages.  We  have  not  intended  thus  to  decide.  That  equity,  by 
virtue  of  its  control  over  the  persons  before  the  court  takes  cognizance 
of  many  things  which  they  may  do  or  be  able  to  do  abroad,  while  they 


702  DISCHARGE   OF    CONTRACT. 

are  themselves  personally  here,  will  not  be  controverted.  One  may  be 
enjoined  from  prosecuting  a  suit  abroad.  He  may  be  compelled  to 
convey  land  situated  abroad,  although  the  conveyance  must  be  accord- 
ing to  the  laws  of  the  foreign  country,  and  must  be  sent  there  for 
record.  Pingree  v.  Coffin,  12  Gray,  288;  Dehon  v.  Foster,  4  Allen, 
545;  Cunningham  v.  Butler,  142  Mass.  47;  Newton  v.  Bronson,  13 
N.  Y.  587;  Bailey  v.  Eyder,  10  N.  Y.  363. 

There  is  nothing  to  show  that  the  defendant,  in  making  his  applica- 
tion in  Canada  for  the  patent,  is  compelled  to  leave  the  State,  any 
more  than  he  would  be  compelled  to  do  so  if  he  was  an  applicant  at 
Washington.  The  grant  of  such  a  patent  is  an  act  of  administration 
only.  If  it  were  to  be  granted  here,  the  party  would  be  ordered  to 
make  application.  It  was  held  in  Kunstetler  v.  Atkinson  (Mac- 
Arthur  &  Mackey  382),  that  where  a  formal  assignment  of  an  in- 
vention had  not  been  made,  but  a  valid  agreement  had  been  made  to 
assign,  equity  would  order  the  party  to  make  the  formal  assignment, 
and  also  to  make  application  for  the  patent  which,  in  such  case,  would 
issue  to  the  assignee.  The  laws  of  Canada,  which  we  can  know  only 
as  facts,  are  not  before  us  by  any  allegations  as  to  them.  If  all  that 
is  required  by  them  is  a  formal  application  in  writing  by  the  inventor, 
there  would  seem  to  be,  from  the  allegations  of  the  bill,  sufficient  reason 
why  the  defendant  should  be  required  to  make  and  forward  it,  or  place 
it  in  the  hands  of  the  plaintiff  to  be  forwarded  to  the  Canadian 
authorities. 

In  any  event,  as  the  application  is  preliminary  only  to  obtain- 
ing letters  patent  for  the  purpose  of  assigning  them  to  the  plaintiff, 
the  averments  of  the  bill  taken  in  connection  with  the  terms  of  the 
agreement  set  forth  a  good  reason  why  the  plaintiff  may  ask  an  assign- 
ment of  his  title  to  the  improvements  in  question  from  the  defendant, 
so  far  as  the  Dominion  of  Canada  is  concerned,  and  also  why  the 
defendant  should  be  restrained  from  alienating  or  in  any  way  in- 
cumbering  any  right  he  may  have  to  letters  patent  from  Canada,  if 
the  plaintiff  should  decide  to  seek  his  remedy  in  this  form,  rather  than 
in  damages  for  breach  of  this  part  of  the  contract. 

Demurrer  overruled.1 

36  Cyc.  558    (27). 

i  "While  it  may  be  conceded  that  in  general  a  court  of  equity  will  not 
take  upon  itself  to  make  such  decree  where  chattel  property  alone  is  con- 
cerned, its  jurisdiction  to  do  so  is  no  longer  to  be  doubted,  and  it  is  believed 
that  no  good  reason  exists  against  its  exercise  in  any  case  where  compensa- 
tion in  damages  would  not  furnish  a  complete  and  satisfactory  remedy." — 
Danforth,  J.,  in  Johnson  v.  Brooks,  93  N.  Y.  337. 


BY    BREACH  :    REMEDIES.  703 

b.  Injunction. 

CORT  v.  LASSARD  et  al 

18  OREGON,  221.— 1889. 

LORD,  J.  This  is  a  suit  wherein  the  plaintiff,  who  is  a  theatrical 
manager,  seeks  to  enjoin  and  prevent  the  defendants,  who  are  acrobats, 
from  performing  at  a  rival  theater  in  the  same  place.  The  plaintiff 
alleges,  among  other  things,  that  the  plaintiff  and  defendants  entered 
into  a  contract  whereby  it  was  agreed  that  the  defendants  were  to  per- 
form as  acrobats,  exclusively  for  the  plaintiff,  during  a  period  of 
six  weeks,  at  a  salary  of  $60  per  week,  etc.,  that  the  plaintiff  has  per- 
formed all  the  conditions  of  his  said  contract,  and  gone  to  large  ex- 
pense in  advertising,  etc.,  and  would  have  derived  large  emoluments 
from  the  performance  of  the  defendants,  which  are  alleged  to  be  unique 
and  attractive;  that  said  defendants,  after  performing  for  the  plain- 
tiff for  the  space  of  three  weeks,  refused  to  perform  longer,  and  en- 
gaged themselves  to  perform  as  acrobats  at  another  theater  mentioned, 
in  said  city;  and  that  said  performance  of  the  said  defendants  will 
attract  large  crowds,  etc.,  and  will  largely  diminish,  if  permitted  to  be 
given,  the  receipts  of  the  plaintiff,  and  cause  an  irreparable  loss,  etc., 
and  diminish  the  attractions  of  his  said  theater,  etc. ;  that  the  said  de- 
fendants are  entirely  impecunious,  and  unable  to  respond  to  an  action 
for  a  breach  of  the  contract,  etc.  The  answer  denies  nearly  all  the 
material  allegations,  but  admits  the  hiring,  etc.,  and  then  avers  affirma- 
tively that  the  plaintiff  failed  to  fulfill  his  part  of  the  contract,  etc., 
and  that  the  plaintiff  discharged  them,  etc. ;  all  of  which  was  put  in 
issue  by  the  reply.  Upon  all  the  issues  presented  by  the  pleadings,  the 
finding  of  the  court  was  favorable  to  the  plaintiff,  with  this  exception : 
"That  the  performance  of  the  said  defendants  was  not  of  an  unique 
or  unusual  character,  but  that  of  an  ordinary  acrobat  and  tumbler, 
which  could  have  been  easily  supplied,  with  little  or  no  delay  or  ex- 
pense ;  and  that  said  service  was  of  a  common  and  ordinary  character, 
and  not  such  as  could  be  enjoined  in  equity  for  a  breach  of  contract 
to  perform,"  etc.  As  a  result,  the  court  found,  as  a  conclusion  of 
law,  that  the  plaintiff  was  not  entitled  to  any  relief  in  equity,  and 
that  his  suit  be  dismissed.  The  contention  of  counsel  for  the  plaintiff 
is  to  this  effect:  (1)  That  it  i's  immaterial  whether  the  performance 
is  unique,  or  involves  special  knowledge  or  skill;  and  (2)  that  the 
finding  is  contrary  to  the  evidence,  which  will  show  that  the  perform- 
ance was  unique  and  unusual.  In  this  case,  there  is  no  negative 
clause  in  the  contract ;  but  the  suit,  as  decided  by  the  court,  assumes 
and  admits  that  such  a  stipulation  is  not  a  prerequisite  to  the  exercise 
of  jurisdiction,  but  that  it  is  enough  to  warrant  equity  to  interfere  if 
the  contract  alleged  to  have  been  broken  stipulated  for  services  which 


704  DISCHARGE   OF    CONTRACT. 

are  unique  and  extraordinary  in  their  character,  or  which  involve 
special  skill  or  knowledge  or  ability,  and  provided  that  such  services 
were  to  be  rendered  at  a  particular  place  or  places,  and  for  a  specified 
time. 

The  question  whether  a  court  of  equity  will  apply  the  preventive 
remedy  of  injunction  to  contracts  for  the  services  of  professional 
workers  of  special  merit,  or  leave  them  to  the  remedy  at  law  for  dam- 
ages, has  been  the  subject  of  much  discussion,  and  the  existence  of 
the  jurisdiction  fully  established.  It  is  not,  perhaps,  possible,  nor  is 
it  necessary,  to  reconcile  the  decisions ;  but  the  ground  of  the  jurisdic- 
tion, as  now  exerted,  rests  upon  the  inadequacy  of  the  legal  remedy. 
In  an  early  English  case,  where  the  jurisdiction  was  invoked  to  prevent 
the  actor  Kean  from  performing  at  another  theater  upon  a  contract 
for  personal  services,  in  which  there  was  a  stipulation  to  the  effect  that 
he  should  not  perform  at  any  other  theater  in  London  during  the  period 
of  his  engagement,  it  was  held,  as  the  court  could  not  enforce  the 
positive  part  of  the  contract,  it  would  not  restrain  by  injunction  a 
breach  of  the  negative  part.  Kemble  v.  Kean,  6  Sim.  333.  But  this 
case  was  expressly  overruled  in  Lumley  v.  Wagner  (1  De  Gex,  M.  & 
G.  604)  upon  a  like  contract  for  personal  services,  to  sing,  during  a 
certain  period  of  time,  at  a  particular  theater,  and  not  to  sing  else- 
where without  written  authority,  upon  the  ground  that  the  positive  and 
negative  stipulations  of  such  contract  formed  but  one  contract,  and 
that  the  court  would  interfere  to  prevent  the  violation  of  the  nega- 
tive stipulation,  although  it  could  not  enforce  the  specific  performance 
of  the  entire  contract.  In  delivering  this  opinion,  among  other  things, 
the  Lord  Chancellor  said: 

"The  agreement  to  sing  for  the  plaintiff  during  three  months  at  his 
theater,  and  during  that  time  not  to  sing  for  anybody  else,  is  not  a  cor- 
relative contract.  It  is,  in  effect,  one  contract;  and  though,  beyond  all 
doubt,  this  court  could  not  interfere  to  enforce  the  specific  performance  of 
the  whole  of  this  contract,  yet,  in  all  sound  construction,  and  according  to 
the  true  spirit  of  the  agreement,  the  engagement  to  perform  for  three 
months  at  one  theater  must  necessarily  exclude  the  right  to  perform  at  the 
same  time  at  another  theater.  It  was  clearly  intended  that  J.  Wagner  was 
to  exert  her  vocal  abilities  to  the  utmost  to  aid  the  theater  to  which  she 
agreed  to  attach  herself.  I  am  of  opinion  that  if  she  had  attempted,  even 
in  the  absence  of  any  negative  stipulation,  to  perform  at  another  theater, 
she  would  have  broken  the  spirit  and  true  meaning  of  the  contract,  as  much 
as  she  would  with  reference  to  the  contract  into  which  she  has  actually 
entered." 

In  Montague  v.  Flockton  (L.  E.  16  Eq.  189)  it  was  held  that  an 
actor  who  enters  into  a  contract  to  perform  for  a  certain  period  at  a 
particular  theater  may  be  restrained  by  injunction  from  performing 
at  any  other  theater  during  the  pendency  of  his  engagement,  not- 
withstanding that  the  contract  contains  no  negative  clause  restricting 


BY    BREACH  :    REMEDIES.  705 

the  actor  from  performing  elsewhere.     Referring  to  Lumley  v.  Wag- 
ner, supra,  the  Vice-Chancellor  said: 

"It  happened  that  the  contract  did  contain  a  negative  stipulation,  and 
finding  it  there,  Lord  St.  Leonard  relied  upon  it;  but  I  am  satisfied  that, 
if  it  had  not  been  there,  he  would  have  come  to  the  same  conclusion,  and 
granted  the  injunction  on  the  grounds  that  Mdlle.  Wagner  having  agreed 
to  perform  at  Mr.  Lumley's  theater,  could  not  at  the  same  time  be  per- 
mitted to  perform  at  Mr.  Gye's.  But,  however  that  may  be,  it  is  compara- 
tively unimportant,  because  the  subsequent  authorities  have  completely 
settled  this  point." 

As  a  result  of  these  English  authorities,  while  conceding  that 
specific  performance  of  such  contracts  could  not  be  enforced,  the 
jurisdiction  is  established  that  relief  may  be  granted  on  a  contract 
for  such  services,  even  though  it  contains  no  negative  clause,  upon 
the  ground  that  a  contract  to  act  or  play  at  a  particular  place  for  a 
specified  time  necessarily  implies  a  prohibition  against  performing  at 
any  other  place  during  that  period.  The  American  courts,  while  they 
recognize  the  existence  of  the  jurisdiction,  have  exhibited  much  hesi- 
tancy in  applying  it  to  such  enlarged  uses.  Until  Daly  v.  Smith  (49 
How.  Pr.  150)  was  decided,  the  doctrine  of  Lumley  v.  Wagner,  supra, 
was  either  entirely  rejected  or  only  partially  accepted.  Sanquirico  v. 
Benedetti,  1  Barb.  315;  Hamblin  v.  Dinneford,  2  Edw.  Ch.  528; 
Fredricks  v.  Mayer,  13  How.  Pr.  566;  Butler  v.  Galletti,  21  How. 
Pr.  465;  Burton  v.  Marshall,  4  Gill.  487;  Hayes  v.  Willio,  11  Abb. 
Pr.  (N.  S.)  167.  In  that  case  (Daly  v.  Smith,  supra)  the  authorities 
are  carefully  discriminated,  and  the  injunction  was  granted  restraining 
an  actress  from  violating  her  agreement  to  play  at  the  plaintiff's 
theater  for  a  stated  period ;  and  the  case  is  on  all  fours  with  Lumley 
v.  Wagner,  supra.  See  also  Hahn  v.  Society,  42  Md.  465;  McCaull 
v.  Braham,  16  Fed.  Eep.  37.  In  Fredricks  v.  Mayer  (13  How.  Pr. 
567)  and  Butler  v.  Galletti  (21  How.  Pr.  466)  the  court  indicates 
the  principle  that  where  the  services  involve  the  exercise  of  powers  of 
the  mind,  as  of  writers  or  performers,  which  are  purely  and  largely 
intellectual,  they  may  form  a  class  in  which  the  court  will  interfere, 
upon  the  ground  that  they  are  individual  and  peculiar. 

In  these  cases  the  element  of  mind  furnishes  the  rule  of  distinction 
and  decision,  as  distinguished  from  what  is  mechanical  and  material, 
and  would  exclude  professional  workers,  such  as  dancers  and  acrobats, 
whose  performances  are  largely  mechanical,  however  unique  or  ex- 
traordinary such  performance  may  be.  But  it  is  apprehended  that  this 
distinction  cannot  be  maintained,  for  the  fact  is  that  such  actors 
do  often  possess  special  merit  of  extraordinary  qualifications  in  their 
line,  which  makes  their  professional  performances  distinctly  personal 
and  peculiar;  and  that,  in  case  of  their  default  on  a  contract  for 
services,  there  would  be  the  same  difficulty  in  supplying  their  places, 


706  DISCHARGE   OF    CONTRACT. 

or  in  obtaining  from  others  the  same  service,  as  would  happen  with 
actors  whose  merits  were  largely  intellectual,  showing  the  same  reason 
to  exist  as  much  in  the  one  case  as  the  other  for  the  application  of  the 
preventive  remedy  by  injunction.  Eelative  to  this  subject,  the  authori- 
ties indicate  that  the  American  courts  have  refused  to  interfere,  unless 
there  was  a  negative  clause  forbidding  the  services  sought  to  be  en- 
joined. Such  a  stipulation  existed  in  the  contract  in  Daly  v.  Smith, 
supra,  upon  which  relief  was  granted,  although  the  opinion  is  broad 
enough  to  include  contracts  without  such  stipulations,  when  the  facts 
show  that  the  contract  is  reasonable,  the  complainant  without  fault, 
and  that  he  has  no  adequate  remedy  at  law.  To  my  mind,  this  is  the 
correct  principle  to  apply  to  such  cases,  even  though  the  contract  con- 
tains no  negative  stipulation ;  for,  in  the  nature  of  things,  a  contract 
to  act  at  a  particular  theater  for  a  specified  time  necessarily  implies  a 
negative  against  acting  at  any  other  theater  during  that  time.  The 
agreement  to  perform  at  a  particular  theater  for  a  particular  time,  of 
necessity  involves  an  agreement  not  to  perform  at  any  other  during 
that  time.  According  to  the  true  spirit  of  such  an  agreement,  the 
implication  precluding  the  defendant  from  acting  at  any  other  theater 
during  the  period  for  which  he  has  agreed  to  act  for  the  plaintiff 
follows  as  inevitably  and  logically  as  if  it  was  expressed.  So  that, 
according  to  all  the  authorities,  where  one  contracts  to  render  personal 
service  to  another  which  requires  special  merit  or  qualifications  in  the 
professional  worker,  and,  in  case  of  default,  the  same  service  is  not 
easily  obtained  from  others,  although  the  court  will  not  interfere  to 
enforce  the  specific  performance  of  the  whole  contract,  yet  it  will 
exert  its  preventive  power  to  restrain  its  breach.  While  it  is  true  that 
the  court  cannot  enforce  the  affirmative  part  of  such  contract,  and 
compel  the  defendant  to  act  or  perform,  it  can  enjoin  its  breach,  and 
compel  him  to  abstain  from  acting  elsewhere  than  at  the  plaintiff's 
theater.  The  principle  upon  which  this  doctrine  rests  is  that  con- 
tracts for  such  services  are  individual  and  peculiar,  because  of  their 
special  merit  or  unique  character,  and  the  inadequacy  of  the  remedy  at 
law  to  compensate  for  their  breach  in  damages. 

"Where,"  says  Professor  Pomeroy,  "a  contract  stipulates  for  a  special, 
unique,  or  extraordinary  personal  service  or  acts,  or  for  such  services  or  acts 
to  be  rendered  or  done  by  a  person  having  special,  unique,  and  extraordinary 
qualifications,  as,  for  example,  by  an  eminent  actor,  singer,  artist,  and  the 
like,  it  is  plain  that  the  remedy  at  law  of  damages  for  its  breach  might 
be  wholly  inadequate,  since  no  amount  of  money  recovered  by  the  plaintiff 
might  enable  him  to  obtain  the  same,  or  the  same  kind  of  services  or  acts 
elsewhere,  or  by  employing  any  other  person."  Pom.  Eq.  Jur.,  §  1343. 

Damages  for  a  breach  of  such  contracts  are  not  only  difficult  to  ascer- 
tain, but  cannot,  with  any  certainty,  be  estimated ;  nor  could  the  plain- 
tiff procure,  by  means  of  any  damages,  the  same  services  in  the  labor 


BY   BREACH  :    REMEDIES.  707 

market,  as  in  the  case  of  an  ordinary  contract  of  employment  between 
an  artisan,  a  laborer,  or  a  clerk,  and  their  employer. 

It  results,  then,  that  if  the  services  contracted  for  by  the  plain- 
tiff to  be  rendered  by  the  defendants  were  unique  or  extraordinary,  in- 
volving such  special  merit  or  qualifications  in  them  as  to  make  such 
services  distinctly  personal  and  peculiar,  so  that  in  case  of  a  default 
by  them,  the  same  or  like  services  could  not  be  easily  procured,  nor 
be  compensated  in  damages,  the  court  would  be  warranted  in  applying 
its  preventive  jurisdiction  and  granting  relief;  but  otherwise,  or 
denied,  if  such  services  were  ordinary,  and  without  special  merit, 
and  such  as  could  be  readily  supplied  or  obtained  from  others  without 
much  difficulty  or  expense.  But  the  present  case  is  far  from  being 
one  of  such  character  as  falls  under  the  principle  of  the  authorities 
in  which  the  preventive  remedy  by  injunction  has  been  allowed.  There 
is  absolutely  nothing  in  the  evidence  to  show  that  the  performances 
of  the  defendants  were  unique  or  of  any  special  merit.  The  plaintiff 
himself  will  not  even  admit  that  they  are;  while  others  say  the  per- 
formances were  "great,"  "pretty  good,"  "do  a  fair  act,"  etc. ;  and  others, 
that  their  performances  were  merely  that  of  the  ordinary  acrobat, 
and  that  there  would  be  no  trouble  in  supplying  their  places,  or,  as 
one  of  a  good  deal  of  professional  experience  says,  "in  getting  a  thou- 
sand to  do  just  as  good  variety  business." 

Indeed,  according  to  our  view  of  the  evidence,  the  plaintiff  fails 
to  make  a  case  within  the  principle  in  which  equity  allows  a  relief  for 
a  breach  of  contract  for  personal  services,  and  the  court  below  com- 
mitted no  error  in  dismissing  the  bill. 

22   Cyc.   845    (18);    858-859    (4-6). 


Discharge  of  right  of  action  arising  from  breach  of  contract, 
(t.)  Discharge  by  consent  of  the  parties. 

a.  Release. 

KIDDEE  v.  KIDDEE  et  al 
33  PENNSYLVANIA  STATE,  268.— 1859. 

Assumpsit  on  a  promissory  note.  Judgment  for  defendant.  Plain- 
tiff brings  error. 

On  the  trial,  the  defendants  gave  in  evidence  the  following  release 
executed  by  the  plaintiff: 

"William  W.  Kidder  ~\     _, 

I    Common  Pleas  of 

Nelson  Kidder 'and  Orris  Hall)  Warren   County'  Pa" 

"I  hereby  release  Nelson  Kidder  from  all  individual  liability  for  the 
claim  upon  which  the  above  suit  is  based;  so  that  if  I  fail  in  recovering 


708  DISCHARGE   OF   CONTEACT. 

judgment   in   the   above   suit,   said   Nelson    Kidder   shall   be,   and   is   hereby, 
released   from   all   individual   liability   whatever   in  the   premises. 

"W.  W.  KFDDEB. 
"WABBEN,  PA.,  Jan.  9th,  1857." 

The  court  below  instructed  the  jury  that  this  was  a  release  of  the 
cause  of  action,  and  that  the  plaintiff  could  not  recover. 

To  this  instruction  the  plaintiff  excepted;  and  a  verdict  and  judg- 
ment having  been  given  for  the  defendants,  he  removed  the  cause  to 
this  court,  and  here  assigned  the  same  for  error. 

THOMPSON,  J.  A  release  under  seal  is  sometimes  called  a  technical 
release ;  although  in  equity  it  has  no  greater  effect  than  a  parol  release, 
yet  it  differs  from  the  latter  in  one  quality  materially,  it  is  self-sustain- 
ing, the  seal  implying  a  consideration.  Not  so  is  it  with  a  release  not 
under  seal.  There  a  consideration  of  some  sort  is  necessary  to  sup- 
port it.  2  Dan.  C.  Pr.  766;  Whitehill  v.  Wilson,  3  Penn.  K.  405;  7 
Barr,  100 ;  1  Barr,  445 ;  1  Eawle.  Wentz  v.  Dehaven  (1  S.  &  E.  312), 
it  is  thought,  sustains  a  different  doctrine.  There  the  release  was  in 
parol;  that  is,  it  was  not  under  seal,  and  expressed  no  consideration. 
It  was  sustained  on  the  ground  that  the  release  of  the  mortgage  was  by 
way  of  advancement  to  a  child.  This  was  inferred  from  the  form  of 
the  writing  and  forbearance  to  sue  by  the  intestate  during  his  life. 
Had  it  been  expressed,  the  case  would  have  doubtless  stood  firm  upon  a 
consideration.  But  that  case  has  not  been  followed.  In  Kennedy 
v.  Ware  (1  Barr,  445),  Gibson,  C.  J.,  finds  fault  with  his  apparent 
support  of  it  in  Whitehill  v.  Wilson  (3  Penn.  R.)  and  adds,  "Wentz 
v.  Dehaven  is  not  to  be  sustained  on  any  ground/' 

The  release  in  question,  in  this  case,  is  without  a  seal,  and  without 
any  consideration  expressed.  As  a  release  it  was  void.  It  was  nudum 
pactum,  and  should  have  been  so  held  by  the  court. 

The  defendant  in  error,  feeling  the  force  of  the  want  of  considera- 
tion, as  a  dernier  resort  has  endeavored  to  give  effect  to  the  release  as 
a  gift  to  the  releasor  of  one-half  of  the  demand.  But  this  is,  if  possi- 
ble, a  more  hopeless  undertaking  than  that  of  supporting  the  release 
without  a  consideration.  It  was  not  an  executed  gift,  even  if  the  in- 
strument would  bear  the  interpretation  that  a  gift  was  intended;  be- 
cause the  instrument  to  be  given  was  not  delivered.  If,  then,  it  was  but 
an  agreement  to  give,  it  could  not  be  enforced  without  a  consideration, 
any  more  than  could  the  release.  On  this  point,  the  case  In  re  Camp- 
bell's Estate  (7  Barr,  100)  need  only  be  cited.  There  it  is  said  by 
Gibson,  C.  J.,  that  "the  gift  of  a  bond,  note,  or  any  other  chattel, 
therefore,  cannot  be  made  by  words  in  futuro,  or  by  words  in  prcesenti, 
unaccompanied  by  such  delivery  of  the  possession  as  makes  the  dis- 
posal of  the  thing  irrevocable." 

But  even  if  there  had  been  a  consideration  expressed,  it  seems  to  me 
that  the  release  was  so  qualified  as  not  to  touch  this  case,  but  only  to 


BY  BREACH:  REMEDIES.  709 

operate,  as  all  such  releases  do  in  equity,  as  an  agreement  not  to  pur- 
sue the  releasee  individually.  He  is  "hereby  released  from  all  indi- 
vidual liability  whatever  in  the  premises,"  does  not  touch  the  case  on 
trial  of  joint  liability.  But  it  is  not  necessary  to  pursue  this,  as  the 
points  already  noticed  rule  this  case. 

Judgment  reversed,  and  a  venire  facias  de  novo  awarded. 

34  Cyc.  1048-1049   (29-34);  W.  P.  816   (25);  820   (45);  17  H.  L.  R.  200. 


b.  Accord  and  satisfaction. 

KEOMER  v.  HEIM. 
75  NEW  YORK,  574.— 1879. 

Appeal  from  order  of  the  General  Term  of  the  Superior  Court  of 
the  city  of  New  York,  affirming  an  order  of  special  term  denying  a 
motion  on  the  part  of  defendant  to  set  aside  an  execution  issued  upon 
judgment  herein,  and  to  have  the  judgment  satisfied  of  record. 

On  June  24,  1876,  plaintiff  obtained  a  judgment  herein  for  $4334.08. 
On  July  26,  1876,  and  pending  a  stay  of  execution,  plaintiff's  attorney 
executed  and  delivered  to  defendant  a  written  stipulation,  in  and  by 
which  plaintiff  agreed  to  accept  in  settlement  of  the  judgment,  if  paid 
within  a  year,  $3000  in  cash  and  an  assignment  of  defendant's  interest 
in  a  certain  patent  right  and  of  the  assets  of  such  patent  business,  or  to 
accept  $1000  in  cash,  $250  down  and  the  balance  in  instalments, 
and  merchandise  to  be  delivered  in  amounts  stated,  sufficient,  with  the 
cash  payments,  to  reduce  the  judgment  to  $1000,  and  an  assignment  of 
said  patent  interests.  Defendant  paid  the  $250  down,  and  made  the 
other  cash  payments  and  deliveries  of  merchandise,  as  specified  in  the 
second  alternative  of  the  stipulation,  until  the  judgment  was  reduced 
to  less  than  $1000,  all  of  which  payments  were  received  by  plaintiff 
without  objection.  Defendant  then  executed  and  tendered  to  plain- 
tiff an  assignment  of  the  patent  interests  as  required,  which 
plaintiff  declined  to  accept,  but  issued  an  execution  to  collect  the  bal- 
ance of  the  judgment. 

ANDREWS,  J.  "Accord,"  says  Sir  Wm.  Blackstone,  "is  a  satis- 
faction agreed  upon  between  the  party  injuring  and  the  party  injured  ; 
which,  when  performed,  is  a  bar  to  all  actions  upon  this  account." 
3  Bl.  Com.  15.  An  accord  executory  without  performance  accepted 
is  no  bar;  and  tender  of  performance  is  insufficient.  Bac.  Abr.  tit. 
Accord  and  Satisfaction,  C.  So  also  accord  with  part  execution 
cannot  be  pleaded  in  satisfaction.  The  accord  must  be  completely 
executed  to  sustain  a  plea  of  accord  and  satisfaction.  Bac.  Abr.  tit. 
Accord  and  Satisfaction,  A ;  Cock  v.  Honychurch,  T.  Ray.  203 ;  Allen 
v.  Harris,  1  Ld.  Ray.  122 ;  Lynn  v.  Bruce,  2  H.  Bl.  317.  In  Peytoe's 


710  DISCHARGE   OF    CONTRACT. 

Case  (9  Co.  79)  it  is  said,  "and  every  accord  ought  to  be  full,  per- 
fect, and  complete ;  for  if  divers  things  are  to  be  done  and  performed  by 
the  accord,  the  performance  of  part  is  not  sufficient,  but  all  ought 
to  be  performed."  The  rule  that  a  promise  to  do  another  thing  is 
not  a  satisfaction,  is  subject  to  the  qualification  that  where  the  parties 
agree  that  the  new  promise  shall  itself  be  a  satisfaction  of  the  prior 
debt  or  duty,  and  the  new  agreement  is  based  upon  a  good  considera- 
tion, and  is  accepted  in  satisfaction,  then  it  operates  as  such,  and  bars 
the  action.  Evans  v.  Powis,  1  Exch.  601;  Kinsler  v.  Pope,  5  Strob- 
hart,  126 ;  Pars,  on  Cont.  683,  note. 

An  exception  to  the  general  rule  on  this  subject  has  been  allowed 
in  cases  of  composition  deeds,  or  agreements  between  a  debtor  and  his 
creditors;  and  they  have  been  held,  upon  grounds  peculiar  to  that 
class  of  instruments,  to  bar  an  action  by  a  separate  creditor,  who  had 
signed  the  composition  to  recover  his  debt,  although  the  composition 
•agreement  was  still  executory.  Good  v.  Cheesman,  2  Barn.  &  Ad. 
335;  Bayley  v.  Homan,  3  Bing.  ]ST.  C.  915.  The  doctrine  which  has 
sometimes  been  asserted  that  mutual  promises  which  give  a  right  of 
action  may  operate  and  are  good,  as  an  accord  and  satisfaction  of  a 
prior  obligation,  must,  in  this  State,  be  taken  with  the  qualification 
that  the  intent  was  to  accept  the  new  promise,  as  a  satisfaction  of  the 
prior  obligation.  Where  the  performance  of  the  new  promise  was  the 
thing  to  be  received  in  satisfaction,  then,  until  performance,  there 
is  not  complete  accord;  and  the  original  obligation  remains  in  force. 
Eussell  v.  Lytle,  6  Wend.  390;  Daniels  v.  Hallenbeck,  19  Id.  408; 
Hawley  v.  Foote,  Id.  516;  The  Brooklyn  Bank  v.  DeGrauw,  23  Id. 
342 ;  Tilton  v.  Alcott,  16  Barb.  598. 

Applying  the  well-settled  principles  governing  the  subject  of  accords 
to  this  case,  the  claim  that  the  plaintiff's  judgment  is  satisfied  can- 
not be  maintained.  There  is  no  ground  to  infer  that  the  agreement 
of  July  26,  1876,  was  intended  by  the  parties  to  be  or  was  accepted 
as  a  substitute  for  or  satisfaction  of  the  plaintiff's  judgment.  It 
was  in  effect  a  proposition  on  the  part  of  the  plaintiff,  in  the  alter- 
native, to  accept  $3000  in  cash,  if  paid  within  one  year,  and  the  as- 
signment of  the  patent  and  avails  of  the  patent  business,  in  full  of 
the  judgment  of  $4334.08,  or  to  accept  $1000  in  cash,  in  instalments, 
and  the  balance  in  merchandise,  until  the  judgment  should  be  reduced 
to  $1000 ;  and  for  that  balance  to  accept  the  assignment  of  the  patent 
interests. 

The  defendant  had  the  election  between  the  alternatives  presented 
by  the  plaintiff.  He  elected  the  latter,  and  paid  the  $1000,  and  sup- 
plied the  merchandise,  until  the  debt  was  reduced  to  $1000,  and  then 
tendered  the  assignment  of  the  patent  interests,  which  the  plaintiff 
refused  to  accept. 

The  judgment  clearly  was  to  remain  in  force  until  the  satisfaction 


BY  BREACH:  REMEDIES.  711 

under  the  new  agreement  was  complete.  It  is  the  case  of  an  accord 
partly  executed.  So  far  as  the  plaintiff  accepted  performance,  his 
claim  was  extinguished.  So  far  as  it  was  unexecuted,  the  judgment 
remained  in  full  force;  and  however  indefensible  in  morals  it  may  be 
for  the  plaintiff  to  refuse  to  abide  by  the  agreement  in  respect  to  the 
patent  interests,  he  was  under  no  legal  obligation  to  accept  the  assign- 
ment tendered ;  and  he  had  the  legal  right  to  enforce  the  judgment  for 
the  balance  remaining  unpaid. 

It  is  clear  that  the  right  to  supply  the  merchandise  was  for  the  bene- 
fit of  the  defendant.  The  plaintiff  gave  him  the  option  to  pay  $3000 
in  cash,  and  assign  the  patent  interests,  or  to  pay  $3334.08  in  mer- 
chandise and  assign  the  patent  interests.  The  merchandise  was  to  be 
furnished  on  "as  favorable  terms  as  would  be  allowed  by  Hoyt  & 
Co.,  or  New  York  rates  for  cash  sales."  It  gave  the  plaintiff  no 
benefit  beyond  what  he  would  derive  by  any  purchase  in  the  open 
market  of  the  same  kind  of  goods.  It  is  quite  clear  that  the  defend- 
ant preferred  to  pay  $3334.08  in  merchandise  to  paying  $3000  in 
cash. 

We  think  that  no  distinction  arises  upon  the  circumstances  to  take 
the  case  out  of  the  general  rule,  that  an  unexecuted  accord  cannot  be 
treated  as  a  satisfaction. 

The  order  should  be  affirmed.     All  concur. 

Order  affirmed.1 

1  Cyc.  315-316  (59,  62-64)  ;  W.  P.  832  (95)  ;  14  H.  L.  R.  621;  Williston, 
Accord  and  satisfaction,  17  H.  L.  R.  459. 


MOREHOUSE,  as  Receiver  v.  SECOND  NATIONAL  BANK  OF 

OSWEGO. 

98  NEW   YORK,  503.— 1885. 

APPEAL  from  judgment  of  the  General  Term  of  the  Supreme  Court 
in  the  Fourth  Judicial  Department,  entered  upon  an  order  made 
October  19th,  1883,  which  affirmed  a  judgment  in  favor  of  plaintiff, 
entered  upon  the  report  of  a  referee.  Reported  below,  30  Hun,  628. 

i  "The  kind  of  agreement  known  as  an  accord,  i.  e.,  an  agreement  for  the 
compromise  or  settlement  of  a  debt  or  other  cause  of  action  is  bilateral.  Of 
course  a  unilateral  promise  may  be  made  by  the  debtor  in  consideration  of 
the  actual  extinguishment  of  the  debt  (which  can  only  be  by  release),  or 
by  the  creditor  to  extinguish  the  debt  in  consideration  of  something  actually 
given  or  done  by  the  debtor;  but  neither  of  these  is  what  is  meant  by  an 
accord,  which  is  executory  on  both  sides.  It  was  formerly  held  that 
an  accord  could  not  be  enforced  by  action,  either  because  mutual  promises 
were  not  binding,  or  because  the  law  would  not  enforce  an  agreement  which 
merely  substituted  one  cause  of  action  for  another,  or  for  both  of  these 
reasons.  The  first  reason  of  course  has  long  ceased  to  exist,  and  the 
second  would  now,  it  seems,  be  disregarded." — Langdell.  Contr.,  p.  106. 


712  DISCHARGE   OF    CONTRACT. 

This  action  was  brought  by  the  plaintiff  as  receiver  of  one  McRae, 
appointed  in  proceedings  supplementary  to  execution,  to  recover 
under  the  provisions  of  §  5198  of  the  Revised  Statutes  of  the  United 
States,  twice  the  amount  of  excessive  interest  alleged  to  have  been 
taken  and  received  by  the  defendant  from  McRae,  prior  to  November 
1st,  1876,  on  loans  and  discounts  made  by  the  bank  to  and  for  Mc- 
Rae the  amount  of  which  excessive  interest,  as  found  by  the  referee, 
was  $946.75.  The  defendant,  among  other  things,  set  up  in  his 
answer  as  a  defense,  an  alleged  agreement  between  McRae  and  the 
bank,  made  on  or  about  November  1st,  1876.  This  agreement  was 
found  by  the  referee  as  follows:  "that  on  or  about  the  first  day  of 
November,  1876,  an  oral  agreement  was  made  between  McRae  and 
the  president  and  vice-president  of  the  defendant,  for  and  on  behalf 
of  the  bank,  whereby  McRae  agreed  to  settle  and  discharge  all  claims 
and  causes  of  action  in  his  favor  against  the  bank,  for  or  on  account 
of  McRae  having  paid  more  than  seven  per  cent,  upon  loans  and  dis- 
counts, and  that  all  such  matters  be  applied  in  payment  of  that  part 
of  his  indebtedness  to  the  bank,  not  collected  by  the  bank  from  any 
other  source,  and  that  he  would  not  sue  or  allow  any  other  suit  to 
be  brought  against  the  bank  for  or  on  account  of  such  illegal  interest 
paid  to  the  bank,  and  in  consideration  thereof -the  said  officers  of  the 
bank,  for  and  in  behalf  of  the  bank,  agreed  that  the  bank  would  satisfy 
so  much  of  the  indebtedness  of  McRae  to  the  bank,  as  remained  after 
applying  all  other  collections  available  to  the  bank,  or  would  con- 
sent as  a  creditor  to  his  discharge  in  bankruptcy,  as  McRae  might  re- 
quest." When  this  agreement  was  made  McRae  was  indebted  to  the 
bank  for  loans  and  discounts  to  a  large  amount,  and  on  June  26th, 
1879,  after  applying  all  collections  made  by  the  bank,  there  was  then 
due  from  McRae  on  the  indebtedness  existing  November  1st,  1876, 
without  taking  into  account  the  excessive  interest  paid,  the  sum  of 
$7847.73,  no  part  of  which  has  since  been  paid.  McRae  became  in- 
solvent in  1876. 

The  referee  overruled  the  defense  stated  and  directed  judgment 
for  the  plaintiff  for  $1893.50,  double  the  amount  of  the  unlawful 
interest. 

Other  facts  are  stated  in  the  opinion. 

ANDREWS,  J.  The  agreement  of  November  1st,  1876,  was,  we 
think,  a  good  defense  to  the  action.  The  General  Term  sustained 
the  finding  of  the  referee,  upon  the  ground  that  the  agreement,  when 
made,  was  executory,  that  there  was  no  subsequent  execution  of  its 
provisions,  and  that  the  case  was  within  the  general  principle  that 
an  accord  without  satisfaction  is  no  bar  to  a  suit  upon  the  original 
cause  of  action.  It  is  not,  however,  universally  true  that  a  cause 
of  action  on  contract,  or  for  tort,  may  not  be  extinguished  by  an 
agreement  between  the  parties,  although  the  agreement  which  is  the 


BY   BREACH  :    REMEDIES.  713 

consideration  for  the  satisfaction  is  executory.  If  the  subsequent 
agreement  is  accepted  in  satisfaction,  and  this  appears  expressly 
or  by  implication,  the  original  cause  of  action  is  merged  and  ex- 
tinguished. Kromer  v.  Heim,  75  N.  Y.  574,  and  cases  cited.  It  is 
plain  also,  that  if  one  having  a  debt  or  claim  against  another  satisfies 
or  releases  it  in  consideration  of  an  executory  promise  by  the  party 
owing  the  debt  or  duty,  he  cannot  afterward  enforce  his  original 
cause  of  action  upon  a  mere  failure  by  the  other  party  to  perform 
his  promise,  "for  he  has  a  remedy  to  compel  performance."  The 
agreement  found  by  the  referee  from  its  very  nature,  operated  as  an 
immediate  discharge  and  satisfaction  of  the  claim  of  McRae  against 
the  bank.  The  mutual  promises  of  the  parties  were  not  dependent, 
so  as  to  render  the  discharge  of  the  claim  of  McRae  conditional  upon 
full  performance  by  the  bank  of  its  promise.  He  agreed  to  settle 
and  discharge  his  claim  against  the  bank,  and  to  apply  the  same  in 
payment  pro  tanto  of  his  indebtedness,  and  further  that  he  would  not 
sue,  or  permit  any  suit  to  be  brought  against  the  bank  thereon.  The 
bank,  on  its  part,  agreed  in  substance  to  make  the  application,  and 
also  to  satisfy  the  remaining  indebtedness,  or  consent  to  McRae's  dis- 
charge in  bankruptcy  as  he  should  elect.  The  agreement  to  set  off 
the  mutual  debts  became  executed  eo  instanti.  This  point  was  ex- 
pressly adjudged  in  Davis  v.  Spencer,  24  N.  Y.  386.  The  law,  acting 
upon  the  agreement  itself,  made  the  application  without  further  act 
of  the  parties.  It  is  true  that  the  exact  amounts  of  the  mutual 
debts  do  not  appear  to  have  been  ascertained  at  the  time,  but  they 
were  capable  of  ascertainment.  In  Davis  v.  Spencer,  the  account 
on  one  side  was,  as  may  be  inferred,  unliquidated,  but  this  did  not 
stand  in  the  way  of  the  application  of  the  principle  decided.  The 
agreement  not  to  sue,  or  to  permit  suit  to  be  brought,  also  operated  as 
a  present  release  and  discharge  of  McRae's  cause  of  action.  Chandler 
v.  Herrick,  19  Johns.  129;  Addison  on  Cont.  270.  The  agreement 
was  not  a  technical  release,  but.  it  operated  as  such,  and  the  fact 
that  it  was  not  under  seal,  or  was  oral,  does  not  affect  the  application 
of  the  principle.  Foster  v.  Purdy,  5  Mete.  442;  Davis  v.  Spencer, 
supra;  Farmers'  Bank  v.  Blair,  44  Barb.  641.  The  only  part  of 
the  agreement  which  was  executory  was  the  undertaking  on  the  part 
of  the  defendant  to  satisfy  the  remaining  indebtedness  of  McRae,  or 
to  consent  to  his  discharge  in  bankruptcy  at  his  option.  The  per- 
formance of  this  part  of  the  agreement  depended  upon  a  prior  re- 
quest or  election  of  McRae.  If  the  bank  on  request  should  refuse 
performance,  McRae  has  a  remedy  in  an  action  for  damages,  or  he 
can  await  proceedings  by  the  bank  to  enforce  the  balance  of  the  debt, 
and  defend  himself  under  the  agreement.  But  his  original  claim 
against  the  bank  was  merged  and  satisfied.  The  claim  that  the 
bank  took  proceedings  subsequent  to  the  agreement,  inconsistent 


714  DISCHARGE   OF    CONTRACT. 

with  it,  is  irrelevant  here,  assuming  that  it  is  well  founded.  It  was 
a  proper  matter  for  the  consideration  of  the  referee,  bearing  upon  the 
point  whether  the  agreement  claimed  by  the  defendant  was  made; 
but  the  agreement  being  established,  its  violation  by  the  defendant 
would  not  affect  its  legal  operation.  There  is  no  ground  for  saying 
that  the  agreement  was  released  or  discharged,  or  in  any  way  be- 
came inoperative.  We  are  of  opinion  that  upon  the  agreement  found, 
the  defendant  was  entitled  to  judgment.  This  renders  it  unnecessary 
to  consider  the  other  questions. 

The  judgment  should  be  reversed. 

All  concur,  except  Euger,  C.  J.,  not  voting. 

Judgment  reversed. 

1   Cyc.  337    (92)  ;  W.  P.  834    (3)  ;   9  H.  L.  R.  285. 


HULL  v.  JOHNSON,  et  al. 
22   RHODE   ISLAND,   66.— 1900. 

STINESS,  J.  The  plaintiff  did  work  for  the  defendants  as  a  carrier, 
for  which  a  balance  of  $58.48  was  due.  In  the  course  of  his  service, 
in  1895,  the  defendants  sent  him  a  lease  of  an  oven,  with  instructions 
to  take  it  from  the  lessee.  By  the  agreed  statement  of  facts  it  ap- 
pears that  he  lost  possession  of  the  lease,  and  thereupon  the  defendants 
claimed  that  he  was  liable  to  them  for  its  value,  $50.  The  plaintiff 
denied  his  liability,  and  the  matter  rested  until  their  settlement  in 
August,  1898,  when  the  above  balance  was  due  on  the  plaintiff's  ac- 
count. In  settlement  of  this  balance  the  defendants  sent  a  check 
for  $8.48  to  the  plaintiff  and  a  receipt  for  the  $50,  both  under  cover 
of  a  letter  in  which  the  defendants  said:  "We  hereby  tender  our 
check  for  the  balance  due  on  your  account,  which  we  trust  will  be 
satisfactory."  On  the  back  of  the  check  these  words  were  stamped: 
"Good  only  if  when  properly  indorsed  in  full  of  all  demands  to  date 
against  H.  A.  Johnson  &  Co."  The  plaintiff  took  the  check,  struck 
out  these  words,  deposited  it  on  his  account,  and  it  was  paid,  through 
clearing,  six  days  later,  at  the  National  Eagle  Bank  in  Boston,  on 
which  it  was  drawn.  On  that  sixth  day  the  plaintiff  returned  the 
receipt  for  "loss  of  lease,"  and  notified  the  defendants  that  he  did 
not  recognize  his  liability,  and  credited  them  with  the  $8.48  on 
account.  On  these  facts  the  defendants  claim  an  accord  and  satis- 
faction. 

A  tender  upon  a  condition  is  not  good  as  a  tender,  and  payment 
of  a  less  sum  than  is  due,  on  an  undisputed  claim,  even  though  it 
be  offered  in  full  settlement,  does  not  bar  a  recovery  for  the  balance. 
So  far  the  parties  to  this  suit  agree,  but,  the  sum  tendered  having 
been  accepted,  and  the  amount  due  being  in  dispute,  the  question  arises 


BY  BREACH:  REMEDIES.  715 

whether,  under  these  facts,  the  parties  made  a  settlement.  Upon 
this  question  the  great  weight  of  authority  is  in  the  affirmative.  The 
law  favors  the  settlement  of  controversies,  and  so  holds  that  an  offer 
of  money  made  and  accepted  on  that  condition  binds  both  parties. 
The  rule  had  its  origin  in  cases  of  unliquidated  claims  where  the 
settlement  was  in  the  nature  of  a  compromise,  but  it  has  been  ex- 
tended to  all  cases  of  dispute  where  an  offer  of  settlement  has  been 
made,  and  an  acceptance  signified  by  taking  the  money  so  offered. 
The  law  leaves  the  parties  where  their  acts  have  put  them.  The 
principle  on  which  the  rule  is  founded  is  that  one  who  takes  money 
offered  on  condition  thereby  accepts  the  condition,  and,  in  the  absence 
of  fraud  or  other  excuse,  he  is  bound  by  his  act.  In  this  case,  al- 
though the  notice  stamped  on  the  back  of  the  check  is  somewhat 
vague,  we  think  it  clearly  means,  and  must  have  been  understood  to 
mean,  that  the  check  was  good  only  if  it  was  accepted  in  full  of  all 
demands  against  the  defendants.  The  plaintiff  therefore  received 
it  coupled  with  the  condition.  Cases  upon  this  subject  are  fully 
stated  in  exhaustive  note  to  Fuller  v.  Kemp  (138  N".  Y.  231),  20 
L.  R.  A.  785  and  need  not  be  repeated.  We  will  refer  only  to  a  few 
recent  cases  which  bear  upon  the  questions  arising  under  the  peculiar 
facts  of  this  case. 

The  first  is  whether  the  plaintiff's  erasure  of  the  condition  on  the 
check  was  enough  to  show  that  he  did  not  agree  to  it,  and  hence 
that  he  has  not  assented  to  an  accord  and  satisfaction.  Numerous 
cases  hold  that  it  is  the  acceptance  of  the  money,  and  not  one's  state- 
ment at  the  time,  which  bind  him.  But,  however  this  may  be,  the 
erasure  on  the  check  was  not  made  in  the  presence  of  the  defendants, 
and  could  not  have  "been  known  to  them  until  the  check  had  reached 
their  bank,  and  had  been  paid.  The  plaintiff  gave  them  no  notice 
of  his  rejection  of  their  offer,  but  took  their  money.  He  cannot,  by 
his  own  act,  unknown  to  them,  change  his  relation  to  the  transaction. 
If  he  had  taken  the  money  in  their  presence,  upon  the  same  condition, 
but  had  said  to  a  third  party,  without  their  knowledge,  that  he  would 
not  accept  it  in  full  payment,  the  case  would  not  have  been  essentially 
different.  And  yet  in  such  a  case  it  is  evident  that  he  would  be  held 
to  have  accepted  the  condition.  In  Logan  v.  Davidson,  45  N.  Y. 
Supp.  961,1  defendant  sent  a  check  in  full  settlement,  and  the 
next  day — probably  the  day  of  its  receipt — the  plaintiff  wrote  that 
he  credited  it  on  account,  and  declined  to  accept  it  as  a  final  pay- 
ment. But  the  court  held  that  the  acceptance  of  the  money  operated 
as  a  satisfaction  of  the  claim,  and  thus  constituted  a  complete  accord 
and  satisfaction;  that  the  plaintiff  could  not  accept  the  money  dis- 
regarding the  condition,  and  impose  a  new  condition  upon  the  defend- 

i  Affirmed,  162  N.  Y.  624. 


716  DISCHARGE   OF    CONTRACT. 

ant  which  destroyed  the  one  on  which  the  payment  was  tendered. 
The  same  decision  was  made,  upon  similar  facts,  in  Ostrander  v. 
Scott,  161  111.  339,  43  N.  E.  1089;  McDaniels  v.  President,  etc., 
29  Vt.  230;  Looby  v.  Village  of  West  Troy,  24  Hun,  78,  Reynolds  v. 
Lumber  Co..  85  Hun,  470,  33  N.  Y.  Supp.  Ill;  and  Potter  v. 
Douglass,  44  Conn.  541.  See,  also,  Bull  v.  Bull,  43  Conn.  455,  and 
Perkins  v.  Headley,  49  Mo.  App.  556. 

The  second  question  is  whether  in  this  case  the  plaintiff's  claim 
can  properly  be  regarded  as  disputed,  since  his  bill  is  admitted,  and 
the  defendants'  claim  is  distinct  from  it,  by  way  of  recoupment  for 
injury  arising  from  the  plaintiff's  service.  It  is  true  that  there  is  a 
technical  difference  between  such  a  case  and  one  of  a  controversy  as 
to  the  amount  due,  but  the  principle  which  governs  them  is  the  same. 
Whatever  may  be  the  ground  of  the  dispute,  the  fact  remains  that 
there  is  one.  In  order  to  settle  the  controversy,  the  defendant  offers 
to  pay  a  certain  sum  on  that  condition,  and  the  acceptance  of  the 
money  so  offered  is  as  much  an  acceptance  of  the  condition  in  one 
case  as  in  the  other.  Such  was  the  decision  in  Lumber  Co.  v.  Brown, 
68  Vt.  239,  35  Atl.  56,  where  the  defendant's  claim  was  based  upon 
a  poor  quality  of  lumber  delivered,  and  damage  arising  from  a  failure 
to  deliver  it  within  the  time  agreed;  also,  in  Tanner  v.  Merrill,  108 
Mich.  58,  65  N.  W.  664,  31  L.  R.  A.  171,  where  the  question  in  dis- 
pute was  the  right  of  the  defendant  to  deduct  the  transportation  of  the 
plaintiff  to  and  from  his  place  of  business.  We  are  of  opinion  that 
the  plaintiff's  acceptance  of  the  money  offered  in  settlement  amounted 
to  an  accord  and  satisfaction,  and  precludes  him  from  maintaining  an 
action  for  the  balance  which  he  claims  to  be  due.  Case  remitted  to 
district  court,  with  direction  to  enter  judgment  for  the  defendant  for 
costs.1 

1  Cyc.  329-331  (61-67) ;  W.  P.  839  (30)  ;  840  (33)  ;  15  H.  L.  R.  589;  17 
H.  L.  R.  272;  18  H.  L.  R.  617;  25  H.  L.  R.  182. 

i  In  Tanner  v.  Merrill,  108  Mich.  58,  the  defendants  were  lumbermen, 
and  the  plaintiff  worked  for  them  at  Georgian  Bay,  his  transportation  from 
Saginaw  to  that  place  having  been  paid  by  them.  When  he  quit  work,  a 
question  arose  as  to  who  should  pay  this,  under  the  contract  of  employ- 
ment, and  the  defendants'  superintendent  declined  to  pay  any  transporta- 
tion. The  plaintiff  needed  the  money  due  him  to  get  home,  and  showed  a 
telegram  announcing  the  illness  or  death  of  his  mother,  and  said  that  he 
must  go  home,  to  which  the  superintendent  replied  that  "he  did  not  pay 
any  man's  fare";  whereupon  a  receipt  in  full  was  signed,  and  the  money 
due,  after  deducting  transportation,  was  paid.  The  court  said:  "Clearly 
the  claim  was  disputed,  and,  so  far  as  the  record  shows,  the  defendants' 
superintendent  was  given  to  understand  that  the  money  paid  was  accepted 
in  full  satisfaction,  as  plaintiff's  own  evidence  shows  that  he  gave  the  re- 
ceipt without  protest,  and  without  stating  to  the  defendants'  superintend- 
ent what  he  said,  aside,  to  his  fellow  laborers,  that  it  would  make  no  dif- 
ference if  they  did  give  the  receipts.  To  hold  otherwise  would  be  a  recogni- 


BY  BREACH:  REMEDIES.  717 

(u.)  Discharge  by  the  judgment  of  a  court  of  competent  jurisdiction. 

MILLER  v.  COVERT. 
1  WENDELL   (N.  Y.),  487.— 1828. 

Action  for  work  and  labor.  Set-off  by  defendant  for  hay  sold  and 
delivered.  Judgment  for  defendant. 

Plaintiff  proved  a  claim  for  work  and  labor  for  $4.16.  Defendant 
proved  the  sale  and  delivery  to  plaintiff  of  three  tons  of  hay  at  $8 
a  ton. 

Plaintiff  proved  that  before  the  beginning  of  this  suit  the  defendant 
had  sued  out  an  attachment  against  plaintiff,  on  the  trial  of 
which  defendant  proved  the  sale  and  delivery  of  one  ton  and  nineteen 

tion  of  the  'mental  reservation'  more  effective  than  just.  Upon  the  plain- 
tiff's own  testimony  he  accepted  the  money,  with  the  knowledge  that  the 
defendants  claimed  that  the  amount  paid  was  all  that  was  his  due,  and  gave  a 
receipt  in  full.  There  is  nothing  in  the  case  to  negative  the  inference 
naturally  to  be  drawn  from  this  testimony,  that  there  was  an  accord  and 
satisfaction  of  an  unliquidated  demand." 

Distinction  between  accord  and  satisfaction,  and  compromise  of  a  dts- 
puted  claim. — In  Flegal  v.  Hoover,  156  Penn.  St.  276,  the  court  said,  "This 
case  was  unfortunately  tried  on  a  wrong  basis  throughout.  It  was  as- 
sumed that  the  agreement  of  May,  1892,  was  an  accord,  and  as  its  terms  had 
not  been  fully  carried  out,  that  there  had  been  no  satisfaction;  that  the 
agreement  was,  therefore,  inoperative,  and  the  parties  were  remitted  to 
their  rights  and  liabilities  under  the  original  contract.  This  was  a  radical 
error.  The  agreement  of  May,  1892,  was  a  compromise  of  disputed  rights. 
The  defendants  claimed  that  the  plaintiff  was  violating  the  contract  in  such 
manner  as  to  entitle  them  to  rescind,  and  they  had  in  fact  taken  possession 
of  the  land  a  short  time  before  by  force.  The  plaintiff,  on  the  other  hand, 
claimed  that  he  was  pursuing  his  contract  rights,  and  he  had  in  turn  ousted 
the  defendants  by  force  from  the  land.  The  parties  then  came  together, 
agreed  upon  a  settlement,  put  its  terms  in  writing,  which  was  signed  by 
both,  and  partly  carried  out.  Such  an  agreement  is  not  an  accord,  but  a 
compromise,  and  is  as  binding  as  any  other  contract." 

Distinction  between  accord  and  satisfaction,  and  a  new  substituted  con- 
tract.— In  Bandman  v.  Finn,  185  N.  Y.  508,  the  court  said:  "Doubtless 
the  general  rule  is  that  an  executory  agreement  for  accord  without  satis- 
faction made  under  it  does  not  bar  a  cause  of  action,  and  that  tender  of  per- 
formance is  insufficient  for  that  purpose.  (Ryan  v.  Ward,  48  N.  Y.  204; 
Kromer  v.  Heim,  75  N.  Y.  574.)  It  is  also  the  rule  that  payment  of  a  less 
sum  than  that  due  does  not  constitute  a  valid  satisfaction,  although  other- 
wise if  the  debtor  gives  the  creditor  additional  security.  (Jaffray  v.  Davis, 
124  N.  Y.  164.)  These  rules,  however  do  not  apply  to  the  present  case. 
At  the  time  of  the  agreement  between  the  parties  in  November,  1903,  there 
had  been  no  breach  of  the  written  contract  with  the  defendant.  Under  that 
contract  he  was  obligated  to  pay  only  in  one  of  two  contingencies,  on  the 
completion  of  the  roof  of  the  contemplated  building  on  such  premises,  or 
in  case  of  a  sale  of  the  same  by  the  defendant.  Neither  of  these  contin- 
gencies had  occurred.  Therefore,  the  situation  was  that  of  a  creditor  hold- 
ing an  unmatured  and  contingent  obligation,  agreeing  with  his  debtor  for 
the  surrender  of  the  obligation." 


718  DISCHARGE   OF    CONTRACT. 

hundredweight  of  hay  on  a  contract  for  three  tons,  and  said  if  A.  R. 
were  present  he  could  prove  the  whole,  but  that  he  would  reserve  the 
remainder  as  there  were  accounts  between  the  parties.  Judgment 
for  the  one  ton  and  nineteen  hundredweight  had  been  paid. 

The  court  refused  to  charge  that  defendant  could  not  set  off  the 
remainder  of  the  demand  in  this  action,  and  charged  that  he  was 
not  barred  by  the  former  suit. 

SUTHERLAND,  J.  The  court  below  erred  in  permitting  Covert,  the 
defendant,  to  prove  and  set  off  against  Miller  his  account  for  the 
balance  of  the  three  tons  of  hay  sold  and  delivered  to  him  in  Jan- 
uary, 1827.  The  sale  of  the  hay  was  by  one  single  indivisible  con- 
tract. Miller  agreed  to  purchase  three  tons  of  hay  from  Covert,  and 
Covert  agreed  to  sell  it  to  him  if  he  had  so  much  to  spare,  and  in  the 
course  of  a  few  days  delivered  the  whole.  It  is  perfectly  settled,  that 
if  a  plaintiff  bring  an  action  for  a  part  only  of  an  entire  and  in- 
divisible demand,  the  verdict  and  judgment  in  that  action  are  a 
conclusive  bar  to  a  subsequent  suit  for  another  part  of  the  same  de- 
mand. The  cases  of  Smith  v.  Jones  (15  Johns.  R.  229),  of  Farrington 
&  Smith  v.  Payne  (15  Johns.  R.  432),  of  Willard  v.  Sperry  (16 
Johns.  R.  121),  and  Phillips  v.  Berick  (16  Johns.  R.  136)  are  pre- 
cisely in  point.  If  Covert  could  not  have  brought  an  action  for  the 
residue  of  the  three  tons  of  hay,  he  of  course  could  not  avail  himself 
of  it  by  way  of  set-off  when  sued  by  Miller. 

Judgment  reversed. 
23  Cyc.  1106    (83)  ;   1174   (85). 


VANUXEM  et  al  v.  BURR. 

151  MASSACHUSETTS,  386.— 1890. 

Contract  upon  promissory  note.  Defense,  former  suit.  Judgment 
for  defendant. 

The  following  facts  were  agreed: 

"The  former  action  therein  referred  to  was  an  action  between  the 
same  parties  begun  before  the  maturity  of  the  note  now  in  suit ;  the 
declaration  therein  contained  three  counts,  one  upon  a  promissory 
note,  and  two  upon  a  special  agreement  to  procure  the  indorsements 
of  the  defendant's  mother  upon  the  last-named  note  and  two  others, 
one  of  which  was  the  note  sued  on  in  this  case.  After  judgment  had 
been  entered  for  the  plaintiffs  in  the  present  suit  in  the  municipal 
court,  and  the  appeal  taken  by  the  defendant  had  been  duly  entered 
in  the  Superior  Court,  the  plaintiffs  recovered  judgment  in  said  former 
suit  in  the  Superior  Court  by  default,  and  by  agreement  damages 
were  assessed  at  the  amount  due  on  said  three  notes,  including  the  one 
now  sued  on." 


BY    BRKACH  :    REMEDIES.  719 

The  judge  refused  to  enter  judgment  for  the  plaintiffs,  and  found 
for  the  defendant. 

HOLMES,  J.  This  is  an  action  upon  a  promissory  note  made  by  the 
defendant.  The  only  defense  is,  that  in  another  action  upon  a  con- 
tract to  procure  the  defendant's  mother's  indorsement  to  this  note 
and  to  two  others,  the  plaintiffs,  since  the  present  suit  was  brought, 
have  recovered  judgment  against  the  defendant  for  damages  assessed 
by  agreement  at  a  sum  equal  to  the  amount  due  on  the  three  notes. 
If  this  judgment  is  not  a  bar,  it  is  admitted  that  the  plaintiffs  are 
entitled  to  recover. 

The  two  contracts  were  both  in  existence  at  the  same  time.  They 
were  distinct  from  each  other  in  form,  as  appears  from  the  statement 
of  them.  They  were  also  distinct  in  substance.  Supposing  that  the 
defendant  could  do  no  more  to  bind  himself  personally  to  pay  the 
money  to  the  plaintiffs  than  he  did  by  making  the  note,  still  his 
promise  to  get  the  security  of  an  indorser  affected  other  things  besides 
his  personal  payment  or  his  personal  obligation  to  pay.  Its  perform- 
ance or  breach  affected  the  plaintiffs'  power  to  discount  the  note  be- 
fore it  was  due,  and  the  probability  of  their  getting  payment  from 
another  whom  the  defendant  might  be  able  to  persuade  to  indorse, 
when  he  could  not  or  would  not  induce  her  to  pay  if  she  had  not 
indorsed.  As  the  contracts  were  both  in  existence,  and  were  differ- 
ent, and  as  they  were  both  broken,  it  is  plain  that  plaintiffs  have 
had  two  different  causes  of  action,  and  there  is  no  need  to  refer  to 
the  tests  of  difference  which  have  been  laid  down  in  the  books.  East- 
man v.  Cooper,  15  Pick.  276,  286;  Lechmere  v.  Fletcher,  1  O.  & 
M.  623,  636.  The  question  arises  solely  on  the  effect  of  the  judgment. 

What  we  mean  when  we  say  that  a  contract  is  legally  binding  is, 
that  it  imposes  a  liability  to  an  action  unless  the  promised  event 
comes  to  pass,  subject  to  whatever  qualifications  there  may  be  to  the 
absoluteness  of  the  promise.  Generally,  if  a  man  is  content  to  make 
two  legally  binding  contracts,  he  consents  to  accept  the  legal  conse- 
quence of  making  two  instead  of  one,  namely,  liability  to  a  judgment 
upon  each  unless  he  performs  it.  It  would  be  anomalous  if  a  judg- 
ment without  satisfaction  upon  one  cause  of  action  were  held  to  be 
a  bar  to  a  suit  upon  another  and  distinct  cause  of  action.  No  doubt, 
two  contracts  may  be  such  that  performance  of  one  of  them,  or  satis- 
faction of  a  judgment  upon  one  of  them,  would  prevent  a  recovery 
upon  the  other,  either  altogether  or  for  more  than  nominal  damages. 
In  this  commonwealth  the  decisions  have  gone  somewhat  further  than 
elsewhere  in  treating  satisfaction  of  one  judgment  as  an  absolute 
bar  to  another  action.  Gilmore  v.  Carr,  2  Mass.  171;  Savage  v. 
Stevens,  128  Mass.  254.  But  instances  are  too  numerous  and  familiar 
to  need  extended  mention,  where  the  mere  recovery  of  a  judgment  is 
held  no  bar  to  another  action,  although  the  satisfaction  of  it  would  be. 


720  DISCHARGE   OF    CONTRACT. 

Simonds  v.  Center,  6  Mass.  18;  Porter  v.  Ingraham,  10  Mass.  88; 
Elliott  v.  Hayden,  104  Mass.  180;  Byers  v.  Franklin  Coal  Co.,  106 
Mass.  131,  136.  This  principle  is  applied,  not  only  to  actions  against> 
different  parties,  such  as  the  maker  and  indorser  of  a  note,  or  joint 
tort-feasors,  but  to  actions  against  the  same  individual  when  he 
has  given  different  obligations  in  respect  of  what  is  in  substance  the 
same  debt.  Thus,  judgment  upon  a  note  given  by  an  obligor  as  col- 
lateral security  for  his  bond  is  no  bar  to  a  subsequent  action  upon  the 
bond.  Lord  v.  Bigelow,  124  Mass.  185,  189;  Drake  v.  Mitchell,  3 
East,  251 ;  Lechmere  v.  Fletcher,  1  Cr.  &  M.  623 ;  Fairchild  v.  Holly, 
10  Conn.  474;  Davis  v.  Anable,  2  Hill  (N.  Y.),  339;  Burnheimer  v. 
Hart,  27  Iowa,  19.  See  Greenfield  v.  Wilson,  13  Gray,  384 ;  Moore  v. 
Lorihg,  106  Mass.  455 ;  Miller's  Biver  National  Bank  v.  Jefferson,  138 
Mass.  Ill ;  Stillwell  v.  Bertrand,  22  Ark.  379 ;  Corn  Exchange  Ins.  Co. 
7.  Babcock  (No.  2),  8  Abb.  Pr.  (N.  S.)  256;  United  States  v.  Gush- 
man,  2  Sumner,  426,  440. 

The  principle  of  the  cases  lasted  cited  is  decisive  of  the  one  at 
bar.  No  distinction  favorable  to  the  defendant  can  be  taken  be- 
between  an  agreement  made  as  itself  collateral  security,  and  an  agree- 
ment to  furnish  collateral  security.  If  there  were  any  difference, 
it  would  be  in  favor  of  the  plaintiffs;  for  the  collateral  contracts 
recovered  on  in  the  cases  cited  were  simply  other  contracts  of  the 
defendant  to  pay  money,  whereas  the  contract  of  this  defendant  was  a 
contract  to  get  a  third  person  to  indorse,  as  we  have  stated.  It  ia 
true,  that  in  most  cases  there  were  other  parties  defendant  in  the 
first  or  second  suit.  But  that  circumstance  had  nothing  to  do  with 
the  ground  of  the  decisions,  as  indeed  it  could  not  have  had  by  any 
technical  rule.  The  ground  was  that  stated  by  Lord  Ellenborough  in 
Drake  v.  Mitchell,  and  approved  by  this  court  in  Lord  v.  Bigelow: 
"A  judgment  recovered  in  any  form  of  action  is  still  but  a  security 
for  the  original  cause  of  action,  until  it  be  made  productive  i'n  satis- 
faction to  the  party;  and  therefore  till  then  it  cannot  operate  to 
change  any  other  collateral  concurrent  remedy  which  the  party  may 
have."  Parsons,  C.  J.,  states  the  law  in  the  same  way:  "A  judg- 
ment in  a  suit,  where  the  action  is  given  as  a  remedy  merely  cumulative, 
is  no  bar,  unless  such  judgment  has  been  satisfied ;  for,  although  there 
may  be  two  remedies,  there  can  be  but  one  satisfaction."  Storer  v. 
Storer,  6  Mass.  390,  393. 

The  technical  effect  of  the  judgment  as  a  bar  would  be  the  same, 
whether  the  defendant  in  both  suits  were  the  same,  or  other  defend- 
ants were  joined  in  any  one  of  them.  The  rule  as  stated  by  the  courts 
in  all  the  cases  applies  with  equal  force,  whichever  may  be  the  fact. 
If  we  were  to  depart  from  that  rule,  and  to  say  that  a  man  should 
have  but  one  judgment,  although  he  had  different  causes  of  action, 
when  we  thought  he  could  get  from  a  single  judgment  all  the  satis- 


BY  BREACH:  REMEDIES.  721 

faction  he  was  likely  to  get,  we  should  be  legislating,  instead  of  fol- 
lowing the  precedents,  and  legislating  in  very  doubtful  accord  with 
the  contracts  of  the  parties. 

Exceptions  sustained. 
23  Cyc.  1193    (69). 


GOLDBEEG  v.  EASTEEN  BEEWING  CO. 

136  N.  Y.  APPELLATE  DIVISION,  692.— 1910. 

JENKS,  J.  This  action  was  brought  in  October,  1908,  for  breach 
of  the  covenant  in  a  lease  that  the  lessee  would  make  all  repairs 
necessitated  by  wear  and  tear  during  the  term,  and  at  the  expiration 
thereof  would  quit  and  surrender  the  premises  in  as  good  state  and 
condition  as  reasonable  use  and  wear  would  permit.  The  lease  ex- 
pired on  May  1,  1908.  The  defendant  pleaded  in  bar  a  judgment  in  a 
former  action  to  recover  rent  under  the  lease,  which  went  to  judg- 
ment and  satisfaction  thereof  prior  to  the  beginning  of  this  action. 
The  defendant  supported  this  plea,  the  Municipal  Court  gave  judg- 
ment upon  it,  and  the  plaintiff  appeals.  I  think  that  the  judgment 
should  be  affirmed.  Bendernagle  v.  Cocks,  19  Wend.  207,  32  Am. 
Dec.  448;  Yates  v.  Fassett,  5  Denio,  21;  Secor  v.  Sturgis,  16  N".  Y. 
548;  Jex  v.  Jacob,  19  Hun,  105;  Bliss  on  Code  Pleading,  §  118;  1 
Encyclopedia  of  Pleading  and  Practice,  p.  153.  The  principle  is 
well  stated  in  the  Encyclopedia  of  Pleading  and  Practice  as  follows: 
"But  where  there  are  breaches  of  several  and  distinct  covenants  con- 
tained in  the  same  instrument,  all  these  breaches  must  be  sued  for 
together;  while  independent  stipulations  may  be  sued  for  as  the 
breaches'  occur,  all  the  breaches  existing  at  the  time  the  action  is 
brought  are  only  one  cause  of  action/'  The  reason  for  the  rule  of 
bar  is  said  to  rest  upon  the  two  maxims,  Interest  reipublicoe  ut  sit 
finis  litium,  and  Nemo  debet  bis  vexari,  pro  una  et  eadem  causa. 
United  States  v.  Throckmorton,  98  U.  S.  65,  25  L.  Ed.  93. 

The  learned  counsel  for  the  appellant  cites,  among  other  authorities, 
Mclntosh  v.  Lown,  49  Barb.  550.  But  in  Jex  v.  Jacob,  supra,  the 
court,  per  Daniels,  J.,  disapproves  of  that  case,  and  says  that  it  was 
clearly  opposed  to  those  which  preceded  it,  as  it  has  been  to  the  cases 
following  it,  and  for  that  reason  it  could  not  be  regarded  as  a  correct 
exposition  of  law  on  this  subject.  Of  the  other  cases  cited,  all  are 
to  be  noticed  hereafter  save  Fox  v.  Phyfe,  36  Misc.  Eep.  207,  73 
N.  Y.  Supp.  149,  which  recognizes  the  rule  of  Secor*s  Case,  supra, 
and  which  bears  no  analogy  upon  the  facts.  Secor's  Case  expresses 
the  -principle  thus:  "The  true  distinction  between  demands  or 
rights  of  action  which  are  single  and  entire  and  those  which  are 
several  and  distinct  is  that  the  former  immediately  arise  out  of  one 


722  DISCHARGE   OF    CONTRACT. 

and  the  same  act  or  contract  and  the  latter  out  of  different  acts  or 
contracts.  Perhaps  as  simple  and  safe  a  test  as  the  subject  admits 
of,  by  which  to  determine  whether  a  case  belongs  to  one  class  or  the 
other,  is  by  inquiring  whether  it  rests  upon  one  or  several  acts  or 
agreements."  The  appellant  says  that  Bendernagle's  Case  must  be 
considered  to  be  overruled  by  Perry  v.  Dickerson,  85  N.  Y.  345,  39 
Am.  Dec.  663.  It  is  not  overruled,  for  the  court,  per  Andrews, 
J.,  say  that,  if  it  is  subject  to  any  criticism,  it  is  because  of  the  appli- 
cation of  the  doctrine  to  the  facts  of  the  case,  and  that  it  is  "an 
extreme  case." 

Perry  v.  Dickerson  presented  the  question  whether  a  judgment  in 
an  action  to  recover  damages  for  a  wrongful  dismissal  before  the  ex- 
piry of  the  stipulated  term  of  service  was  a  bar  to  a  subsequent  suit 
for  wages  earned  by  the  plaintiff,  due  and  payable  before  the  dis- 
missal, and  the  court  say  that,  although  in  a  sense  the  two  causes  of 
action  arose  out  of  the  contract,  yet  the  right  of  wages  was  given  by 
it,  and  the  right  to  damages  arose  from  the  wrong  which  put  an  end  to 
it;  and  the  court  points  out  that  the  right  to  receive  the  wages  was 
definite,  or  could  be  made  so,  when  they  were  due,  while  the  damages 
for  the  wrongful  dismissal  could  not  be  ascertained  exactly  until  the 
stipulated  period  of  the  service  had  expired.  In  the  case  at  bar  there 
were  breaches  of  the  one  express  contract,  the  lease,  already  com- 
mitted, for  the  lease  expired  on  May  1,  1908,  and  the  first  action  was 
not  brought  until  some  months  thereafter,  and  in  Bendernagle's  Case, 
supra,  Cowen,  J.,  says :  "I  have  been  able  to  find  but  one  case  which 
holds  that,  there  being  several  breaches  of  the  same  contract  already 
committed,  the  party  may  bring  a  several  action  for  each."  And 
also:  "I  admit  that  the  rule  does  not  extend  to  several  and  distinct 
trespasses  or  other  wrongs  (White  v.  Moseley,  8  Pick.  [Mass.]  356), 
nor,  as  we  have  seen,  to  distinct  contracts.  It  goes  against  several 
actions  for  the  same  wrong,  and  against  several  actions  on  the  same 
contract.  All  damages  accruing  from  a  single  wrong,  though  at 
different  times,  make  but  one  cause  of  action;  and  all  debts  or 
demands  already  due  by  the  same  contract  make  one  entire  cause  of 
action.  Each  comes  under  the  familiar  rule  that,  if  a  party  will  sue 
and  recover  for  a  portion,  he  shall  be  barred  of  the  residue." 

In  any  event  I  think  that  we  have  an  express  approval  of  the  rule  in 
Bendernagle's  Case,  supra,  and  in  Pakas  v.  Hollingshead,  184  N".  Y. 
211,  at  page  215,  77  N.  E.  40,  41,  3  L.  R.  A.  (N.  S.)  1042,  112 
Am.  St.  Rep.  601,  where  the  court,  per  O'Brien,  J.,  say:  "It  was 
held  in  the  case  of  Bendernagle  v.  Cocks,  19  Wend.  207  [32  Am.  Dec. 
448],  that  where  a  party  had  several  demands  or  existing  causes  of 
action  growing  out  of  the  same  contract  or  resting  in  matter  of  ac- 
count, which  may  be  joined  and  sued  for  in  the  same  action,  they  must 
be  joined ;  and  if  the  demands  or  causes  of  action  be  split  up,  and  a 


BY  BREACH:  REMEDIES.  723 

suit  brought  for  part  only,  and  subsequently  a  second  suit  for  the 
residue  is  brought,  the  first  action  may  be  pleaded  in  abatement 
or  in  a  bar  of  the  second  action.  That,  it  seems  to  us,  is  what  has 
been  decided  in  this  case.  The  case  referred  to  was  elaborately  dis- 
cussed by  Judge  Cowen,  and  the  English  authorities  on  the  subject 
cited  and  distinguished."  And  in  Lorillard  v.  Clyde,  122  N.  Y.  45, 
25  N.  E.  292,  19  Am.  St.  Kep.  470,  Vann,  J.,  writing  for  the  court, 
cites  both  Bendernagle's  Case,  supra,  as  well  as  Jex  v.  Jacob,  supra, 
among  his  authorities.  The  learned  Municipal  Court  judge  rested 
his  decision  on  Kennedy  v.  City  of  New  York,  127  App.  Div.  89, 
111  N.  Y.  Supp.  61,  which  was  reversed  in  196  N.  Y.  19,  89  N.  E. 
360,  without  affecting  the  rule  stated  and  applied  in  the  judgment 
of  the  Appellate  Division. 

The  judgment  of  the  Municipal  Court  is  affirmed,  with  costs.  All 
concur. 

23   Cyc.   1189-1190    (54-55). 


ALLEN  v.  COLLIERY  ENGINEERS'  CO. 
196  PENNSYLVANIA  STATE,  512.— 1900. 

Action  by  William  D.  Allen  against  the  Colliery  Engineers'  Com- 
pany for  wages  under  a  contract  of  employment.  From  a  judgment 
in  favor  of  defendant  on  a  demurrer  to  the  surrebutter,  plaintiff 
appeals.  Reversed. 

FELL,  J.  The  judgment  appealed  from  was  entered  on  a  de- 
murrer to  a  surrebutter.  We  are  asked,  however,  to  determine  the 
right  of  the  plaintiff  to  recover  without  regard  to  the  technical 
questions  raised  by  the  pleadings.  The  facts  alleged  are  that  the 
plaintiff  was  employed  by  the  defendant  as  a  manager  of  a  branch  of 
its  business  for  one  year,  beginning  January  12,  1898,  at  a  salary  of 
$75  per  week.  On  July  2,  1898,  he  was  discharged  without  cause. 
On  July  18th,  he  sued  the  defendant  for  two  weeks'  salary  in  the 
district  court  of  the  city  of  Brooklyn,  N.  Y.,  and  recovered  a  judg- 
ment therefor,  which  has  been  paid.  This  action  was  brought  after 
the  expiration  of  the  time  for  which  the  plaintiff  was  employed  to 
recover  the  salary  for  the  balance  of  the  year.  The  defendant  pleaded 
the  recovery  of  the  judgment  in  New  York  in  bar.  It  is  conceded 
that  while  the  plaintiff  was  in  the  employ  of  the  defendant  he  could 
have  maintained  a  separate  action  for  each  week's  salary  as  it  be- 
came due;  but  it  is  contended  that  after  his  discharge  his  only 
remedy  was  an  action  for  damages  for  the  breach  of  the  contract, 
and  that,  as  there  can  be  but  one  recovery  on  that  ground,  he  is 
concluded  by  the  action  brought  in  New  York. 

The  generally  recognized  rule  is  that  an  employe  for  a  fixed  period, 


724  DISCHARGE   OF    CONTRACT. 

who  has  been  wrongfully  discharged,  may  either  treat  the  contract  as 
existing,  and  sue  for  his  salary  as  it  becomes  due,  not  on  a  quanlum 
meruit,  but  by  virtue  of  the  special  contract,  his  readiness  to  serve 
being  considered  as  equivalent  to  actual  service,  or  he  may  sue  for 
the  breach  of  contract  at  once  or  at  the  end  of  the  contract  period, 
but  for  the  breach  he  can  have  but  one  action.  2  Smith,  Lead.  Gas. 
38,  note  to  Cutter  v.  Powell;  7  Am.  Law.  Reg.  (N.  S.)  148,  note 
to  Huntington  v.  Eailroad  Co.  Our  cases  are  in  entire  harmony 
with  this  rule.  In  Algeo  v.  Algeo  (10  Serg.  &  E.  235),  it  was  held 
that,  where  the  performance  of  services  had  been  prevented  by  the 
discharge  of  the  employe,  he  must  declare  on  the  special  agreement, 
and  could  not  recover  on  the  implied  promise,  as  the  law  would  infer 
a  promise  from  the  acts  of  the  plaintiff  only,  and  not  from  the  acts 
of  prevention  by  the  defendant.  In  Telephone  Co.  v.  Eoot  (Pa. 
Sup.)  4  Atl.  828,  the  plaintiff  sued  during  the  contract  period  on  an 
agreement  which,  as  in  this  case,  was  severable  because  the  con- 
sideration was  apportioned.  In  the  opinion  in  Kirk  v.  Hartman 
(63  Pa.  St.  97),  it  was  said  by  Sharswood,  J.,  that  a  servant  dis- 
missed without  cause  before  the  expiration  of  a  definite  period  of 
employment  could  maintain  an  action  of  debt  on  the  special  agreement. 

It  follows  that  if  the  recovery  in  the  New  York  court  was  for  the 
installments  of  salary  then  due,  as  alleged  in  the  declaration  in  this 
case,  the  plaintiff  may  maintain  his  action;  if  it  was  for  damages  for 
the  breach  of  the  contract  as  averred  in  the  plea  filed,  he  is  con- 
cluded by  it.  There  is  nothing  in  the  record  before  us  which  throws 
any  light  upon  this  question,  and  the  case  must  go  back  for  decision 
in  the  common  pleas. 

The  judgment  is  reversed,  with  a  procedendo.1 

26  Cyc.  999    (3-4)  ;   14  H.  L.  R.  294;   22  H.  L.  R.  537. 


ALIE  v.  NADEATL 

93  MAINE,  282.— 1899. 

This  was  an  action  by  the  plaintiff  to  recover  wages  for  the  last 
two  months  of  a  period  of  six  months,  under  an  agreement  entered 
into  November  9,  1897,  wherein  defendant  agreed  to  employ  plaintiff 
for  six  months  at  wages  of  $10  per  week,  payable  weekly. 

After  keeping  plaintiff  in  his  employ  about  two  months,  or  to 
January  15,  1898,  defendant  discharged  him  without  cause.  March 
12,  1898,  the  plaintiff  brought  suit  to  recover  the  wages  due  him 
up  to  that  time,  and  on  trial  a  jury  found  for  the  plaintiff  on  all 

i  The  doctrine  of  "constructive  service"  is  rejected  in  New  York  in 
Howard  v.  Daly,  61  N.  Y.  362. 


BY  BREACH:  REMEDIES.  725 

the  issues,  and  rendered  judgment  for  the  wages  due  up  to  March 
12,  1898.  This  judgment  has  been  satisfied. 

The  present  suit  was  brought  at  the  expiration  of  the  six-months 
period  to  recover  the  balance  of  wages  due  after  March  12,  1898. 
The  jury  rendered  a  verdict  for  the  plaintiff,  and  the  defendant  took 
exceptions  to  the  refusal  of  the  court  to  nonsuit  the  plaintiff,  and 
also  upon  the  court's  refusing  to  make  certain  rulings  requested  by 
defendant,  which  appear  in  the  opinion. 

SAVAGE,  J.  The  plaintiff  brings  this  action  to  recover  damages  for 
the  breach  of  a  contract  of  service,  whereby  the  plaintiff  alleges  that 
he  agreed  to  enter  and  remain  in  the  employment  of  the  defendant 
for  the  period  of  six  months  from  the  9th  day  of  November,  1897, 
and  that  the  defendant  agreed  to  hire  the  plaintiff  for  the  same 
period,  and  to  pay  him  for  his  labor  the  sum  of  $10  per  week.  The 
plaintiff  further  alleges  that  he  entered  upon  the  performance  of 
the  contract  upon  his  part,  and  continued  to  work  until  January  15, 
1898,  upon  which  day  he  was  discharged  by  the  defendant,  without 
lawful  cause. 

The  case  shows  that  the  plaintiff  was  paid  all  wages  due  him  up 
to  the  time  of  his  discharge.  On  March  12,  1898,  the  plaintiff  com- 
menced an  action  against  the  defendant  for  damages,  alleging  the 
same  breach  of  the  same  contract  as  is  alleged  here,  and  claiming 
damages  to  the  date  of  his  writ.  In  that  action  he  ultimately  re- 
covered judgment  in  damages  for  an  amount  equal  to  the  weekly 
wages  agreed  upon  from  January  15,  1898,  to  March  12,  1898. 

This  action  was  commenced  November  23,  1898,  and  the  plaintiff 
now  claims  to  recover  damages  from  March  12,  1898,  to  May  9, 
1898,  the  remainder  of  the  period  covered  by  the  contract.  At  the 
close  of  the  testimony,  the  defendant's  counsel  requested  the  pre- 
siding justice  to  instruct  the  jury  that  the  judgment  in  the  former 
action  was  a  bar  to  recovery  in  this  suit.  To  a  refusal  to  give  this 
instruction  the  defendant  excepted. 

We  think  the  requested  instruction  should  have  been  given.  Here 
is  a  single  and  indivisible  contract,  a  hiring  for  the  period  of  six 
months.  When  the  defendant  discharged  the  plaintiff,  he  broke  the 
contract.  He  broke  it  altogether.  But  there  was  only  one  breach. 
The  plaintiff  urges  that,  while  the  contract  was  entire,  the  perform- 
ance was  divisible;  that  each  week's  work  constituted  a  performance 
so  far,  and  that  the  defendant  was  in  default  each  week  lie  failed 
to  continue  plaintiff  in  his  employment.  Hence  the  plaintiff  claims 
that  an  action  will  lie  for  each  default.  A  little  examination  will 
show  that  this  position  cannot  be  sustained. 

The  contract  of  the  defendant  may  be  viewed  in  a  twofold  aspect. 
In  the  first  place,  he  agreed  to  continue  the  plaintiff  in  his  employ- 
ment for  a  period  of  six  months.  That  contract  was  entire  and  in- 


726  DISCHARGE   OF    CONTRACT. 

divisible.  There  was  a  single  breach  of  that  part  of  the  contract. 
He  also  agreed,  we  will  assume,  to  pay  the  plaintiff  weekly.  Per- 
formance of  that  part  of  the  contract  by  the  defendant  was  divisible, 
and  the  plaintiff  might  have  maintained  an  action  for  wages  for 
services  performed  on  each  failure  of  the  defendant  to  pay  as  he 
agreed.  To  this  effect  are  most  of  the  cases  cited  by  the  plaintiff 
from  our  own  decisions.  But  such  is  not  this  case.  After  the  plaintiff 
was  discharged,  he  performed  no  more  service,  and  was  entitled  no 
longer  to  wages  as  such,  for  the  contract  was  at  an  end.  The  damage 
was  the  loss  of  his  contract  right  to  earn  wages.  He  was  entitled 
to  recover  all  the  damages  he  sustained  by  the  breach,  both  present  and 
prospective,  and  for  such  a  breach  but  one  action  can  be  maintained. 
Sutherland  v.  Wyer,  67  Me.  64.  The  plaintiff  brought  an  action  for 
breach  of  contract,  and  recovered  judgment  for  damages.  It  is  to 
be  presumed  that  he  recovered  all  he  was  entitled  to  receive  for 
that  breach.  We  think  the  principles  stated  in  Sutherland  v.  Wyer, 
supra,  are  decisive  upon  this  point.  See,  also  Miller  v.  Groddard, 
34  Me.  102 ;  Colburn  v.  Woodworth,  31  Barb.  381 ;  Olmstead  v.  Bach, 
78  Md.  132;  James  v.  Allen  Co.,  44  Ohio  St.  226,  and  cases  cited; 
2  Sedgw.  Dam.  (8th  ed.),  §  366. 

But  the  plaintiff  contends  that  the  rule  should  not  apply  here, 
because  in  his  first  writ  he  claimed  damages  only  to  May  12,  1898. 
If  this  contention  is  sound,  it  follows  that  any  litigant  may  sever 
an  indivisible  contract,  and  become  entitled  to  maintain  several 
actions  as  for  several  breaches  of  it,  simply  by  limiting  his  claim 
for  damages  in  his  earlier  actions  to  less  than  full  damages.  We 
think  this  cannot  be  done.  As  we  have  already  suggested,  the 
law  presumes  that  the  plaintiff  alleged  and  recovered  in  his  first 
action  all  the  damages  that  he  sustained. 

Exceptions  sustained. 

23  Cyc.  1177   (94-95);  26  Cyc.  999    (5);  W.  P.  876   (27). 


(in.)  Discharge  by  lapse  of  time. 

MANCHESTER  et  al.  v.  BRAEDNER. 

107  NEW  YORK,  346.— 1887. 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court 
in  the  first  judicial  department,  entered  upon  an  order  made  January 
9,  1885,  which  affirmed  a  judgment  in  favor  of  plaintiff  entered  upon 
the  report  of  a  referee. 

This  action  was  commenced  June  20,  1882,  to  recover  for  build- 
ing materials  furnished  and  delivered  by  plaintiffs  to  defendant. 
The  defense  was  the  statute  of  limitations. 


BY  BBEACH:  REMEDIES.  727 

It  appeared  that  defendant  in  February,  1876,  entered  into  an 
agreement  with  one  Hoover,  who  was  engaged  as  contractor  in 
building  certain  houses,  to  do  all  the  plastering  for  a  sum  agreed 
upon,  payable  in  instalments  as  the  work  progressed.  Plaintiffs  agreed 
to  furnish  the  materials,  defendant  agreeing  to  pay  therefor  in  cash  as 
wanted.  In  pursuance  of  this  agreement  plaintiffs  furnished,  be- 
tween March  1  and  June  12,  1876,  materials  from  time  to  time  as 
ordered.  About  that  time  Hoover  became  embarrassed  and  abandoned 
the  work.  The  sub-contractors,  and  among  them  defendant,  entered 
into  an  arrangement  with  Hoover  to  continue  the  work,  and  defendant 
delivered  to  plaintiffs  three  orders  on  Hoover,  dated  June  21,  1876, 
for  sums  aggregating  the  amount  of  their  bill,  payable,  as  the  work 
progressed,  from  the  sums  coming  to  him  under  his  contract.  De- 
fendant resumed  his  work,  but  in  a  few  days  abandoned  it  and  refused 
to  go  on  with  the  same. 

ANDREWS,  J.  When  one  delivers  to  another  an  order  on  a  third 
person  to  pay  a  specified  sum  of  money  to  the  person  to  whom  the 
order  is  given,  the  natural  import  of  the  transaction  is,  that  the 
drawee  is  indebted  to  the  drawer  in  the  sum  mentioned  in  the  order, 
and  that  it  was  given  to  the  payee  as  a  means  of  paying  or  securing 
the  payment  of  his  debt.  In  other  words,  it  implies  the  relation  »£ 
debtor  and  creditor  between  the  parties  to  the  extent  of  the  sum 
specified  in  the  order  and  a  willingness  on  the  part  of  the  debtor 
to  pay  the  debt.  The  transaction  may  be  consistent  with  a  different 
relation  and  another  purpose,  but  in  the  absence  of  explanation,  that 
is  its  natural  and  ordinary  meaning.  See  Bogert  v.  Morse,  1  N.  Y. 
377.  The  oral  evidence  shows  that  the  defendant  was  owing  the 
plaintiffs  the  amount  specified  in  the  several  orders  of  June  21,  1876, 
and  that  they  were  given  to  secure  the  payment  of  the  debt,  thus  fully 
corroborating  the  inferences  deducible  from  the  order  themselves. 
We  think  the  orders  constituted  an  acknowledgment  in  writing  of 
the  debt,  within  section  110  of  the  Code,  and  continued  the  debt  for 
the  period  of  six  years  from  their  date.  The  decisions  as  to  what  is  a 
sufficient  acknowledgment  of  a  debt,  to  take  it  out  of  the  statute,  are 
very  numerous  and  not  altogether  harmonious.  It  seems  to  be  the 
general  doctrine  that  the  writing,  in  order  to  constitute  an  acknowl- 
edgment, must  recognize  an  existing  debt,  and  that  it  should  contain 
nothing  inconsistent  with  an  intention  on  the  part  of  the  debtor  to 
pay  it.  But  oral  evidence  may  be  resorted  to,  as  in  other  cases  of 
written  instruments,  in  aid  of  the  interpretation.  Consistently  with 
this  rule,  it  has  been  held  that  oral  evidence  is  admissible  to  identify 
the  debt  and  its  amount,  or  to  fix  the  date  of  the  writing  relied  upon 
as  an  acknowledgment,  when  these  circumstances  are  omitted  ( Kincaid 
v.  Archibald,  73  N.  Y.  189 ;  Lechmere  v.  Fletcher,  3  Tyrw.  450 ;  Bird 
v.  Gammon,  3  Bing.  N.  C.  883),  or  to  explain  ambiguities.  1  Smith's 


728  D1&.-HAUGI-:    OF    CONTRACT. 

Lead.  Cas.  960,  and  cases  cited.  The  promise  to  be  inferred  from  the 
order  was  not  conditional  in  the  sense  that  the  debt  was  to  be  paid 
only  out  of  the  fund  in  the  hands  of  the  drawee.  At  most,  there  was 
an  appropriation  of  that  fund  for  the  payment  of  the  debt,  but  the 
language  of  the  orders  did  not  import  that  the  debt  was  to  be  paid 
only  out  of  the  fund  against  which  they  were  drawn.  See  Winchell  v. 
Hicks,  18  N.  Y.  558;  Smith  v.  Ryan,  66  Id.  352.  The  defendant 
by  his  own  act  in  abandoning  the  contract  with  Hoover,  the  drawee, 
prevented  the  payment  of  the  orders  and  left  him  subject  to  the  gen- 
eral obligation  of  payment  resting  upon  all  debtors. 

The  judgment  should  be  affirmed.     All  concur. 

Judgment  affirmed. 

25  Cyc.  1337   (47);  W.  P.  777   (10). 


ALLEN  v.  COLLIEK. 
70  MISSOURI,   138.— 1879. 

NORTON,  J.  The  defendant  in  this  case  interposed  the  plea  of  the 
statute  of  limitations  in  bar  of  plaintiff's  right  of  action  on  a  note 
executed  by  his  intestate  to  plaintiff,  dated  January  10,  1864,  for 
$134,  due  from  its  date.  To  take  the  case  from  under  the  operation 
of  the  statute  plaintiff  offered  in  evidence  a  certain  writing  con- 
tained in  the  private  account-book  of  defendant's  intestate,  signed  by 
said  intestate,  purporting  to  be  a  will  written  in  pencil.  Said  writ- 
ing was  not  attested  and  was  found  among  the  papers  of  the  intestate 
after  his  death,  and  contained  the  following  words:  "That  out  of 
my  estate  she  (alluding  to  his  wife)  shall  pay  all  my  just  debts, 
including  a  debt  due  my  mother  of  about  $400." 

The  only  question  presented  in  the  case  is  whether  the  said  writing 
was  such  an  acknowledgment  as  would  prevent  the  operation  of  the 
limitation  law.  The  court  below  held  that  it  was  not  sufficient,  and 
gave  effect  to  the  defendant's  plea  of  the  statute,  and  this  action  of 
the  court  is  assigned  for  error.  There  is  a  conflict  of  the  authorities 
as  to  whether  an  acknowledgment  or  promise  in  writing,  signed  by 
the  party  to  be  bound,  if  made  to  a  stranger,  would  be  sufficient  to 
take  a  case  from  under  the  operation  of  the  statute  of  limitations, 
but  there  is  no  conflict,  as  to  the  necessity  for  such  promise  or  acknowl- 
edgment being  made  to  some  person,  either  to  the  creditor  or  his 
representative,  or  to  a  stranger.  A  promise  or  acknowledgment  im- 
plies that  it  is  made  to  somebody,  and  in  every  promise  there  must 
necessarily  be  a  promisor  and  promisee.  The  will  in  question  was 
never  attested,  and  was,  therefore,  no  will.  A  mere  writing  acknowl- 
edging a  debt,  which  is  retained  by  the  person  making  it,  and  which 
is  never  delivered  either  to  the  creditor  or  any  one  else,  cannot  have 


BY  BREACH:  REMEDIES.  129 

the  effect  of  preventing  the  operation  of  the  statute.  In  the  case  of 
Merriam  v.  Leonard  (6  Gush.  151),  where  the  acknowledgment  of 
the  debt  was  contained  in  a  mortgage  duly  executed  and  acknowledged, 
which  was  never  delivered  to  the  mortgagee,  but  was  found  after 
the  mortgagor's  death  among  his  papers,  Justice  Shaw  held  that  it 
did  not  amount  to  an  acknowledgment  of  the  debt  or  of  a  willingness 
or  intention  to  pay  from  which  a  promise  could  be  implied.  The 
deed  was  never  delivered,  and  of  course  was  not  an  instrument  by 
which  the  signer  was  bound.  Judgment  affirmed.  All  concur  ex- 
cept Judge  Napton. 
25  Cyc.  1346  (30-31). 


CHAPTER  IV. 

IMPOSSIBILITY  OF  PERFORMANCE. 

General  rule. 

ANDERSON  v.  MAY. 

50  MINNESOTA,  280.— 1892. 

Action  for  price  of  seeds.  Defense,  damages  for  breach  of  contract. 
Verdict  for  plaintiff.  Defendant  appeals. 

GILFILLAN,  C.  J.  The  defendant  having  alleged  as  a  counter- 
claim a  contract  in  June,  1890,  between  him  and  plaintiff,  whereby 
the  latter  agreed  to  sell  and  deliver  to  the  former,  on  or  before 
November  15th,  certain  quantities  of  specified  kinds  of  beans,  and 
that  he  failed  so  to  do  except  as  to  a  part  thereof,  the  plaintiff,  in 
his  reply,  alleged  in  substance  that  the  contract  was  to  deliver  the 
beans  from  the  crop  that  he  should  raise  that  year  from  his  market 
gardening  farm  near  Red  Wing.  Upon  the  trial  the  contract  was 
proved  by  letters  passing  between  the  parties.  From  these  it  fairly 
appears  that  the  beans  to  be  delivered  were  to  be  grown  by  plaintiff, 
though  it  cannot  be  gathered  from  them  that  he  was  to  grow  the  beans 
on  any  particular  land.  They  contain  no  restriction  in  that  respect. 
There  can  be  no  question  that,  if  grown  by  him,  and  of  the  kinds  and 
quality  specified,  defendant  would  have  been  obliged  to  accept  the 
beans,  though  not  grown  on  any  land  previously  cultivated  by  plain- 
tiff. The  contract,  therefore,  was,  in  effect,  to  raise  and  sell  and 
deliver  the  quantities,  kinds,  and  quality  of  beans  specified, — a  con- 
tract in  its  nature  possible  of  performance. 

As  an  excuse  for  not  delivering  the  entire  quantity  contracted  for, 
the  plaintiff  relies  on  proof  of  the  fact  that  an  early  unexpected  frost 
destroyed  or  injured  his  crop  to  such  extent  that  he  was  unable  to 
deliver  the  entire  quantity. 

What,  in  the  way  of  subsequently  arising  impossibility  for  the 
party  to  perform,  will  suffice  as  excuse  for  non-performance  of  a 
contract,  is  well  settled  in  the  decisions;  the  only  apparent  difference 
in  them  arising  from  the  application  of  the  rules  to  particular 
circumstances.  The  general  rule  is  as  well  stated  as  anywhere  in  2 
Chit.  Cont.  1074,  thus :  "Where  the  contract  is  to  do  a  thing  which 
is  possible  in  itself,  or  where  it  is  conditioned  on  any  event  which 
happens,  the  promisor  will  be  liable  for  a  breach  thereof,  notwith- 

730 


BY    IMPOSSIBILITY.  731 

standing  it  was  beyond  his  power  to  perform  it;  for  it  was  his  own 
fault  to  run  the  risk  of  undertaking  to  perform  an  impossibility,  when 
he  might  have  provided  against  it  by  his  contract.  And  therefore, 
in  such  cases,  the  performance  is  not  excused  by  the  occurrence  of  an 
inevitable  accident,  or  other  contingency,  although  it  was  not  forseen 
by,  or  within  the  control  of,  the  party."  An  application  of  this  rule 
is  furnished  by  Cowley  v.  Davidson,  13  Minn.  92  (Gil.  86).  What  is 
sometimes  called  an  "exception  to  the  rule"  is  where  the  contract 
is  implied  to  be  made  on  the  assumed  continued  existence  of  a  par- 
ticular person  or  thing,  and  the  person  or  thing  ceases  to  exist,  as, 
where  it  is  for  personal  service,  and  the  person  dies,  or  it  is  for  re- 
pairs upon  a  particular  ship  or  building,  and  the  ship  or  building  is 
destroyed.  An  agreement  to  sell  and  deliver  at  a  future  time  a 
specified  chattel  existing  when  the  agreement  is  made  would  come  under 
this  exception.  The  exception  was  extended  further  than  in  any  other 
case  we  have  found  in  Howell  v.  Coupland,  L.  R.  9  Q.  B.  462.  That 
was  a  contract  to  sell  and  deliver  a  certain  quantity  from  a  crop  to 
be  raised  on  a  particular  piece  of  land  and  the  entire  crop  was  de- 
stroyed by  blight.  The  court  held  the  contract  to  be  to  deliver  part  of 
a  specific  thing,  to  wit,  of  the  crop  to  be  grown  on  a  given  piece  of 
land,  and  held  it  to  come  within  the  rule  that,  where  the  obligation 
depends  on  the  assumed  existence  of  a  specific  thing,  performance  is 
excused  by  the  destruction  of  the  thing  without  the  parties'  fault. 
Without  intimating  whether  we  would  follow  that  decision  in  a  simi- 
lar case,  we  will  say  that  the  case  is  unlike  this,  in  that  in  this  case  the 
plaintiff  was  not  limited  or  restricted  to  any  particular  land.  It  was 
not  an  undertaking  to  sell  and  deliver  part  of  a  specific  crop,  but  a 
general  undertaking  to  raise,  sell,  and  deliver  the  specified  quantity 
of  beans.  We  have  been  cited  to  and  found  no  case  holding  that,  where 
one  agrees  generally  to  produce,  by  manufacture  or  otherwise,  a  par- 
ticular thing,  performance  being  possible  in  the  nature  of  things, 
he  may  be  excused  from  performance  by  the  destruction,  before  comple- 
tion or  delivery,  of  the  thing,  from  whatever  cause,  except  the  act  of 
the  other  party.  Applications  of  the  general  rule,  where  the  thing 
agreed  to  be  produced  was,  before  completion,  destroyed  without  the 
party's  fault,  are  furnished  in  Adams  v.  Nichols,  19  Pick.  275,  279; 
School  Dist.  v.  Dauchy,  25  Conn.  530;  and  Trustees  v.  Bennett,  27 
N.  J.  Law,  513,  approved  and  followed  in  Stees  v.  Leonard,  20  Minn. 
494  (Gil.  448).  Where  such  causes  may  intervene  to  prevent  a  party 
performing,  he  should  guard  against  them  in  his  contract. 

Order  reversed. 

9  Cyc.  627-629  (66-78);  14  L.  R.  A.  217;  W.  P.  528  (10);  539  (22); 
15  H.  L.  R.  63,  418;  20  H.  L.  R.  413;  11  C.  L.  R.  83;  Woodward,  Impossi- 
bility of  performance  as  excuse  for  breach  of  contract,  1  C.  L.  R.  529. 


732  DISCHARGE  OF   CONTRACT. 

Exceptions. 

(t.)  Legal  impossibility. 
CORDES  v.  MILLER. 
39  MICHIGAN,  581.— 1878. 

Assumpsit  on  covenant  in  a  lease.     Defendant  brings  error. 

COOLEY,  J.  Miller,  on  the  fourth  day  of  October,  1872,  rented 
of  Cordes,  for  the  term  of  ten  years,  a  wooden  building  in  Grand 
Rapids,  at  a  specified  annual  rent.  The  lease  contained  a  covenant 
on  the  part  of  Cordes  that  "if  said  building  burns  down  during  this 
lease,  said  Cordes  agrees  to  rebuild  the  same  in  a  suitable  time,  for  said 
Miller."  Miller  went  into  possession  and  occupied  the  building  for 
a  restaurant  and  saloon  until  May  26,  1874,  when  it  was  destroyed 
by  fire.  Within  a  week  Miller  notified  Cordes  to  rebuild,  and  some 
preparation  to  do  so  would  appear  to  have  been  made  by  the  removal 
of  the  debris  of  the  fire.  June  15,  1874,  the  common  council  of 
Grand  Rapids  passed  an  ordinance  prohibiting  the  erection  of  wooden 
buildings  within  certain  limits  which  embraced  the  site  where  the 
burned  building  had  stood.  Cordes  afterwards  went  on  and  pre- 
pared plans  and  specifications  for  a  larger  brick  building,  and  con- 
tracted for  putting  it  up.  Miller  declined  to  examine  the  plans  or 
to  say  anything  about  them,  but  in  substance  he  said  that  when  the 
building  was  completed  he  would  move  into  it.  It  was  completed  in 
November,  and  in  December  Miller  moved  into  a  part  of  it,  which  was 
considered  by  the  parties  as  being  equivalent  to  the  old  building. 
Complaining  then  that  the  new  building  was  not  put  up  in  a  suitable 
time,  he  brought  this  suit  on  the  covenant. 

The  principal  question  in  the  case  is  whether  such  a  suit  can  be 
maintained.  No  question  is  made  of  the  validity  of  the  city  ordi- 
nance, and  it  is  urged  on  behalf  of  the  lessor  that  as  the  putting  up 
of  such  a  structure  as  was  originally  leased  was  thereby  rendered  im- 
possible, the  covenant  was  discharged.  Brady  v.  Insurance  Co.,  11 
Mich.  425.  On  the  other  hand,  it  is  argued  that  rebuilding  is  not  im- 
possible ;  it  is  only  rebuilding  of  a  specified  material  that  is  forbidden ; 
and  that  Cordes,  when  he  rented  his  building  and  agreed  to  rebuild 
in  case  of  fire,  took  upon  himself  all  the  risks  of  being  compelled  to 
make  use  of  some  other  material  than  wood,  as  much  as  he  did  the  risk 
of  the  rise  in  the  cost  of  materials.  Some  stress  is  also  laid  upon  the 
fact  that  the  lease  did  not  mention  the  material  of  which  the  old  build- 
ing was  constructed.  The  court  below  sustained  the  action. 

If  this  judgment  is  correct,  then  Cordes  had  placed  himself  under 
legal  obligation  not  only  to  put  up  a  new  building  of  some  more  sub- 
stantial material  than  wood,  no  matter  how  much  greater  might  be 


BY    IMPOSSIBILITY.  733 

the  cost,  and  to  turn  it  over  to  Miller  for  the  term  at  the  same  rent, 
no  matter  how  much  more  the  occupation  might  be  worth.  More- 
over, he  would  be  obliged  to  reproduce  the  old  building,  as  near  as 
the  change  in  material  would  permit,  and  could  not  compel  his  lessee 
to  accept  a  building  differently  planned,  subdivided,  and  arranged, 
even  though  it  might  be  better  and  at  least  equally  convenient.  In 
other  words,  in  the  enforced'  change  of  material  Cordes  could  not  con- 
sult his  own  interest  in  making  such  modifications  as  the  change  would 
be  likely  to  render  important  and  desirable,  but  would  be  tied  down 
to  the  plan  and  arrangement  of  a  building  which  it  might  be  well 
enough  to  reproduce  in  the  old  material,  but  which  would  never  be 
chosen  if  the  material  were  to  be  brick,  stone,  or  iron. 

We  cannot  think  this  the  fair  construction  of  the  lease.  Cordes 
covenanted  to  rebuild,  if  destroyed  by  fire,  the  building  he  leased ;  but 
did  not  covenant  that  if  not  allowed  to  rebuild  that,  he  would  put  up 
another  on  the  same  plan,  of  more  substantial  and  presumably  more 
costly  material.  Had  the  exact  contingency  which  has  since  happened 
been  in  the  minds  of  the  parties  at  the  time,  it  is  scarcely  conceivable 
that  the  lessor  would  have  consented  to  put  up  a  brick  building  in  the 
place  of  the  one  leased,  and  to  receive  for  it  the  same  rent  the  wood 
building  brought  him,  when  its  probable  rental  value  would  be  con- 
siderably greater,  and  its  cost  presumably  more. 

Had  this  been  an  agreement  by  a  builder  to  rebuild  the  old  building, 
it  would  scarcely  be  urged  that  the  covenant  would  bind  him  to  erect 
a  new  one  differing  from  it  so  radically  as  would  a  brick  or  a  stone 
structure  from  one  of  wood.  Had  Cordes  been  selling  this  land  to 
Miller  with  a  similar  agreement  respecting  the  building,  it  would  be 
equally  plain  that  the  change  in  the  law  could  not  work  a  change  in 
ihis  contract  so  seriously  increasing  his  responsibility.  But  in  princi- 
ple the  cases  suggested  would  not  differ  from  this  in  the  least. 
Cordes  undertook  for  something  which  by  a  change  in  the  law  has 
become  illegal ;  and  his  covenant  has  thereby  been  discharged. 

In  this  case  Cordes  prepared  accommodations  for  Miller  which 
the  latter  has  accepted  and  now  occupies.  But  they  were  differ- 
ent from  the  old,  and  Miller  could  not  have  been  compelled  to  accept 
them.  The  arrangement  was  therefore  one  outside  the  lease, — not  one 
in  compliance  with  its  terms.  Probably  the  course  of  the  parties  has 
in  effect  been  equivalent  to  an  offer  on  one  side  and  an  acceptance  on 
the  other  of  the  new  quarters  in  place  of  the  old  and  under  the  old 
lease;  but  no  question  concerning  that  arrangement  arises  here. 

The  judgment  must  be  reversed,  and  judgment  entered  for  Cordes 
with  costs  of  both  courts. 

The  other  justices  concurred. 

9  Cyc.  630  (79-80.  84)  ;  W.  P.  514  (79)  ;  529  (11)  ;  12  H.  L.  R.  501;  16 
H.  L.  R.  64;  18  H.  L.  R.  64;  5  C.  L.  R.  243. 


734  DISCHARGE   OF    CONTRACT. 

HUGHES  v.  WAMSUTTA  MILLS. 

11  ALLEN  (MASS.),  201.— 1865. 

Contract  for  work.     Verdict  for  plaintiff. 

Plaintiff  agreed  that  if  he  left  without  giving  two  weeks'  notice 
he  should  receive  nothing  for  wages  due.  He  was  arrested  and  con- 
victed of  a  crime  and  sentenced  to  jail.  The  damage  to  defendant 
from  want  of  notice  was  greater  than  the  wages  due. 

BIGELOW,  C.  J.  The  question  at  issue  between  the  parties  to  this 
suit  depends  entirely  on  the  construction  of  the  contract  under  which 
the  plaintiff  was  employed.  This,  we  think,  is  misapprehended  by 
the  counsel  for  the  defendants.  The  interpretation  which  he  seeks 
to  put  on  the  stipulation ,  that  the  plaintiff  was  to  receive  no  wages 
if  he  left  defendants'  service  without  giving  two  weeks'  previous 
notice  of  his  intention  so  to  do,  is  inconsistent  with  the  terms  of  the 
stipulation,  and  too  narrow  to  be  a  fair  or  reasonable  exposition  of 
the  intention  of  the  parties.  The  stipulation  clearly  had  reference 
only  to  a  voluntary  abandonment  of  the  defendants'  employment,  and 
not  one  caused  vi  majore,  whether  by  the  visitation  of  God  or  other 
controlling  circumstances.  Clearly  the  abandonment  must  have  been 
such  that  the  plaintiff  could  have  foreseen  it ;  he  could  give  notice  only 
of  such  departure  as  he  could  anticipate,  and  the  stipulation  that  he 
was  to  have  the  privilege  of  leaving  after  giving  two  weeks'  notice 
without  forfeiting  his  wages  implied  that  the  forfeiture  was  to  take 
place  only  when  it  would  be  within  his  power  to  give  the  requisite 
notice.  It  certainly  cannot  be  contended  that  the  stipulation  was 
absolute;  that  he  was  to  receive  no  wages  in  case  of  leaving  without 
notice,  whatever  may  have  been  the  cause  of  his  abandonment  of  the 
service.  It  is  settled  that  absence  from  sickness  or  other  visitation  of 
God  would  not  work  a  forfeiture  of  wages  under  such  a  contract. 
Fuller  v.  Brown,  11  Met.  440.  Pari  rations,  any  abandonment  caused 
by  unforeseen  circumstances  or  events,  and  which  at  the  time  of  their 
occurrence  the  person  employed  could  not  control  or  prevent  from 
operating  to  terminate  his  employment,  ought  not  to  operate  to  cause 
a  forfeiture  of  wages. 

It  may  be  said  that  in  the  case  at  bar  the  commission  of  the  offense 
for  which  the  plaintiff  was  arrested  was  his  voluntary  act,  and  that 
the  consequences  which  followed  after  it  and  led  to  his  compulsory 
departure  from  the  defendants'  service  are  therefore  to  be  regarded 
as  bringing  this  case  within  the  category  of  a  voluntary  abandonment 
of  his  employment.  But  the  difficulty  with  this  argument  is,  that 
it  confounds  remote  with  proximate  causes.  The  same  argument 
might  be  used  in  case  of  inability  to  continue  in  service  occasioned  by 
sickness  or  severe  bodily  injury.  It  might  be  shown  in  such  a  case 


/  BY    IMPOSSIBILITY.  735 

that  some  voluntary  act  of  imprudence  or  carelessness  led  directly 
to  the  physical  consequences  which  disabled  a  party  from  continuing 
his  service  under  a  contract.  The  true  and  reasonable  rule  of  in- 
terpretation to  be  applied  to  such  contracts  is  this:  To  work  a  for- 
feiture of  wages,  the  abandonment  of  the  employer's  service  must  be 
the  direct,  voluntary  act,  or  the  natural  and  necessary  consequence 
of  some  voluntary  act  of  the  person  employed,  or  the  result  of  some 
act  committed  by  him  with  a  design  to  terminate  the  contract  or  em- 
ployment, or  render  its  further  prosecution  impossible.  But  a  for- 
feiture of  wages  is  not  incurred  where  the  abandonment  is  immedi- 
ately caused  by  acts  or  occurrences  not  foreseen  or  anticipated,  over 
which  the  person  employed  had  no  control,  and  the  natural  and  neces- 
sary consequence  of  which  was  not  to  cause  the  termination  of  the  em- 
ployment of  a  party  under  a  contract  for  services  or  labor. 

It  results  from  these  views  that  the  plaintiff  has  not  forfeited  his 
wages  by  any  breach  of  his  contract,  and  that  he  is  entitled  to  re- 
cover the  full  amount  due  to  him  for  services,  without  any  deduction 
for  damages  alleged  to  have  been  suffered  by  the  defendants  in  con- 
sequence of  his  sudden  departure  from  their  employment. 

Judgment  on  the  verdict.1 

9  Cyc.  631    (87);  W.  P.  645    (32). 


(it.)  Destruction  of  subject  matter. 

DEXTER  v.  NORTON  et  al. 

47  NEW  YORK,   62.— 1871. 

Appeal  from  a  judgment  entered  upon  an  order  of  the  General 
Term  of  the  Supreme  Court  in  the  first  judicial  district,  overruling 
plaintiff's  exceptions,  and  directing  judgment  dismissing  the  com- 
plaint, in  accordance  with  ruling  of  the  court  at  circuit. 

i  Where  a  registered  policy  life  insurance  company  which  has  entered  into 
a  contract  with  a  general  agent  for  his  services  for  a  specified  term  at  a 
stipulated  salary,  before  any  breach  of  the  contract  on  its  part,  is  re- 
strained from  further  prosecuting  its  business  or  exercising  its  corporate 
franchises  by  order  of  the  court,  and  a  receiver  of  its  assets  is  appointed  in 
proceedings  under  the  insurance  law  (§  7,  Chap.  902,  Laws  of  1869),  the 
agent  has  no  valid  claim  upon  the  fund  in  the  hands  of  the  receiver  for 
damages  for  alleged  breach  of  the  contract,  because  of  the  discontinuance 
of  the  employment;  at  least,  in  the  absence  of  evidence  that  it  was  some 
fault  of  the  company  which  induced  the  superintendent  of  the  insurance 
department  to  make  the  certificate  upon  which  the  attorney-general  acted. 
There  is,  in  such  case,  no  breach  on  the  part  of  the  company  as  perform- 
ance is  prevented,  and  the  contract  dissolved  by  the  action  of  the  State. — 
People  v.  Globe  Mut.  Ins.  Co.,  91  N.  Y.  174.  (Syllabus.)  See  9  Cyc.  630 
(80);  631  (88);  W.  P.  534  (17);  548  (34). 


736  DISCHARGE   OF    CONTRACT. 

This  action  is  brought  to  recover  damages  for  a  breach  of  a  con- 
tract to  sell  and  deliver  cotton.  Defendants,  on  the  5th  day  of 
October,  1865,  at  the  city  of  New  York,  agreed  to  sell  and  deliver  to 
the  plaintiff  607  bales  of  cotton,  bearing  certain  marks  and  num- 
bers, specified  in  the  contract,  at  the  price  of  forty-nine  cents  per 
pound,  and  fourteen  bales,  bearing  marks  and  numbers,  specified  in 
the  written  contract,  at  the  price  of  forty-three  cents  per  pound, 
the  cotton  to  be  paid  for  on  delivery.  Defendants  delivered  to  the 
plaintiff  460  bales  of  the  said  cotton,  the  remaining  161  bales  were 
accidentally  destroyed  by  fire  without  fault  or  negligence  of  the  de- 
fendants. Cotton  rose  in  value  after  the  sale,  and  plaintiff  claimed 
to  recover  the  increase  on  the  161  bales.  The  court  dismissed  the 
complaint,  upon  the  ground  that  a  fulfillment  of  the  contract  by  the 
sellers  had  become  impossible  by  the  destruction,  without  their  fault, 
of  the  subject  matter  of  the  sale,  and  they  were,  therefore,  excused 
from  the  obligation  to  perform  their  agreement.  Plaintiff  excepted. 

CHURCH,  C.  J.  The  contract  was  for  the  sale  and  delivery  of 
specific  articles  of  personal  property.  Each  bale  sold  was  designated 
by  a  particular  mark,  and  there  is  nothing  in  the  case  to  show  that 
these  marks  were  used  merely  to  distinguish  the  general  kind  or 
quality  of  the  article,  but  they  seem  to  have  been  used  to  describe  the 
particular  bales  of  cotton  then  in  possession  of  the  defendant.  Nor 
does  it  appear  that  there  were  other  bales  of  cotton  in  the  market 
of  the  same  kind,  and  marked  in  the  same  way.  The  plaintiff  would 
not  have  been  obliged  to  accept  any  other  cotton  than  the  bales  speci- 
fied in  the  bought  note. 

The  contract  was  executory,  and  various  things  remained  to  be  done 
to  the  161  bales  in  question  by  the  sellers  before  delivery.  The  title, 
therefore,  did  not  pass  to  the  vendee,  but  remained  in  the  vendor. 
Joyce  v.  Adams,  8  N.  Y.  291. 

This  action  was  brought  by  the  purchaser  against  the  vendor  to 
recover  damages  for  the  non-delivery  of  the  cotton,  and  the  important 
and  only  question  in  the  case  is,  whether  upon  an  agreement  for  the 
sale  and  delivery  of  specific  articles  of  personal  property,  under  cir- 
cumstances where  the  title  to  the  property  does  not  vest  in  the  vendee, 
and  the  property  is  destroyed  by  an  accidental  fire  before  delivery  with- 
out the  fault  of  the  seller,  the  latter  is  liable  upon  the  contract  for 
damages  sustained  by  the  purchaser. 

The  general  rule  on  this  subject  is  well  established,  that  where  the 
performance  of  a  duty  or  charge  created  by  law  is  prevented  by  in- 
evitable accident  without  the  fault  of  the  party  he  will  be  excused, 
but  where  a  person  absolutely  contracts  to  do  a  certain  thing  not 
impossible  or  unlawful  at  the  time,  he  will  not  be  excused  from  the 
obligations  of  the  contract  unless  the  performance  is  made  unlawful, 
or  is  prevented  by  the  other  party. 


I  BY    IMPOSSIBILITY.  737 

Neither  inevitable  accident,  nor  even  those  events  denominated 
acts  of  God  will  excuse  him,  and  the  reason  given  is  that  he  might 
have  provided  against  them  by  his  contract.  Paradine  v.  Jane,  Aleyn, 
27;  Harmony  v.  Bingham,  12  N.  Y.  99;  Tompkins  v.  Dudley,  25 
N.  Y.  272. 

But  there  are  a  variety  of  cases  where  the  courts  have  implied  a 
condition  in  the  contract  itself,  the  effect  of  which  was  to  relieve  the 
party  when  the  performance  had,  without  his  fault,  become  impossible ; 
and  the  apparent  confusion  in  the  authorities  has  grown  out  of  the 
difficulty  in  determining  in  a  given  case  whether  the  implication  of  a 
condition  should  be  applied  or  not,  and  also  in  some  cases  in  placing 
the  decision  upon  a  wrong  basis.  The  relief  afforded  to  the  party  in 
the  cases  referred  to  is  not  based  upon  exceptions  to  the  general  rule, 
but  upon  the  construction  of  the  contract. 

For  instance,  in  the  case  of  an  absolute  promise  to  marry,  the  death 
of  either  party  discharges  the  contract,  because  it  is  inferred  or  pre- 
sumed that  the  contract  was  made  upon  the  condition  that  both 
parties  should  live. 

So  of  a  contract  made  by  a  painter  to  paint  a  picture,  or  an 
author  to  compose  a  work,  or  an  apprentice  to  serve  his  master  a 
specified  number  of  years,  or  in  any  contract  for  personal  services 
dependent  upon  the  life  of  the  individual  making  it,  the  contract  is 
discharged  upon  the  death  of  the  party,  in  accordance  with  the  condi- 
tion of  continued  existence,  raised  by  implication.  2  Smith's  Lead- 
ing Cases,  50. 

The  same  rule  has  been  laid  down  as  to  property :  "As  if  A  agrees 
to  sell  and  deliver  hi's  horse  Eclipse  to  B  on  a  fixed  future  day,  and 
the  horse  die  in  the  interval,  the  obligation  is  at  an  end."  Benjamin 
on  Sales,  424.  In  replevin  for  a  horse,  and  judgment  of  retorno 
Tiabendo,  the  death  of  the  horse  was  held  a  good  plea  in  an  action  upon 
the  bond.  12  Wend.  589.  In  Taylor  v.  Caldwell  (113  E.  C.  L.  R. 
824)  A  agreed  with  B  to  give  him  the  use  of  a  music  hall  on  specified 
days,  for  the  purpose  of  holding  concerts,  and  before  the  time  arrived 
the  building  was  accidentally  burned;  held,  that  both  parties  were 
discharged  from  the  contract.  Blackburn,  J.,  at  the  close  of  his 
opinion,  lays  down  the  rule  as  follows:  "The  principle  seems  to  us 
to  be,  that  in  contracts  in  which  the  performance  depends  on  the  con- 
tinued existence  of  a  given  person  or  thing,  a  condition  is  implied  that 
the  impossibility  of  performance,  arising  from  the  perishing  of  the 
person  or  thing,  shall  excuse  the  performance."  And  the  reason  given 
for  the  rule  is,  "because  from  the  nature  of  the  contract,  it  is  appar- 
ent that  the  parties  contracted  on  the  basis  of  the  continued  existence 
of  the  particular  person  or  thing." 

In  School  District  No.  1  v.  Dauchy  (25  Conn.  530)  the  defendant 
had  agreed  to  build  a  school-house  by  the  first  of  May,  and  had  it 


738  DISCHARGE   OF    CONTRACT. 

nearly  completed  on  the  twenty-seventh  of  April,  when  it  was  struck 
by  lightning  and  burned;  and  it  was  held,  that  he  was  liable  in 
damages  for  the  non-performance  of  the  contract.  But  the  court, 
while  enforcing  that  general  rule  in  a  case  of  evident  hardship,  recog- 
nizes the  rule  of  an  implied  condition  in  case  of  the  destruction  of  the 
specific  subject  matter  of  the  contract ;  and  this  is  the  rule  of  the  civil 
law.  Pothier  on  Contracts  and  Sale,  art.  4,  §  1,  p.  31. 

We  were  referred  to  no  authority  against  this  rule.  But  the  learned 
counsel  for  the  appellant,  in  his  very  able  and  forcible  argument,  in- 
sisted that  the  general  rule  should  be  applied  in  this  case.  While  it 
is  difficult  to  trace  a  clear  distinction  between  this  case  and  those 
where  no  condition  has  been  implied,  the  tendency  of  the  authorities, 
so  far  as  they  go,  recognizes  such  a  distinction,  and  it  is  based  upon 
the  presumption  that  the  parties  contemplated  the  continued  existence 
of  the  subject  matter  of  the  contract. 

The  circumstances  of  this  case  are  favorable  to  the  plaintiff.  The 
property  was  merchandise  sold  in  the  market.  The  defendant  could, 
and  from  the  usual  course  of  business,  we  may  infer,  did  protect  him- 
self by  insurance ;  but  in  establishing  rules  of  liability  in  commercial 
transactions,  it  is  far  more  important  that  they  should  be  uniform 
and  certain  than  it  is  to  work  out  equity  in  a  given  case.  There  is  no 
hardship  in  placing  the  parties  (especially  the  buyer)  in  the  position 
they  were  in  before  the  contract  was  made.  The  buyer  can  only  lose 
the  profits  of  the  purchase;  the  seller  may  lose  the  whole  contract 
price,  and  if  his  liability  for  non-delivery  should  be  established,  the 
enhanced  value  of  the  property.  After  considerable  reflection,  I  am 
of  the  opinion  that  the  rule  here  indicated  of  an  implied  condition 
in  case  of  the  destruction  of  the  property  bargained,  without  fault  of 
the  party,  will  operate  to  carry  out  the  intention  of  the  parties  under 
most  circumstances,  and  will  be  more  just  than  the  contrary  rule. 
The  buyer  can  of  course  always  protect  himself  against  the  effect  of  the 
implied  condition,  by  a  provision  in  the  contract  that  the  property 
shall  be  at  the  risk  of  the  seller. 

Upon  the  grounds  upon  which  this  rule  is  based  of  an  implied 
condition,  it  can  make  no  difference  whether  the  property  was  de- 
stroyed by  an  inevitable  accident,  or  by  an  act  of  God,  the  condition 
being  that  the  property  shall  continue  to  exist.  If  we  were  creating 
an  exception  to  the  general  rule  of  liability,  there  would  be  force  in  the 
considerations  urged  upon  the  argument,  to  limit  the  exception  to 
cases  where  the  property  was  destroyed  by  the  act  of  God,  upon 
grounds  of  public  policy,  but  they  are  not  material  in  adopting  a  rule 
for  the  construction  of  the  contract  so  as  to  imply  a  condition  that 
the  property  was  to  continue  in  existence.  It  can  make  no  difference 
how  it  was  destroyed,  so  long  as  the  party  was  not  in  any  degree  in 
fault.  The  minds  of  the  parties  are  presumed  to  have  contemplated 


BY    IMPOSSIBILITY.  739 

the  possible  destruction  of  the  property,  and  not  the  manner  of  its 
destruction;  and  the  supposed  temptation  and  facility  of  the  seller 
to  destroy  the  property  himself,  cannot  legitimately  operate  to  affect 
the  principle  involved. 

The  judgment  must  be  affirmed. 

Allen,  Grover,  and  Eapallo,  JJ.,  concur;  Peckham  and  Folger,  JJ., 
dissent. 

Judgment  affirmed.1 
9  Cyc.  631    (94-95);  W.  P.  559   (51). 

i  In  Clarksville  Land  Co.  v.  Harriman,  68  N.  H.  374,  the  facts 
were  that  in  the  spring  of  1881  the  defendant  had  a  large  quantity  of  logs 
on  the  branches  of  Hall  stream,  ready  to  be  driven  down  the  stream.  At 
this  time  the  plaintiffs  entered  into  an  agreement  with  him  to  drive  the 
logs  down  the  stream  to  the  Connecticut  river.  Although  it  is  not  found 
in  express  terms  that  the  contract  was  to  be  performed  that  spring,  yet  such 
appears  to  have  been  the  understanding  of  the  parties.  Shortly  afterwards, 
and  before  the  plaintiffs  had  a  reasonable  time  in  which  to  complete  their 
contract,  notwithstanding  the  fact  that  they  used  due  diligence,  the  water 
in  the  stream  suddenly  fell,  and  remained  so  low  that  the  further  perform- 
ance of  the  contract  that  spring  was  rendered  impossible.  The  question  was 
whether  this  was  an  excuse  for  the  non-performance  of  the  contract  on  the 
part  of  the  plaintiff.  The  court  held  that,  "the  contract  was  made  on  the  basis 
of  the  continued  existence  of  sufficient  water  to  render  its  performance  possible. 
The  plaintiffs,  being  without  fault,  and  having  exercised  due  diligence  in  the 
performance  of  their  contract,  were  excused  from  its  further  performance  by 
the  failure  of  the  water." 

In  Stewart  v.  Stone,  127  N.  Y.  500,  the  court  said:  "By  the  contract 
now  under  consideration,  the  cheese  and  butter  were  to  be  manufactured  at 
this  factory,  and  to  be  made  from  the  milk  furnished  by  the  patrons,  of 
•whom  the  plaintiff  and  his  assignors  were  members.  The  existence  of  that 
particular  factory  was  terminated  by  its  destruction,  and  the  loss  with  it 
of  the  manufactured  product  and  of  the  milk  then  remaining  there  un- 
converted into  cheese  and  butter  rendered  it  impossible  for  the  defendant 
to  further  proceed  with  the  performance  of  his  contract  in  respect  to  those 
articles  of  material  and  product.  And  as  the  nature  of  the  agreement  was 
euch  that  it  must  be  deemed  to  have  been  contemplated  by  the  parties  to  it, 
that  the  articles  to  be  manufactured  should  be  made  only  from  the  materials 
furnished  by  the  patrons  and  at  the  factory  referred  to,  there  was  necessarily 
an  implied  condition  so  qualifying  the  defendant's  undertaking,  as  to  relieve 
him  from  performance  rendered  impossible  without  his  fault,  and  from  the 
consequences  of  his  inability  thus  occasioned  to  fulfil  his  contract  in  respect 
to  the  subject  of  the  bailment  which  was  destroyed  by  the  fire." 

In  Buffalo  and  Lancaster  Land  Co.  v.  Bellevue  Land  and  Improvement  Co., 
165  N.  Y.  247,  it  was  held  that  an  agreement  by  the  vendor  of  land,  as  a 
part  of  the  consideration  of  its  sale,  to  construct  an  electric  street  railroad 
upon  the  property  and  to  run  cars  thereon  "as  often  as  once  every  half 
hour  from  7  A.  M.  to  8  P.  M.  each  day,  as  such  street  railroads  are  usually 
run"  is  not  violated,  so  as  to  entitle  the  purchasers  to  rescind  the  contract, 
by  the  fact  that  on  certain  days  during  a  winter  of  unusual  severity  there 
was  a  failure  to  run  cars  at  the  times  named  on  account  of  heavy  snows, 
the  interruptions  not  being  due  to  any  omission  on  the  part  of  the  vendor, 
which  operated  the  road  on  the  days  in  question  as  similar  roads  in  the 


740  DISCHARGE   OF   CONTRACT. 

WILMINGTON  TKANSPORTATION  CO.  v.  O'NEIL. 

98    CALIFORNIA,    1.— 1893. 

Action  on  contract.  Defense,  impossibility  of  performance.  Judge- 
ment for  plaintiff.  Defendant  appeals. 

Defendant  chartered  plaintiff's  boat,  covenanting  to  return  the 
same  in  good  condition,  and  should  it  "be  lost  or  damaged  to  the 
extent  that  it  cannot  be  put  in  the  same  good  condition  as  when 
received  .  .  to  pay  ...  the  sum  of  $3500"  for  the  same.  The 
boat  was  lost  in  a  storm  without  negligence  on  the  part  of  defendant. 

VAN  CLIEP,  C.  .  .  .  The  defendant  appeals  from  the  judgment 
and  contends:  1.  That  the  answer  raised  a  material  issue  as  to 
whether  the  lighter  was  lost  by  inevitable  accident;  2.  That  the 
sum  to  be  paid  ($3500)  in  case  the  lighter  should  be  lost  or  damaged, 
etc.,  was  not  intended  to  be  fixed  or  liquidated  damages,  and  that 
such  intention  does  not  appear  from  the  agreement  properly  con- 
strued; and  3.  That  if  the  sum  of  $3500  was  intended  as  liquidated 
damages,  the  agreement,  to  that  extent,  is  made  void  by  sections 
1670  and  1671  of  the  Civil  Code. 

I  think  the  first  point  cannot  be  sustained  by  the  authorities. 
The  defendant  expressly  promised  to  pay  in  case  the  lighter  should  be 
lost,  without  any  provision  or  qualification  in  the  contract  as  to  the 
manner  or  cause  of  such  loss.  Where  a  party  has  expressly  under- 
taken, without  any  qualification,  to  do  anything  not  naturally  or 
necessarily  impossible  under  all  circumstances,  and  does  not  do  it, 
he  must  make  compensation  in  damages,  though  the  performance  was 
rendered  impracticable,  or  even  impossible,  by  some  unforeseen  cause 
over  which  he  had  no  control,  but  against  which  he  might  have  pro- 
vided in  his  contract.  Wharton  on  Contracts,  §§  311,  314,  and 
authorities  there  cited,  particularly  School  District  v.  Dauchy,  25 
Conn.  530;  68  Am.  Dec.  371;  Harmony  v.  Bingham,  12  N.  Y.  99; 
62  Am.  Dec.  142 ;  Tompkins  v.  Dudley,  25  N.  Y.  272 ;  82  Am.  Dec. 
349.  It  is  to  be  observed,  however,  that  the  contract  here  is  not 
merely  to  return,  or  to  redeliver  the  lighter  to  plaintiff,  but  also  to 
pay  $3500  in  case  the  lighter  should  be  lost;  and  that  there  is  no 
pretense  that  such  payment  has  been  rendered  impossible  or  im- 
practicable by  any  cause;  so  that  the  alleged  casus  can  apply  only  to 
the  promise  to  redeliver  the  lighter,  while  the  action  is  based  solely 

vicinity  were  operated;  the  court  saying  that  "there  are  many  contracts 
from  which  by  their  very  nature  a  condition  may  be  implied  that  a  party 
will  be  relieved  from  the  consequences  of  non-performance  in  some  slight 
particular,  where  the  obligation  is  qualified,  or  when  performance  is  ren- 
dered impossible  without  his  fault,  and  we  think  the  contract  in  question  be- 
longed to  that  class." 


BY  IMPOSSIBILITY.  741 

upon  the  alleged  breach  of  the  promise  to  pay  in  case  the  lighter  should 
be  lost. 

If  I  am  not  mistaken  in  this  view  of  the  nature  of  the  case,  the 
issue  as  to  the  cause  of  the  loss  is  wholly  immaterial.  The  possibility 
of  a  loss  was  foreseen  and  provided  for  in  the  agreement,  whereby  the 
defendant  unqualifiedly  obligated  himself  to  pay  in  the  event  of  a  loss 
from  any  cause;  and  the  only  qualification  or  limitation  of  this  obli- 
gation by  the  law  is  that  it  would  not  bind  the  defendant  in  case 
the  loss  had  been  caused  by  the  culpable  negligence  or  other  wrongful 
act  of  the  plaintiff,  of  which  there  is  no  pretense. 

[On  the  second  and  third  points  the  court  decides  in  favor  of  the 
defendant.] 

I  therefore  conclude  that  the  judgment  should  be  reversed  and  the 
cause  remanded  for  a  new  trial,  with  leave  to  the  parties  to  amend 
their  pleadings  if  so  advised. 

For  the  reasons  given  in  the  foregoing  opinion  the  judgment  is 
reversed  and  the  cause  remanded  for  a  new  trial,  with  leave  to  the 
parties  to  amend  their  pleadings  if  so  advised.1 

9  Cyc.  625    (52)  ;  627   (66). 

i  In  Drake  v.  White,  117  Mass.  10,  the  action  was  upon  the  following 
agreement,  signed  by  the  defendants:  "Boston,  October  22d,  1872.  Re- 
ceived of  John  E.  Drake  one  Morris  &  Ireland  fireproof  safe,  which  we 
promise  to  deliver  the  same  to  said  Drake,  or  its  equivalent  in  money, 
on  payment  of  a  certain  note  signed  by  said  Drake,  dated  October  22d,  1872, 
payable  in  four  months  from  date,  for  the  sum  of  $276.68."  The  plaintiff 
paid  his  note  at  maturity,  and  made  a  demand  for  the  safe,  before  bringing 
this  action.  The  safe  was  destroyed  by  the  fire  of  November  9th,  1872,  and 
there  was  no  evidence  of  negligence  or  want  of  due  care  upon  the  part  of 
the  defendants.  The  court  said:  "The  parties  have  reduced  their  con- 
tract to  writing,  and  have  omitted  to  attach  to  the  defendants'  liability  for 
the  property  any  limitation  whatever.  On  the  contrary,  their  express 
promise  is  to  do  one  or  the  other  of  two  things:  either  to  return  the  property 
specifically,  or  to  pay  for  it  in  money.  There  can  be  no  doubt  that  if  a 
creditor  sees  fit  to  accept  a  deposit  of  security  upon  such  terms,  and  to 
place  himself  in  the  position  of  an  insurer  of  its  safety,  he  can  legally  do> 
so.  It  is  not  difficult  to  suppose  a  case  in  which  the  parties  might  find  it 
convenient  that  the  business  of  guarding  against  the  risk  of  fire  or  other 
accident  should  be  attended  to  by  the  depositary.  But  however  that  may 
be,  the  proper  interpretation  of  the  contract  is  to  be  determined  by  the 
general  rules  of  construction  recognized  by  the  law;  and  if  the  parties  have 
improvidently  made  their  contract  more  onerous  than  they  expected,  the 
difficulty  cannot  be  removed  by  a  violation  of  those  rules." 


742  DISCHARGE   OF    C'ONTKACT. 

ANGUS  v.  SCULLY. 

176  MASSACHUSETTS,  357.— 1900. 

Action  by  one  Angus  and  others  against  one  Scully  to  recover  for 
services  performed  in  moving  a  building.  From  a  judgment  in 
favor  of  plaintiffs,  defendant  excepts.  Exceptions  overruled. 

HAMMOND,  J.  The  contract  was  that  the  plaintiffs  should  move 
a  large  building  belonging  to  the  defendants  from  a  lot  on  Third  Street 
to  a  lot  on  First  Street,  and  also  change  the  location  of  two  other 
buildings,  of  which  one  was  on  the  First  Street  lot,  and  one  on  the 
Third  Street  lot ;  and  the  defendant  was  to  pay  the  $840.  In  accord- 
ance with  the  agreement,  the  plaintiffs  began  the  work.  "They  first 
moved  the  house  on  the  Third  Street  lot,  and  then  began  to  move  the 
large  building  from  the  Third  Street  lot  across  certain  open  lots 
toward  the  lot  on  First  Street.  When  said  last-named  building  had 
been  moved  about  half  the  distance  to  said  lot  on  First  Street  it  was 
•entirely  consumed  by  fire  at  some  time  during  the  night,  and  there- 
upon, with  the  assent  of  the  defendant,  no  further  work  was  done 
in  moving  either  of  the  other  buildings." 

In  this  action  the  plaintiffs  seek  to  recover  the  fair  value  of  the  ser- 
vices rendered  by  them  in  the  work  done  down  to  the  time  of  the 
fire.  The  court  refused  to  rule  as  requested  by  the  defendant,  that  the 
plaintiffs  could  not  recover,  and  submitted  the  case  to  the  jury  upon 
instructions  which  would  authorize  them  to  find  for  the  plaintiffs  if 
they  were  satisfied  that  the  fire  was  not  attributable  to  any  negligence 
of  the  plaintiffs.  We  see  no  error  in  the  rulings  under  which  the 
case  thus  went  to  the  jury.  Clearly,  one  of  the  implied  conditions 
of  the  contract  was  that  the  building  should  continue  to  exist.  Upon 
the  destruction  of  the  building,  the  work  could  not  be  completed 
according  to  the  contract. 

Authorities  differ  as  to  the  rights  of  the  parties  in  such  a  case,  but 
so  far  as  respects  this  commonwealth  the  rule  is  well  settled.  As 
stated  by  Knowlton,  J.,  in  Butterfield  v.  Byron  (153  Mass.  517,  523) 
"the  principle  seems  to  be  that  when,  under  an  implied  contract, 
the  parties  are  to  be  excused  from  performance  if  a  certain  event  hap- 
pens, and  by  reason  of  the  happening  of  the  event  it  becomes  im- 
possible to  do  that  which  was  contemplated  by  the  contract,  there  is  an 
implied  assumpsit  for  what  has  properly  been  done  by  either  of  them ; 
the  law  dealing  with  it  as  done  at  the  request  of  the  other,  and  creat- 
ing a  liability  to  pay  for  its  value,  to  be  determined  by  the  price 
stipulated  in  the  contract,  or  in  some  other  way  if  the  contract  price 
cannot  be  made  applicable."  Stated  more  narrowly,  and  with  par- 
ticular reference  to  the  circumstances  of  this  case,  the  rule  may  be 
said  to  be  that  where  one  is  to  make  repairs  or  do  any  other  work 


BY    IMPOSSIBILITY.  743 

on  the  house  of  another  under  a  special  contract,  and  his  contract 
becomes  impossible  of  performance  on  account  of  the  destruction  of 
the  house  without  any  fault  on  his  part,  then  he  may  recover  for  what 
he  has  done.  This  case  comes  clearly  within  this  rule.  Lord  v. 
Wheeler,  1  Gray,  282;  Butterfield  v.  Byron,  ubi  supra,  and  cases 
therein  cited. 

Exceptions  overruled.1 
6  Cyc.  80  (8-9)  ;  W.  P.  537   (21). 


SIEGEL,  COOPER  &  CO.  v.  THE  EATON  &  PRINCE  CO. 

165  ILLINOIS,  550.— 1897. 

Action  by  the  Eaton  &  Prince  Company  against  Siegel,  Cooper 
&  Co.  There  was  a  judgment  for  plaintiff,  which  was  affirmed  by  the 
appellate  court  (60  111.  App.  639),  and  defendant  appeals. 

This  is  an  action  by  appellee  against  appellant,  to  recover  money 
due  appellee  under  a  contract  to  construct  an  elevator  in  a  building 
belonging  to  appellant,  which  was  destroyed  during  the  progress  of 
the  work.  The  whole  contract  price  was  $2500,  payable  as  the  work 
progressed,  as  follows:  "One-half  when  engine  is  on  foundation 
and  final  payment  to  be  due  and  payable  when  the  elevator  is  put 
up  in  good  running  order."  The  first  count  of  the  declaration,  which 
is  in  assumpsit,  sets  up  the  contract,  and  alleges  that  the  engine 
mentioned  therein  was  on  the  foundation  prior  to  the  fire,  and  claimed 
a  right  to  recover  $1250  by  the  terms  of  the  contract.  The  second 
count  also  set  up  the  contract,  and  alleged  the  performance  of  work 
and  furnishing  materials  by  plaintiff,  of  the  value  of  $2000,  when, 
without  its  fault,  the  building  was  destroyed.  The  plea  is  the  gen- 
eral issue.  The  cause  was  tried  on  the  following  stipulation: 

"It  is  hereby  stipulated  and  agreed  that  the  plaintiff  and  de- 
fendants entered  into  the  contract  on  the  first  day  cf  June,  1891 ; 
that  under  the  said  contract,  the  plaintiff  on  the  first  day  of  August, 
1891,  had  the  engine  mentioned  therein  on  its  foundation,  but  not 
leveled  nor  fastened  to  said  foundation,  and  had  prepared  material 
and  done  labor  under  said  contract  to  the  total  value  of  $1390;  that 
neither  the  cabs,  the  cage,  nor  the  cable  for  same  was  on  said  premises 
at  the  time  the  premises  of  Siegel,  Cooper  &  Co.,  were  destroyed  by 
fire;  that  the  engine  had  been  placed  on  the  foundation  as  aforesaid 
about  six  o'clock  on  Saturday  afternoon,  August  1,  1891 ;  that  fire 
destroyed  the  premises  of  Si'egel,  Cooper  &  Co.,  in  which  said  elevator 
and  machinery  therefor  under  said  contract  was  to  be  placed,  and 

i  In  Niblo  v.  Binsse,  3  Abb.  App.  Dec.  (N.  Y.)  375,  recovery  for  the  part 
performed  is  allowed,  but  upon  the  ground  that  defendant  impliedly  con- 
tracts to  keep  the  building  in  existence. 


744  DISCHARGE   OF   CONTRACT. 

broke  out  about  7 :30  o'clock  on  Monday  morning,  August  3, 1891 ;  that 
all  work  to  be  done  under  the  contract  had  not  been  performed  when 
the  premises  were  destroyed  by  fire ;  that  the  premises  were  destroyed 
by  fire  without  the  fault  of  either  party  to  the  contract,  and  nothing 
had  been  paid  to  the  Eaton  &  Prince  Co.  by  Siegel,  Cooper  &  Co. 
under  or  upon  said  contract;  that  defendant  had  the  hatchways 
ready  for  the  elevator  work  on  July  10,  1891,  and  plaintiff  had  the 
uninterrupted  use  of  the  hatchways  on  and  after  said  date.  It  is 
further  stipulated  that  the  jury  in  this  case  shall  be  waived  and  the 
same  submitted  to  the  court  for  trial,  without  a  jury." 

The  plaintiff  recovered  judgment  for  $1390,  the  full  value  of 
material  furnished  and  labor  done.  That  judgment  has  been  affirmed 
by  the  appellate  court. 

The  trial  court  held  the  following  propositions  in  the  decision  of 
the  case: 

"The  court  holds,  as  a  matter  of  law,  that  if  the  plaintiff  made  and 
entered  into  the  contract  in  evidence  with  the  defendant,  for  the  con- 
struction of  an  elevator  and  appurtenances  as  set  forth  in  said  con- 
tract; that  work  under  said  contract  had  so  far  progressed  that  the 
engine  thereof  had  been  placed  upon  its  foundation;  and  that  after- 
wards, and  without  fault  on  the  part  of  the  plaintiff,  the  building  in 
which  said  elevator,  with  its  appurtenances,  etc.,  was  to  be  placed  or 
constructed,  was  on  or  about  August  1,  1891,  destroyed  by  fire, — then 
the  plaintiff  was  excused  from  further  compliance  with  said  contract, 
and  is  entitled  to  recover  of  and  from  the  defendant  the  sum  of  $1250, 
with  interest  thereon  at  the  rate  of  five  per  cent  per  annum,  from 
said  August  1,  1891." 

"And  the  court  further  holds  that  if  the  plaintiff  set  about  the  per- 
formance of  said  contract,  and  prepared  material  and  machinery  in 
accordance  with  the  terms  of  said  contract,  and  delivered  a  part 
thereof  to  the  building  in  which  said  elevator  and  its  appurtenances 
was  to  be  constructed  or  built,  and  that  afterwards,  and  on  or  about 
the  first  day  of  August,  1891,  the  said  building  in  which  said  elevator 
was  being  constructed  was  destroyed  by  fire,  without  the  fault  of  the 
plaintiff,  then,  as  a  matter  of  law,  the  plaintiff  is  entitled  to  recover 
of  and  from  the  defendant  the  full  value,  to  be  determined  by  the 
evidence  or  stipulation  of  the  parties,  of  all  work  done  and  material 
prepared  and  delivered  to  said  building,  pursuant  to  said  contract, 
prior  to  the  happening  of  the  fire." 

WILKIN,  J.  It  is  insisted  that  the  court  erred  in  holding  these 
propositions,  and  in  refusing  counter  propositions  asked  by  the  appel- 
lant, its  contention  being  that  the  contract  is  an  entire  one,  and  the 
building  in  which  the  elevator  was  to  be  placed  having  been  destroyed 
by  fire  before  the  time  for  final  payment,  without  any  fault  of  either 
party,  no  recovery  for  the  work  done  or  materials  furnished  could  be 


BY    IMPOSSIBILITY.  745 

had.  As  will  be  seen  from  plaintiff's  declaration,  it  proceeds  on  two 
theories :  First,  that  the  contract  was  not  an  entire  one,  so  far  as  the 
payments  were  concerned ;  and,  second,  even  if  it  was,  under  the  law 
it  was  entitled  to  recover  the  value  of  the  work  done  and  materials 
furnished  prior  to  the  destruction  of  the  building.  The  judgment 
is  upon  this  last  theory,  and  is  based  upon  the  law  as  stated  in  the 
second  of  the  above  propositions.  The  theory  upon  which  this 
proposition  is  based  is  that,  under  the  contract  requiring  the  elevator 
to  be  placed  in  a  particular  building,  it  was  the  duty  of  defendant  to 
furnish  and  provide  that  building,  and  therefore  it  is  liable,  even 
though  the  destruction  was  without  its  fault.  The  rule  of  law,  as 
we  understand  it,  is  otherwise.  Thus,  in  Add.  Cont.,  p.  401,  it  is 
said :  "Where  a  man  contracts  to  expend  materials  and  labor  on 
buildings  belonging  to  and  in  the  occupation  of  the  employer,  to  be 
paid  for  on  completion  of  the  whole,  and  before  completion  the  build- 
ings are  destroyed  by  accidental  fire,  the  contractor  is  excused  from 
completing  the  work,  but  is  not  entitled  to  any  compensation  for  the 
work  already  done,  which  perished  without  any  default  of  the  em- 
ployer." This  doctrine  is  sustained  by  Brumby  v.  Smith,  3  Ala.  123 ; 
Lord  v.  Wheeler,  1  Gray.  282 ;  Guilleu  v.  Toudy,  5  Wkly.  Notes  Gas. 
528.  The  rule  seems  to  be  adduced  from  the  case  of  Appleby  v. 
Myers,  L.  R.  2  C.  P.  651.  In  that  case  the  action  was  to  recover  for 
a  part  performance  of  a  contract  to  furnish  and  attach  to  a  building 
of  the  defendant  certain  machinery,  to  be  paid  for  upon  the  comple- 
tion of  the  work.  The  premises,  together  with  part  of  plaintiff's 
materials,  were  destroyed  by  fire  before  the  contract  was  completed. 
It  was  held  that  there  was  no  right  of  action,  the  court  saying :  "We 
think  when,  as  in  the  present  case,  the  premises  are  destroyed  without 
fault  on  either  side,  it  is  a  misfortune  equally  affecting  both  parties, 
excusing  both  from  further  performance  of  the  contract,  by  giving  a 
cause  of  action  to  neither."  See  Bish.  Cont.,  §  588. 

It  is  insisted  by  counsel  for  appellee — and  the  decision  of  the  ap- 
pellate court  i's  in  conformity  with  that  contention — that  a  different 
rule  is  announced  in  Cleary  v.  Sohier,  120  Mass.  210,  and  Rawson 
v.  Clark,  70  111.  656.  We  do  not  so  understand  either  of  these  cases. 
The  Massachusetts  case  was  upon  an  oral  contract  to  lath  and  plaster 
a  certain  building  at  a  certain  price  per  square  yard.  "No  agree- 
ment was  made  and  nothing  was  said,  as  to  terms  or  times  of  pay- 
ment, but  only  that  the  work  was  to  be  done  for  forty  cents  per  yard." 
A  certain  part  of  the  work  being  done,  the  building  was  destroyed, 
without  the  fault  of  either  party.  The  amount  claimed  by  plaintiff 
was  $474,  the  reasonable  value  of  the  work  done.  All  that  is  said  by 
the  court  in  the  decision  of  the  case  is:  "The  building  having  been 
destroyed  by  fire  without  the  fault  of  the  plaintiff,  so  that  he  could 
not  complete  his  contract,  he  may  recover  under  a  count  for  work 


746  DISCHARGE   OF    CONTRACT. 

done  and  materials  furnished;"  citing  Lord  v.  Wheeler,  supra,  and 
Wells  v.  Calnan,  107  Mass.  514.  This  in  no  way  conflicts  with 
Appleby  v.  Myers,  supra,  for  it  was  said  in  that  case:  "It  is  quite 
true  that  materials  worked  by  one  into  the  property  of  another  be- 
come a  part  of  that  property.  This  is  equally  true,  whether  it  be  fixed 
or  movable  property.  Bricks  built  into  a  wall  become  part  of  the 
house.  Thread  stitched  into  a  coat  which  is  under  repair,  or  planks 
and  nails  and  pitch  worked  into  a  ship  under  repair,  become  part  of 
the  coat  or  the  ship;  and  therefore,  generally,  and  in  the  absence  of 
something  to  show  a  contrary  intention,  the  bricklayer  or  tailor  or 
shipwright  is  to  be  paid  for  the  work  and  materials  he  has  done  and 
provided,  although  the  whole  work  is  not  complete.  It  is  not  material 
whether  in  such  case  the  noncompletion  is  because  the  shipwright 
did  not  choose  to  go  on  with  the  work  (as  was  the  case  in  Roberts  v. 
Havelock,  3  Barn.  &  Adol.  404),  or  because,  in  consequence  of  a  fire, 
he  could  not  go  on  with  it  (as  in  Menetone  v.  Athawes,  3  Burrows, 
1592).  But,  though  this  is  the  prima  facie  contract  between  those 
who  enter  into  contracts  for  doing  work  and  supplying  materials, 
there  is  nothing  to  render  it  illegal  or  absurd  in  the  workman  to  agree 
to  complete  the  whole,  and  to  be  paid  when  the  whole  is  complete, 
and  not  till  then ;  and  we  think  the  plaintiffs  in  the  present  case  had 
entered  into  such  a  contract." 

The  case  of  Rawson  v.  Clark  has  no  bearing  whatever  upon  the  case. 
There  the  plaintiff  agreed  to  "manufacture  and  place  in  the  building" 
certain  iron  work,  for  a  certain  price,  85  per  cent  of  which  was  to  be 
paid  on  the  certificate  of  the  architect  as  the  work  progressed,  and  the 
balance,  15  per  cent,  when  the  work  was  completed.  The  suit  was  for 
the  iron  work  which  had  been  manufactured.  The  evidence  showed 
that  the  price  agreed  upon  for  manufacturing  the  iron  was  $206,  and 
for  putting  it  up  about  $75.  Upon  the  completion  of  the  manufactur- 
ing of  the  iron,  and  the  delivery  of  a  small  portion  of  it,  the  defendant 
notified  the  plaintiff  that  the  building  was  not  ready  for  the  work, 
and  directed  him  to  send  no  more  until  it  should  be  ready,  promising 
to  notify  him  when  that  time  arrived.  A  week  later  the  building  was 
destroyed  by  fire.  The  time  required  to  put  up  the  work  would  have 
been  about  two  days ;  so  that  it  clearly  appeared  in  that  case  that  the 
plaintiff  was  prevented  from  completing  the  work,  not  by  the  destruc- 
tion of  the  building  by  fire,  but  because  the  defendant  did  not  have  it 
ready  for  the  work  when  plaintiff  offered  to  complete  it,  and  hence 
we  said:  "Appellees  were  in  no  way  in  default.  They  were  ready 
and  offered  to  fully  perform  within  the  time  limited,  but  were  pre- 
vented by  appellant.  The  reason  of  their  not  entirely  completing 
their  contract,  by  placing  the  iron  work  in  the  building,  was  the  de- 
fault of  the  defendant,  in  not  having  a  building  provided  for  the 
purpose."  This,  certainly,  does  not  mean  that  they  were  in  default 


BY   IMPOSSIBILITY.  747 

in  not  having  a  building  because  it  was  finally  destroyed  by  fire,  but 
because  the  building  "was  not  then  ready  for  the  work,"  etc. 

We  think  the  law  is  that  where  a  contract  is  entered  into  with 
reference  to  the  existence  of  a  particular  thing,  and  that  thing  is 
destroyed  before  the  time  for  the  performance  of  the  contract,  without 
the  fault  of  either  party,  both  parties  are  excused  from  performing  the 
contract,  but  neither  is  entitled  to  recover  any  thing  for  a  part  per- 
formance thereof. 

It  remains,  however,  to  be  determined  whether  this  contract  is  an 
entire  contract  within  that  rule.  It  will  be  seen  that  by  its  terms  pay- 
ment was  to  be  made,  not  upon  the  completion  of  the  work,  but  "as 
the  work  progresses,  as  follows:  One-half  when  the  engine  is  on 
foundation,  and  final  payment  to  be  due  and  payable  when  the  eleva- 
tor is  put  up  in  good  running  order;"  thus  clearly  providing  for  pay- 
ment by  installments.  Counsel  insist,  however,  that  this  does  not 
destroy  the  entirety  of  the  contract,  because  they  say  the  $1250  was  a 
mere  arbitrary  sum,  fixed  without  reference  to  the  value  of  the  work 
done  at  the  time  designated  for  its  payment;  and  that  the  phrase 
"when  the  engine  is  on  foundation"  merely  named  an  arbitrary  time 
at  which  a  partial  payment  should  be  made,  without  reference  to  the 
value  of  the  work  and  material  furnished  at  that  time;  and  that  the 
payment  of  the  installment  in  that  manner  was  merely  for  the  con- 
venience of  the  contractor,  and  as  an  evidence  of  the  good  faith  of 
Siegel,  Cooper  &  Co.  in  completing  its  part  of  the  contract  by  mak- 
ing the  payment.  If  all  this  were  true,  we  are  unable  to  see  why  the 
contract  is  not  severable,  so  far  as  the  payments  are  concerned.  But 
we  do  not  think  the  contract  is  fairly  susceptible  of  that  construction. 
The  $1250  is  not  a  mere  arbitrary  sum,  fixed  without  reference  to  the 
value  of  the  work  done  at  the  time  of  paying  the  installment.  Pay- 
ment was  to  be  made  as  the  work  progressed,  one-half  when  the  engine 
was  on  the  foundation.  The  parties  here  fixed  the  sum,  by  agreement, 
which  should  be  paid  when  the  work  had  progressed  thus  far,  and  pre- 
sumably with  reference  to  the  value  of  the  material  and  labor  then 
placed  in  the  defendant's  building.  That  it  served  the  convenience 
of  the  contractor,  and  evidenced  the  good  faith  of  the  employer,  in  no 
way  affects  the  case. 

Parsons,  in  his  work  on  Contracts  (6th  ed.,  vol.  2,  §  517),  speaking 
of  the  entirety  of  contracts,  says:  "If  the  part  to  be  performed  by 
one  party  consists  of  several  distinct  and  separate  items,  and  the 
price  to  be  paid  by  the  other  is  apportioned  to  each  item  to  be  per- 
formed, or  is  left  to  be  implied  by  law,  such  a  contract  will  generally 
be  held  to  be  severable;  and  the  same  rule  holds  where  the  price  to  be 
paid  is  clearly  and  distinctly  apportioned  to  different  parts  of  what 
is  to  be  performed,  although  the  latter  is  in  its  nature  single  and 
entire."  See  note  C  to  the  same  section. 


748  DISCHARGE   OF   CONTRACT. 

In  Schwartz  v.  Saunders  (46  111.  18),  Saunders  made  a  contract 
with  Schwartz  to  do  the  carpenter  work,  and  furnish  the  material 
therefor  on  a  brick  building  being  erected,  to  be  paid  for  as  the 
work  progressed,  upon  estimates  to  be  furnished  by  the  architect. 
The  building  was  blown  down,  after  an  estimate  of  certain  carpenter 
work,  and  before  the  contract  was  completed;  and  it  was  held  that 
the  contractor,  under  such  circumstances,  was  justified  in  abandoning 
the  contract,  and  entitled  to  a  mechanic's  lien  for  the  work  done. 
It  was  contended  there,  as  here,  that  the  destruction  of  the  build- 
ing absolved  both  parties,  and  protected  the  defendant  from  any 
action  for  the  work  done,  the  case  of  Appleby  v.  Myers,  supra,  being 
relied  upon  to  support  the  contention,  but  it  was  said  of  the  Appleby 
Case:  "This  case  we  have  examined,  and,  from  the  statement  of  it, 
it  would  appear  the  contract  was  unlike  the  one  between  these  parties, 
which  provides,  in  terms,  that  85  per  cent  of  the  work  estimated  by 
the  architect  should  be  paid  as  the  work  progressed,  whilst,  in  the 
case  cited,  no  payment  was  to  be  made  until  the  work  was  com- 
pleted, and,  as  it  was  not  completed,  the  mechanic  could  not  recover 
for  the  work  he  had  done."  It  is  true  that  there  are  distinguishing 
features  between  that  case  and  this,  prominent  among  which  is  the  fact 
that  there  the  defendant  had  positively  refused  to  pay  the  archi- 
tect's estimate  of  the  work  done  before  the  destruction  of  the  build- 
ing, and  afterwards  refused  to  pay  the  same,  insisting  that,  to  entitle 
him  to  pay  therefor,  he  was  bound  to  replace  the  work  destroyed 
without  any  compensation,  and  the  plaintiff's  right  to  abandon  the 
work  was  placed  partly  upon  the  refusal  to  pay  and  the  unjust  de- 
mand, as  well  as  the  destruction  of  the  building.  But  the  case 
does  not  hold  that  where,  by  the  terms  of  a  contract  of  this  character, 
payment  is  to  be  made  as  the  work  progresses,  the  doctrine  announced 
in  Appleby  v.  Myers  has  no  application. 

We  think  the  appellate  court  properly  ruled  that  plaintiff  was 
entitled  to  recover  under  the  first  count  of  the  declaration,  but  we 
are  unable  to  find  authority  or  satisfactory  reason  upon  which  to 
sustain  the  second.  The  language  "payment  to  be  made  as  the  work 
progresses"  cannot,  we  think,  be  considered  to  mean  more  than  that 
the  $1250  should  be  paid  as  stated;  that  is,  it  cannot  be  construed 
to  mean  that  the  payments,  after  the  engine  was  on  foundation,  should 
be  made  as  the  work  progressed,  it  being  expressly  stated,  "Final 
payment  to  be  due  and  payable  when  the  elevator  is  put  up  in  good 
running  order," — that  is,  when  the  work  was  complete.  Therefore, 
on  a  proper  construction  of  the  contract,  the  second  proposition 
should  have  been  refused.  There  was,  however,  no  error  in  the  judg- 
ment of  the  trial  court,  because  under  the  first  proposition,  which, 
as  we  have  seen,  was  properly  held,  the  plaintiff  was  entitled  to  re- 
cover the  $1250,  with  5  per  cent  interest  thereon  from  August  1, 


BY   IMPOSSIBILITY.  749 

1891,  to  the  date  of  the  judgment,  July  5,  1895,  which  amounted  to 
considerable  more  than  the  $1390  recovered.  The  judgment  below 
will  be  affirmed. 

Judgment  affirmed. 
Phillips  and  Cartwright,  JJ.,  dissenting. 


(tit.)  Death  or  disability  of  a  party  in  contract  for  personal  service. 

SPALDING  et  al  v.  EOSA  et  al. 
71  NEW  YORK,  40.— 1877. 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court, 
in  the  third  judicial  department,  in  favor  of  defendants,  entered 
upon  an  order  overruling  exceptions  and  directing  a  judgment  upon 
an  order  on  trial  dismissing  plaintiffs'  complaint. 

This  action  was  brought  by  plaintiffs,  who  were  the  owners  and 
managers  of  the  Olympic  Theater,  in  St.  Louis,  to  recover  damages 
for  an  alleged  breach  of  contract  by  defendants.  By  the  con- 
tract, defendants  agreed  to  furnish  the  "Wachtel  Opera  Troupe," 
to  give  four  performances  per  week  at  plaintiffs'  theater  for  two 
weeks,  commencing  the  26th  or  27th  February,  1872,  plaintiffs  to  re- 
ceive twenty  per  cent  of  the  gross  receipts,  up  to  $1800  per  week,  and 
defendants  the  balance.  Prior  to  the  time  specified  in  the  contract, 
Wachtel,  who  was  the  chief  singer  and  attraction,  and  who  gave  the 
name  to  the  troupe,  was  taken  sick,  and  at  the  time  was  unable  to 
sing.  Defendants  in  consequence  did  not  furnish  the  troupe  at  the 
time  specified. 

The  court  at  the  close  of  the  evidence  directed  a  dismissal  of 
the  complaint,  to  which  plaintiffs'  counsel  duly  excepted.  Excep- 
tions were  ordered  to  be  heard  at  first  instance  at  General  Term. 

ALLEN,  J.  The  contract  of  the  defendants  was  for  four  perform- 
ances per  week  for  two  weeks,  commencing  on  the  26th  or  27th  of 
February,  1872,  by  the  "Wachtel  Opera  Troupe,"  at  the  plaintiffs' 
theater  in  St.  Louis. 

The  "Wachtel  Opera  Troupe"  was  well  known  by  its  name  as  the 
company  at  the  time  of  making  the  contract,  performing  in  operas, 
under  temporary  engagements,  at  the  principal  theaters  and  opera- 
houses  in  the  larger  cities  of  the  United  States,  and  composed  of 
Wachtel  as  the  leader  and  chief  attraction,  and  from  whom  the  com- 
pany took  its  name,  and  those  associated  with  him  in  different  capac- 
ities, and  taking  the  different  parts  in  the  operatic  exhibitions  for 
which  they  were  engaged.  The  proof  of  the  fact  that  there  was  a 
troupe  or  company  known  by  that  name,  was  competent,  as  showing 
what  particular  company  was  in  the  minds  of  the  contracting  parties, 


750  DISCHARGE   OF   CONTRACT. 

and  intended,  by  the  terms  used,  and  as  there  was  no  controversy 
upon  this  subject,  and  no  ambiguity  arising  out  of  the  extrinsic  evi- 
dence, there  was  no  question  of  fact  for  the  jury. 

Wachtel  had  acquired  a  reputation  in  this  country,  as  well  as  in 
Europe,  as  a  tenor  singer  of  superior  excellence ;  and,  in  the  language 
of  the  witnesses,  had  made  a  "decided  hit"  in  his  professional  per- 
formances here.  It  was  his  name  and  capabilities  that  gave  character 
to  the  company,  and  constituted  its  chief  attraction  to  connoisseurs 
and  lovers  of  music,  filling  the  houses  in  which  he  appeared.  His  con- 
nection with  the  company  was  the  inducement  to  the  plaintiffs  to 
enter  into  the  contract,  and  give  the  troupe  eighty  per  centum  of 
the  gross  receipts  of  the  houses,  one-half  of  which  went  to  Wachtel. 
Both  the  plaintiffs  testified  that  it  was  Wachtel's  popularity  and  capa- 
bilities as  a  singer  upon  which  they  relied  to  fill  their  theater  and  re- 
imburse themselves  for  their  expenses  and  make  a  profit.  The  ap- 
pearance of  Wachtel  in  the  operas  was  the  principal  thing  contracted 
for,  and  the  presence  of  the  others  of  the  company  was  but  incidental 
to  the  employment  and  appearance  of  the  "famous  German  tenor." 
The  place  of  any  other  member  of  the  company  could  have  been  sup- 
plied, but  not  so  of  Wachtel.  His  presence  was  of  the  essence  of 
the  contract,  and  his  part  in  the  performances  could  not  be  performed 
by  a  deputy  or  any  substitute.  The  plaintiffs  would  not  have  been 
bound  to  accept,  and  would  not  have  accepted  the  services  of  the  troupe 
under  the.  contract  without  Wachtel;  it  would  not  have  been  the 
"Wachtel  Opera  Troupe"  contracted  for  without  him. 

There  is  no  dispute  as  to  the  facts.  The  only  question  is  one  of 
law,  as  to  the  effect  of  the  sickness,  and  consequent  inability  of 
Wachtel  to  fulfill  the  engagement,  upon  the  obligations  of  the  defend- 
ants. So  far  as  this  question  is  concerned,  it  must  be  treated  as  if  the 
contract  was  for  the  performance  by  Wachtel  alone;  as  if  he  was  the 
sole  performer  contracted  for.  This  follows  from  the  conceded  fact 
that  his  presence  was  indispensable  to  the  performance  of  the  services 
agreed  to  be  rendered  by  the  entire  company.  In  this  view  of  the 
case,  the  legal  question  is  very  easy  of  solution,  and  can  receive  but 
one  answer.  The  sickness  and  inability  of  Wachtel  occurring  with- 
out the  fault  of  the  defendants,  constitutes  a  valid  excuse  for  the 
non-performance  of  the  contract.  Contracts  of  this  character,  for 
the  personal  services,  whether  of  the  contracting  party  or  of  a  third 
person,  requiring  skill,  and  which  can  only  be  performed  by  the  par- 
ticular individual  named,  are  not,  in  their  nature,  of  absolute  obliga- 
tion under  all  circumstances.  Both  parties  must  be  supposed  to  con- 
template the  continuance  of  the  ability  of  the  person  whose  skilled 
services  are  the  subject  of  the  contract,  as  one  of  the  conditions  of  the 
contract.  Contracts  for  personal  services  are  subject  to  this  im- 
plied condition,  that  the  person  shall  be  able  at  the  time  appointed 


BY    IMPOSSIBILITY.  751 

to  perform  them;  and  if  he  dies,  or  without  fault  on  the  part  of  the 
covenantor  becomes  disabled,  the  obligation  to  perform  is  extinguished. 
This  is  so  well  settled  by  authority  that  it  is  unnecessary  to  do  more 
than  refer  to  a  few  of  the  authorities  directly  in  point.  People  v. 
Manning,  8  Cow.  297;  Jones  v.  Judd,  4  N.  Y.  411;  Clark  v.  Gilbert, 
26  N.  Y.  279 ;  Wolfe  v.  Howes,  24  Barb.  174,  666 ;  20  N.  Y.  197 ; 
Gray  v.  Murray,  3  Johns.  Ch.  R.  167;  Robinson  v.  Davison,  L.  R. 
6  Excheq.  269;  Boast  v.  Firth,  4  L.  R.  Com.  Pleas,  1.  The  same 
principle  was  applied  in  Dexter  v.  Norton  (47  N.  Y.  62)  and  for 
the  same  reasons,  to  a  contract  for  the  delivery  of  a  quantity  of 
specified  cotton  destroyed  by  fire,  without  the  fault  of  the  vendor, 
intermediate  the  time  of  making  the  executory  contract  of  sale  and 
the  time  for  the  delivery. 

The  judgment  must  be  affirmed.  All  concur,  except  Folger,  J., 
absent. 

Judgment  affirmed.1 

9  Cyc.  632-633    (96-99,  1)  ;  W.  P.  545    (30). 

i  See  also  Lacy  v.  Getman,  ante  p.  547 ;  Dickinson  v.  Calahan's  Adm'rs, 
ante,  p.  542. 

Wilful  abandonment  of  contract  prevents  recovery  for  benefits  already  con- 
ferred by  party  in  default,  and  renders  him  liable  to  respond  in  damages  for 
the  breach. — Lawrence  v.  Miller,  86  N.  Y.  131.  Contra:  Britton  v.  Turner, 
6  N.  H.  481.  But  where  full  performance  by  plaintiff  is  impossible  he  may 
recover  for  benefits  conferred.  Wolfe  v.  Howes,  20  N.  Y.  197;  Green  v.  Gil- 
bert, 21  Wis.  395;  Manhattan  Life  Ins.  Co.  v.  Buck,  93  U.  S. -24.  For  re- 
covery for  benefits  conferred  upon  abandonment  of  illegal  contract,  see  Ber- 
nard v.  Taylor,  ante,  p.  451. 


CHAPTER  V. 

DISCHARGE  OF  CONTRACT  BY  OPERATION  OF  LAW. 

Merger. 

CLIFTON  v.  JACKSON  IRON  CO. 

74   MICHIGAN,    183.— 1889. 

Trespass.     Defendant  brings  error. 

CAMPBELL,  J.  The  plaintiff  sued  defendant  for  trespass  in  cutting 
his  timber  in  the  winter  of  1885-6.  The  defense  set  up  was  that 
the  timber,  though  on  plaintiff's  land,  belonged  to  defendant.  This 
claim  was  based  on  the  fact  that  on  September  22,  1877,  a  little 
more  than  eight  years  before  the  trespass,  defendant  made  a  contract 
to  sell  the  land  trespassed  on  to  the  plaintiff,  but  with  this  reservation : 

"Reserving  to  itself,  its  assigns  and  corporate  successors,  the  ownership 
of  pine,  butternut,  hemlock,  beech,  maple,  birch,  iron-wood,  or  other  timber 
suitable  for  sawing  into  lumber,  or  for  making  into  fire-wood  or  charcoal, 
now  on  said  tract  of  land,  and  also  the  right  to  cut  and  remove  any  or  all 
of  said  timber,  at  its  option,  at  any  time  within  ten  years  from  and  after  the 
date  of  these  presents." 

There  were  some  unimportant  provisions,  also,  not  now  material. 
Plaintiff  showed  that  on  November  4,  1885,  the  defendant  conveyed 
to  him  the  land  in  question  by  full  warranty  deed,  and  with  no  ex- 
ceptions or  reservations  whatever.  The  testimony  of  defendant's 
agent,  who  cut  the  land,  tended  to  prove  that  when  the  cutting  was 
done  the  defendant's  manager  did  not  dispute  plaintiff's  title,  but 
gave  the  agent  to  understand  that  it  belonged  to  plaintiff,  but  that 
some  arrangement  would  be  made  about  it;  that  plaintiff  was  then 
absent,  and  there  was  no  conversation  with  him  or  his  wife  on 
the  subject.  The  bill  of  exceptions  certifies  that  no  other  evidence 
was  given  concerning  the  right  to  cut  timber.  Upon  these  facts  the 
court  held  that  the  deed  conveyed  the  right  in  the  timber  to  plaintiff, 
and  that  he  owned  it. 

Had  no  deed  been  made,  it  is  agreed  that  the  reservation  would 
have  prevailed.  But  a  previous  contract  cannot  contradict  or  control 
the  operation  of  a  deed.  It  was  competent  for  defendant  to  relinquish 
any  contract  reservation,  and  a  deed  which  grants  and  warrants  with- 
out any  reservation  has  that  effect.  We  do  not  hold  that  if  the  deed 
were  so  made  by  some  mistake  within  the  cognizance  of  equity  the 

752 


BY   OPERATION    OF    LAW.  753 

mistake  might  not  be  corrected.  Neither  need  we  consider  whether, 
after  such  a  deed,  there  might  not  be  such  dealings  as  to  render  such 
timber-cutting  lawful,  by  license,  express  or  implied.  In  this  case 
there  was  no  testimony  tending  to  show  that  the  deed  was  not  sup- 
posed and  intended  to  close  up  all  the  rights  of  the  parties. 

The  judgment  must  be  affirmed. 
9  Cyc.  633-635   (5-11);  W.  P.  874   (21). 


Alteration  or  loss  of  a  written  instrument. 

SMITH  v.  MACE. 
44  NEW  HAMPSHIRE,  553.— 1863. 

Assumpsit  to  recover  a  balance  due  on  the  sale  of  lands.  Ver- 
dict for  plaintiff. 

Defendants  gave  plaintiff  two  notes  for  $300  and  $400,  which  they 
alleged  had  been  altered  by  inserting  the  word  "annually"  after  the 
rate  of  interest.  The  court  charged  that  if  the  word  "annually"  was 
wrongfully  and  fraudulently  inserted,  the  notes  would  be  void,  but 
the  debt  would  not  be  paid  and  the  plaintiff  might  recover. 

BELLOWS,  J.  The  principal  question  in  this  case  arises  upon  the 
instructions  to  the  jury,  that  although  the  notes  given  for  the  price 
of  the  land  would  be  rendered  void  by  fraudulent  alteration,  yet  the 
debt  would  still  remain,  and  the  plaintiff  might  recover  upon  the 
general  count. 

The  ground  taken  by  the  plaintiff  is,  that  the  notes  were  not  pay- 
ment of  the  price,  unless  so  agreed  by  the  parties,  and  that  upon  the 
production  of  the  notes  at  the  trial,  or  proof  of  their  loss  or  destruc- 
tion, the  plaintiff  might  recover  upon  the  original  consideration.  As- 
suming that  the  notes  were  to  be  regarded  strictly  as  collateral  security, 
the  position  of  the  plaintiff  might,  perhaps,  be  tenable;  but  we  think 
they  are  not  to  be  so  regarded,  but  rather  as  payment,  upon  condition 
that  the  notes  are  productive  at  maturity;  and  in  the  meantime 
suspending  the  vendor's  right  of  action;  therefore  in  case  the  notes 
of  a  third  person  are  received  for  the  price  of  the  property  sold, 
the  vendor  is  bound  to  use  due  diligence  to  charge  such  third  person, 
or  his  laches  will  operate  to  discharge  the  original  contract;  and  the 
fact  that  no  recovery  can  be  had  without  producing  or  accounting  for 
the  note  received,  is  inconsistent  with  the  position  that  it  is  held  in  such 
cases  strictly  as  collateral  security.  So  also  the  discharge  of  the 
notes  by  a  release  would  discharge  also  the  original  contract;  and 
we  think  that  the  same  effect  would  be  produced  by  such  a  fraudulent 
alteration  of  the  notes -by  the  vendor  as  would  render  them  void. 

In  the  case  of  such  an  alteration  the  policy  of  the  law  makes  the 


754  DISCHARGE   OF    CONTRACT. 

note  wholly  void,  upon  the  ground  stated  in  Master  v.  Miller  (4  D.  & 
E.  345),  that  "a  man  shall  not  take  the  chance  of  committing  a  fraud, 
and,  when  the  fraud  is  detected,  recover  on  the  instrument  as  orig- 
inally made."  This  sound  and  salutary  principle,  based  as  it  is 
upon  high  moral  considerations,  and  long  and  well  established  in 
both  the  English  and  American  courts,  would  be  rendered  entirely  inert 
in  respect  to  the  original  promisee,  if,  when  detected  in  the  fraudulent 
alteration  of  the  written  promise,  he  might  recover,  upon  a  promise 
implied  by  law,  the  amount  of  the  original  obligation.  It  would  in 
fact  be  changed  into  a  mere  technical  objection  to  the  form  of  the 
action,  which  is  utterly  inconsistent  with  the  policy  which  dictated  it. 

These  views  are  fully  sustained  by  the  well  considered  case  of 
Martendale  v.  Follet  (1  N.  H.  95),  which  is  often  cited,  and,  so  far 
as  we  have  observed,  never  questioned.  The  same  doctrine  is  fully 
recognized  in  Wheelock  v.  Freeman,  13  Pick.  165.  In  both  these 
cases  notes  were  given  for  the  price  of  property  sold,  and  payable, 
the  former  in  merchantable  neat  stock,  and  the  latter  in  stock  in 
one  year,  or  money  in  two.  In  both  the  alterations  affected  the  mode 
of  payment,  and  in  both  it  was  decided  that  no  recovery  could  be 
had  upon  the  original  consideration. 

In  Arrison  v.  Harmstead  (2  Penn.  St.  191)  there  was  a  deed  of 
land,  reserving  rent,  and  after  the  delivery,  it  being  in  the  hands  of 
the  scrivener,  it  was  altered  by  the  grantor;  held,  in  an  action  for 
the  rent,  with  counts  for  use  and  occupation,  etc.,  that  the  plaintiff 
could  not  recover,  either  on  the  deed  or  for  use  and  occupation;  for, 
although  the  land  passed  by  the  deed,  the  estate  of  the  grantor  was 
destroyed,  as  a  penalty  for  the  fraud  in  making  the  alteration.  The 
case  is  well  considered,  and  the  court  say :  "If  a  bond,  note,  or  other 
instrument  for  the  payment  of  money  be  altered,  and  thereby  avoided 
by  the  obligor,  it  has  never  been  suffered,  or  even  attempted  to  re- 
cover on  the  original  contract;  as,  for  example,  for  money  lent. 
It  is  a  mistake  to  suppose  the  evidence  of  title  only  is  avoided. 
The  whole  contract  becomes  void,  and  it  is  held,  as  a  principle  of 
policy,  that  the  fraudulent  party  may  lose,  but  can  gain  nothing  by 
his  fraud."  See  also  Miller  v.  Gilleland,  19  Penn.  St.  119. 

In  White  v.  Hass  (32  Ala.  430)  it  is  laid  down  that  although  a 
promissory  note,  not  under  seal,  may  not  be  a  merger  of  the  contract 
for  which  it  was  given,  yet  the  payee  cannot  recover  on  the  original 
consideration,  when  his  recovery  on  the  note  is  defeated  by  proof  of 
material  alteration  by  him,  without  the  assent  of  the  maker,  which 
renders  the  note  void.  The  court  say,  "as  the  note  was  at  first  valid, 
there  can  be  no  recovery  on  the  contract  unless  the  note  still  con- 
tinues valid,  and  is  produced  in  evidence,  or  proved  to  have  been  lost 
by  time  or  accident;  and  to  allow  the  payee,  after  he  had  designedly 
made  a  material  alteration  in  the  note,  without  the  assent  of  the 


BY    OPERATION    OF    LAW.  755 

maker,  to  recover  upon  the  contract  for  which  the  note  was  given, 
would  be  to  depart  from  the  sound  and  just  principle  that  no  one  shall 
be  permitted  to  take  the  chance  of  committing  a  fraud  without  run- 
ning any  risk  by  the  event,  when  it  is  detected." 

In  Whitmer  v.  Frye  (10  Mo.  348)  it  was  held,  that  where  a  party 
by  his  own  act  alters  an  instrument,  so  that  it  cannot  be  the  founda- 
tion of  any  legal  remedy,  he  will  not  be  permitted  to  prove  the  cov- 
enant, or  promise  contained  in  it,  by  any  other  evidence;  and  that 
this  principle  will  prevent  a  resort  to  the  common  counts  in  order 
to  sustain  the  plaintiff's  right  of  recovery.  This  case  is  cited  by 
counsel  in  White  v.  Hass  (32  Ala.  430)  and  was  a  case  of  a  sealed 
instrument,  but  no  stress  was  put  upon  that.  See  also  1  Greenl.  Ev.,  § 
568,  and  note  4;  Newell  v.  Mayberry,  3  Leigh,  250;  Mills  v.  Starr, 
2  Bailey,  359,  cited  in  2  Smith's  L.  C.  (5th  Am.  ed.)  961. 

So  it  is  held  that  where  a  note,  given  at  the  time  when  the  liability 
occurs,  is  usurious,  and  therefore  void  by  the  New  York  law,  no  re- 
covery can  be  had  upon  a  general  count  for  the  sum  justly  due,  for 
the  whole  transaction  is  infected;  and  yet  the  money  justly  due  is 
good  consideration  for  a  subsequent  express  promise;  but  the  law 
will  raise  no  promise  by  implication.  Eice  v.  Welling,  5  Wend.  595 ; 
Early  v.  Mahon,  19  Johns.  147 ;  Hammond  v.  Hopping,  13  Wend.  505. 

In  Blade  v.  Noland  (12  Wend.  173)  the  suit  was  upon  a  note, 
destroyed  or  lost,  and  for  the  work  and  labor  of  which  the  note 
was  given;  and  it  was  held  that  proof  that  the  note  was  voluntarily 
and  deliberately  burnt  will  not  authorize  the  secondary  proof  of  its 
contents,  or  entitle  the  plaintiff  to  resort  to  the  original  consideration. 
Clute  v.  Small  (17  Wend.  238)  takes  a  distinction  between  an  in- 
nocent alteration,  though  unauthorized,  and  a  fraudulent  alteration. 
The  court,  Cowen,  J.,  says:  "To  allow  a  holder  the  privilege  of 
destroying  his  note  and  thus  bringing  himself  to  the  original  con- 
sideration, would  put  it  in  his  power  to  acquire  an  advantage  by  a 
wrongful  suppression  of  testimony;"  and  he  says  of  Atkinson  v. 
Haydon  (2  Ad.  &  El.  628)  that  the  question  arose  upon  pleading,  and 
for  aught  that  appeared  the  alteration  was  made  under  an  honest 
mistake  of  right,  and  he  says  perhaps  this  distinction  should  be 
adopted. 

To  the  point  that  although,  technically  speaking,  such  a  note 
is  not  regarded  as  an  extinguishment  of  an  antecedent  debt,  yet  is 
treated  as  payment  sub  modo;  or  a  payment  on  condition  that  the 
note  prove  to  be  productive,  are  the  cases  of  Angel  v.  Felton,  8  Johns. 
149 ;  Burdick  v.  Green,  15  Johns.  247 ;  Ward  v.  Evans,  2  Ld.  Eaym. 
928. 

To  entitle  the  vendor,  then,  to  maintain  a  suit  on  the  original 
promise,  or  for  money  had  and  received,  the  note  must  be  produced 
and  cancelled  at  the  trial,  or  otherwise  accounted  for;  and  regularly 


756  DISCHARGE  OF   CONTRACT. 

it  should  appear  that  the  note,  when  so  produced,  still  continues 
valid,  and  not  discharged  or  avoided.  Such  is  the  doctrine  distinctly 
of  Martendale  v.  Follet,  and  also  of  White  v.  Hass,  32  Ala.  430. 
If  fraudulently  altered  by  the  vendor  its  identity  is  destroyed,  and 
he  shall  not  be  permitted  to  explain  it  by  showing  his  own  turpitude. 
The  vendor  therefore  has  lost  the  power  to  produce  the  note;  and 
by  his  own  fraudulent  act  designed  to  injure  the  vendee  or  debtor; 
and  he  cannot,  consistently  with  sound  public  policy,  be  permitted 
to  recover  on  the  original  consideration,  and  thus,  by  merely  chang- 
ing the  form  of  action,  avoid  the  consequences  of  his  crime.  The 
rule  which  seeks  to  punish  the  offender  by  destroying  the  claim  which 
is  thus  tampered  with,  has  no  such  formal  or  technical  foundation, 
but  stands  upon  the  broad  foundations  of  public  policy,  which  treats 
such  an  act  as  a  virtual  discharge  of  the  debt,  as  much  as  if  it  had 
been  released. 

We  are  aware  that  it  is  laid  down  (in  Chit,  on  Bills,  184),  that 
in  such  cases  the  party  may  resort  to  the  original  promise,  although 
it  is  said  (on  page  598)  that  where  a  party  is  discharged  by  the  altera- 
tion of  the  bill,  or  the  laches  of  the  holder,  the  plaintiff  cannot  resort 
to  the  general  counts. 

The  authority  upon  which  Mr.  Chitty  relies  for  the  position  that 
he  cannot  resort  to  the  general  counts  is  Atkinson  v.  Haydon,  2 
Ad.  &  El.  628;  but  it  appears  upon  examination  that  a  fraudulent 
alteration  was  not  alleged  in  the  pleading;  furnishing  ground  for 
the  distinction  suggested  by  Cowen,  J.,  in  Clute  v.  Small  (17  Wend. 
238),  before  adverted  to.  The  decision,  moreover,  was  simply  an- 
nounced by  the  court,  and  no  reasons  for  it  assigned.  On  the  other 
hand,  in  Powell  v.  Divett  (15  East,  29),  it  was  held  that  a  material 
alteration  in  a  sale  note  avoids  it,  and  that  no  action  could  be  main- 
tained on  the  contract  evidenced  by  it. 

Eeference  has  also  been  made  to  the  case  of  alterations  of  bills 
and  notes  without  a  new  stamp,  but  it  will  be  seen  at  once  that 
this  class  of  cases  is  not  in  point,  inasmuch  as  the  alteration  is  not 
fraudulent;  but,  although  made  with  the  consent  of  both  parties,  is 
rendered  void  by  positive  statute. 

The  other  exceptions  are  all  overruled,  but,  for  errors  in  the  in- 
structions adverted  to,  there  must  be 

A  new  trial. 

2  Cyc.  183  (8,  10,  11)  ;  185  (17)  ;  9  Cyc.  635  (12)  ;  Williston,  Discharge  of 
contract  by  alteration,  18  H.  L.  R.  105,  165. 


BY   OPERATION    OF   LAW.  757 

CLOUGH  v.  SEAY  et  al 

49   IOWA,   111.— 1878. 

Action  on  promissory  note,  and  for  foreclosure  of  a  mortgage. 
Defense,  alteration,  by  cutting  off  from  the  bottom  the  words  "we 
will  pay  fifteen  per  cent  interest  in  addition  to  the  interest  men- 
tioned in  the  above  note." 

DAY,  J.  .  .  .  Appellants  insist  that  the  alteration  of  the  note  was 
fraudulent,  and  that,  therefore,  the  plaintiff  should  not  be  permitted 
to  recover  upon  the  original  consideration.  The  answer  does  not  allege, 
nor  does  the  court  find,  that  the  alteration  was  fraudulent.  We 
have  no  statement  that  the  abstract  contains  all  the  evidence,  and 
hence  we  cannot  review  the  findings  of  the  court  upon  the  facts. 
If,  however,  the  abstract  contains  all  the  evidence,  and  the  case 
were  in  condition  to  be  tried  de  novo,  we  should  feel  impelled  to  find 
that  the  fact  of  alteration  is  not  established  by  a  preponderance  of 
evidence.  We  are  bound  by  the  finding  of  the  court  that  there  was 
a  material  alteration  but  we  cannot  go  beyond  that  finding,  and  find 
the  further  fact  that  the  alteration  was  fraudulent. 

Appellants  seem  to  insist,  however,  that  the  note  embraces  the 
contract  of  the  parties,  and  supplies  the  place  of  any  implied  promise 
arising  out  of  the  borrowing  of  the  money,  and  that  the  alteration  of 
the  note,  however  innocently  made,  deprives  the  plaintiff  of  any 
right  to  recover  upon  the  original  consideration.  We  believe  the 
better  doctrine  to  be  opposed  to  this  view.  In  Krause  v.  Meyer 
(32  Iowa,  569)  both  parties  conceded  that  if  the  alteration  was  in- 
nocently made  the  plaintiff  might  recover  upon  the  consideration 
of  the  note.  Because  of  this  concession  the  point  was  not  determined 
in  that  case.  "In  Vogle  et  al.  v.  Eipper  (34  Illinois,  100),  which 
was  an  action  to  foreclose  a  mortgage  executed  to  secure  notes  which 
had  been  altered  so  as  to  draw  ten  instead  of  six  per  cent,  the  follow- 
ing language  is  employed:  "In  a  court  of  equity  a  mortgage  is  re- 
garded as  an  incident  of  the  debt,  and,  where  a  mortgagee  has  re- 
leased or  discharged  the  debt  by  a  fraudulent  alteration  or  destruction 
of  the  written  evidence  of  it,  he  ought  not  to  be  permitted  to  sus- 
tain a  suit  for  its  recovery;  but  where  the  alteration  was  not  fraud- 
ulent, although  the  identity  of  the  instrument  may  be  destroyed, 
we  think  it  should  not  cancel  the  debt,  of  which  the  instrument  was 
merely  the  evidence.  If  there  was  no  attempt  to  defraud,  there 
is  no  reason  why  a  court  should  not  assist  the  creditor  so  far  as  it 
can  consistently."  In  this  case  there  was  a  decree  for  the  sum  due, 
and  foreclosure  of  the  mortgage.  See  also  Matteson  v.  Ellsworth, 
33  Wis.  488.  In  Parsons  on  Notes  and  Bills,  Vol.  2,  p.  572, 
respecting  alterations  of  notes  innocently  made,  it  is  said:  "And 


758  DISCHARGE  OF   CONTRACT. 

though  it  is  true  that  an  avoided  noted  destroyed  innocently  by  a 
material  alteration  cannot  even  be  the  evidence  of  the  original  debt,  it 
does  not  destroy  the  debt.  The  debt  is  still  obligatory,  and  may  be  re- 
covered by  a  suit  on  the  original  cause  of  action/'  The  case  of 
Wneelock  v.  Freeman  (13  Pickering,  165),  upon  which  appellants 
rely,  was  decided  upon  the  ground  that  the  alteration  was  fraudulent. 
It  is  claimed  that  the  court  erred  in  decreeing  the  foreclosure  of 
the  mortgage,  the  note,  which  it  was  executed  to  secure,  having  been 
rendered  void  by  a  material  alteration.  We  think  this  action  of 
the  court  was  right.  See  Vogle  v.  Ripper,  34  Illinois,  100 ;  Sloan  v. 
Rice,  41  Iowa,  465.  .  .  . 

Affirmed.1 

2  Cyc.   183    (8-11);   224    (33);   W.  P.  870    (4). 


McRAVEN  v.  CRISLER. 

53  MISSISSIPPI,   542.— 1876. 
[Reported  herein  at  p.  664.] 


BLADE  v.  NOLAND. 
12  WENDELL  (N.'Y.),  173.— 1834. 

Error  from  the  Jefferson  common  pleas. 

Noland  sued  Blade  in  a  justice's  court,  and  declared  on  a  note 
destroyed  or  lost,  and  for  work  and  labor.  The  defendant  pleaded 
the  general  issue  and  gave  notice  of  set-off.  The  plaintiff  called  a 
witness,  and  proved  by  him  that  the  defendant  previous  to  4th  March, 
1832,  gave  the  plaintiff  a  note  for  $24.80,  payable  in  three  months,  for 
wages  due  to  him  for  work  done  for  the  defendant.  The  plaintiff 
himself  was  then  sworn,  to  prove  the  loss  of  the  note,  and  testified  that 
he  burnt  it  up  the  next  morning  after  it  was  given.  A  witness  called 
by  the  defendant  also  gave  testimony  tending  to  show  that  the  note 
was  burnt  by  the  plaintiff  on  the  day  after  it  was  given.  There  how- 
ever was  proof  that  the  note  was  in  existence  subsequent  to  the  day  on 
which  the  plaintiff  alleged  it  was  destroyed.  There  was  also  evidence 
of  payments  by  the  defendant  on  account.  The  justice  rendered  judg- 
ment in  favor  of  the  plaintiff  for  $18,  besides  costs.  The  common 
pleas  of  Jefferson,  on  certiorari,  affirmed  the  judgment  of  the  justice. 
The  defendant  sued  out  a  writ  of  error. 

NELSON,  J.     I  concede  the  rule  insisted  on  by  the  counsel  for  the 

i  Alteration  by  stranger  does  not  invalidate  instrument.  Bigelow  v. 
Stilphens,  35  Vt.  521. 


BY    OPERATION    OF   LAW.  759 

plaintiff  below,  to  the  fullest  extent,  borne  out  by  the  authorities,  and 
they  are  numerous;  and  still  am  of  opinion  that  the  plaintiff  did  not 
give  such  proof  of  the  loss  of  the  note  as  to  justify  the  secondary  proof 
of  its  contents,  or  to  entitle  him  to  resort  to  the  original  consideration. 
If  there  had  been  satisfactory  proof  of  the  loss  or  destruction  of  the 
note,  the  omission  to  give  a  bond  of  indemnity  under  the  statute  (2 
K.  S.  406,  §§  75,  76)  would  not  have  interfered  with  the  recovery;  for 
the  provision  of  the  statute  on  this  subject  is  limited  to  negotiable 
paper.  There  is  no  evidence  that  the  note  in  question  was  negotiable, 
and  it  seems  to  be  settled  that  the  court  will  not  presume  a  lost  note 
to  be  negotiable.  10  Johns.  R.  104 ;  3  Wendell,  344. 

The  proof  is,  that  the  plaintiff  deliberately  and  voluntarily  de- 
stroyed the  note  before  it  fell  due,  and  there  is  nothing  in  the  case  ac- 
counting for,  or  affording  any  explanation  of  the  act,  consistent  with 
an  honest  or  justifiable  purpose.  Such  explanation  the  plaintiff  was 
bound  to  give  affirmatively,  for  it  would  be  in  violation  of  all  the  prin- 
ciples upon  which  inferior  and  secondary  evidence  is  tolerated,  to 
allow  a  party  the  benefit  of  it  who  has  wilfully  destroyed  the  higher 
and  better  testimony.  The  danger  of  this  very  abuse  of  a  relaxation 
of  the  general  rule  greatly  retarded  its  introduction  into  the  law  of 
evidence,  and  it  was  for  a  long  time  confined  to  a  few  extreme  cases, 
such  as  burning  of  houses,  robbing,  or  some  unavoidable  accident.  It 
was  contended  by  Chancellor  Lansing,  in  the  case  of  Livingston  v. 
Eogers  (2  Johns.  Gas.  488),  after  an  examination  of  all  the  leading 
cases  on  the  subject,  that  secondary  evidence  was  not  admissible  to 
prove  the  contents  of  a  paper,  where  the  original  had  been  lost  by  the 
negligence  or  laches  of  the  party  or  his  attorney.  He  failed  to  convince 
the  court  of  errors  to  adopt  his  views  in  a  case  where  the  negligence 
was  not  so  great  as  to  create  suspicion  of  design.  Further  than  this 
I  could  not  consent  to  extend  the  rule.  I  have  examined  all  the  cases 
decided  in  this  court,  where  this  evidence  has  been  admitted,  and  in  all 
of  them  the  original  deed  or  writing  was  lost,  or  destroyed  by  time, 
mistake,  or  accident,  or  was  in  the  hands  of  the  adverse  party.  Where 
there  was  evidence  of  the  actual  destruction  of  it,  the  act  was  shown 
to  have  taken  place  under  circumstances  that  repelled  all  inference  of 
a  fraudulent  design.  2  Johns.  Cas.  488 ;  2  Caines,  363 ;  10  Johns.  R. 
374,  363;  11  Id.  446;  8  Id.  149;  3  Cowen,  303;  8  Id.  77;  3  Wendell, 
344;  Peak's  Ev.  972  (Am.  ed.) ;  10  Co.  88,  Leyfield's  case;  3  T.  R. 
151 ;  8  East,  288,  9 ;  Gilb.  Ev.  97. 

In  Leyfield's  case  Lord  Coke  gives  the  obvious  reasons  why  the  deed 
or  instrument  in  writing  should  be  produced  in  court:  1.  To  enable 
the  court  to  give  a  right  construction  to  it  from  the  words;  2.  To  see 
that  there  are  no  material  erasures  or  interlineations;  3.  That  any 
condition,  limitation,  or  power  of  revocation  may  be  seen;  for  these 
reasons  over  is  required  in  pleading  a  deed.  But  he  says,  in  great  and 


760  DISCHARGE   OF   CONTRACT. 

notorious  extremities,  as  by  casualty  of  fire,  etc.,  if  it  shall  appear  to 
the  judges  that  the  paper  is  burnt,  it  may  be  proved  by  witnesses  so 
as  not  to  add  affliction  to  affliction. 

The  above  is  in  brief  the  foundation  of  the  rule  in  these  cases  of 
secondary  proof  of  instruments  in  writing,  and  it  has  been  much 
relaxed  and  extended  in  modern  times  from  necessity,  and  to  prevent  a 
failure  of  justice;  yet  I  believe  no  case  is  to  be  found  where,  if  a 
party  has  deliberately  destroyed  the  higher  evidence,  without  explana- 
tion showing  affirmatively  that  the  act  was  done  with  pure  motives, 
and  repelling  every  suspicion  of  a  fraudulent  design,  that  he  has  had 
the  benefit  of  it.  To  extend  it  to  such  a  case  would  be  to  lose  sight 
of  all  the  reasons  upon  which  the  rule  is  founded,  and  to  establish  a 
dangerous  precedent.  .We  know  of  no  honest  purpose  for  which  a 
party,  without  any  mistake  or  misapprehension,  would  deliberately 
destroy  the  evidence  of  an  existing  debt ;  and  we  will  not  presume  one. 

From  the  necessity  and  hardship  of  the  case,  courts  have  allowed  the 
party  to  be  a  competent  witness  to  prove  the  loss  or  destruction  of 
papers ;  but  it  would  be  an  unreasonable  indulgence,  and  a  violence  of 
the  just  maxim  that  no  one  shall  take  advantage  of  his  own  wrong, 
to  permit  this  testimony  where  he  has  designedly  destroyed  it. 

Judgment  reversed. 

17  Cyc.  525-526    (7-9);   W.  P.  844    (53). 


Discharge  by  bankruptcy. 

KEED  v.  PIEKCE. 

36    MAINE,    455.— 1853. 

Action  on  covenants  broken.     Defense,  discharge  in  bankruptcy. 

In  1833  defendant  mortgaged  land  to  A.,  and  in  1835  conveyed  the 
land  to  plaintiff  with  covenants  that  it  was  free  from  incumbrances 
and  that  he  would  warrant  and  defend  it  against  all  lawful  claims. 
In  1851  the  mortgagee  entered  and  took  possession,  to  regain  which 
plaintiff  paid  $1169.86  in  discharge  of  the  mortgage.  Defendant  in- 
troduced as  a  bar  to  the  suit  his  discharge  in  bankruptcy  dated  in 
1842,  and  the  schedule  of  debts  showing  the  amount  then  due  on  the 
mortgage  to  A. 

APPLETON,  J.  The  defendant  conveyed  to  the  plaintiff  by  deed  of 
warranty,  premises,  which  at  the  time  were  subject  to  mortgage, 
and  has  since  received  his  discharge  in  bankruptcy.  At  the  time  of 
his  application  and  discharge,  the  notes  secured  by  mortgage  were 
outstanding  and  no  entry  had  been  made  by  the  mortgagee  for  the 
purpose  of  foreclosure.  Subsequently  the  mortgage  was  foreclosed 
and  the  plaintiff  was  evicted  by  the  paramount  title  of  the  mortgagee. 


BY   OPERATION    OF   LAW.  761 

This  suit  is  brought  on  the  several  covenants  of  the  defendant's  deed, 
in  bar  to  the  maintenance  of  which  the  defendant  has  pleaded  his 
discharge. 

The  covenant  against  incumbrances  was  broken  at  the  time  of  the 
conveyance.  The  damages  to  which  the  plaintiff  was  entitled  were 
readily  ascertainable.  If  he  had  paid  the  mortgage  notes,  the  sum 
paid  would  have  been  the  measure  of  damages.  If  the  incumbrances 
had  not  been  removed  and  there  had  been  no  action  on  the  part  of 
the  mortgagee  to  enforce  his  mortgage,  the  plaintiff's  damages  would 
have  been  nominal.  To  this  covenant,  as  it  was  broken  before  the 
defendant's  bankruptcy,  and  as  the  plaintiff  might  have  proved  his 
claim  for  its  breach,  the  discharge  is  a  bar. 

The  several  covenants  in  a  deed  of  warranty  are  distinct;  their 
breach  arises  at  different  times;  is  established  by  proof  of  different 
facts,  and  damages  thereof  may  be  enforced  by  different  suits  and 
recompensed  by  different  rules  of  assessment.  It  is  obvious  then  that 
what  may  be  a  discharge  of  one  is  not  necessarily  that  of  another  and 
distinct  covenant. 

The  breach  of  the  other  covenants  was  long  after  the  discharge  in 
bankruptcy.  So  far  as  the  claims  now  in  suit  could  have  been  proved 
and  the  plaintiff  have  received  his  dividends  upon  their  proof,  the 
discharge  is  a  bar,  and  no  farther. 

The  defendant,  to  show  that  they  might  have  been  proved,  relies 
on  the  sixth  section  of  the  Bankrupt  Act,  by  which  persons  having 
uncertain  and  contingent  demands  are  permitted  to  come  in  and 
prove  such  debts  or  claims. 

The  meaning  of  the  phrase  "contingent  demand,"  and  the  corre- 
sponding expression  in  the  English  bankrupt  law,  "debt  payable  upon 
a  contingency,"  has  been  definitely  settled  by  repeated  adjudications 
in  this  and  in  other  States,  as  well  as  by  the  English  courts.  In 
Woodard  v.  Herbert  (24  Maine,  360)  the  distinction  between  a 
contingent  demand  and  a  contingency  whether  there  ever  would  be  a 
demand,  was  recognized  and  adopted.  "The  contingent  or  uncertain 
demands  provided  for,"  says  Shepley,  J.,  "in  the  act  of  Congress,  are 
the  contingent  demands,  which  were  in  existence  as  such,  and  in  a 
condition  that  their  value  could  be  estimated  at  the  time  when  the 
party  was  decreed  a  bankrupt."  The  same  construction  was  reaffirmed 
in  Ellis  v.  Ham,  28  Maine,  385,  and  in  Dole  v.  Warren,  32  Maine,  94. 
In  Goss  v.  Gibson  (8  Humph.  199)  it  was  held  that  a  discharge  in 
bankruptcy  would  not  relieve  one  surety  from  the  claim  of  another 
surety  who  had  paid  money  for  the  principal  after  the  decree.  "At 
the  time  these  defendants  were  declared  bankrupts,"  says  Green,  J., 
"the  complainant  had  no  debt  or  demand  against  them.  The  com- 
plainant had  no  demand  that  could  be  proved  at  the  time  the  de- 
fendants were  declared  bankrupts.  The  possibility  of  the  demand 


762  DISCHABGE   OF    CONTRACT. 

that  now  exists  was  incapable  of  valuation."  It  was  decided  in  Cake 
v.  Lewis  (8  Barr.  493)  that  the  liability  of  a  principal  to  his  guarantee 
was  not  discharged  by  bankruptcy.  In  Boorman  v.  Nash  (9  B.  &  C. 
145)  the  defendant,  who  had  contracted  for  a  certain  quantity  of  oil 
to  be  delivered  to  him  at  a  future  day  at  a  certain  price,  became 
bankrupt  before  the  day  arrived  and  obtained  his  certificate.  "The 
right  of  the  plaintiff,"  says  Lord  Tenterden,  "to  maintain  this  action, 
depends  upon  the  question  whether  he  could  or  could  not  have  proved 
his  demand  under  the  commission  of  bankrupt  issued  against  the 
defendant.  It  appears  to  us  impossible  that  he  should  so  prove  it; 
for  at  the  time  when  the  commission  issued,  it  was  uncertain  not  only 
what  amount  of  damage,  but  whether  any  damage  would  be  sustained." 
A  similar  decision  was  made  in  Woolley  v.  Smith,  54  E.  C.  L.  610. 

In  Thompson  v.  Thompson  (2  Scott,  266)  it  was  decided  that  the 
instalments  of  an  annuity,  for  the  payment  of  which  a  surety  expressly 
covenanted  in  default  of  the  grantor,  are  not  provable  under  a  -fiat 
against  the  surety,  when  such  instalments  do  not  become  due  until 
after  the  bankruptcy  of  the  surety.  "Before  the  days  of  payment 
arrive,"  said  Tindal,  C.  J.,  in  delivering  his  opinion,  "these  instal- 
ments are  not  only  no  debt,  but  can  never  become  a  debt  from  the 
surety,  except  in  the  event  that  the  grantor  of  the  annuity  shall  make 
default  in  such  payments.  The  value  of  such  a  contingency  it  is  im- 
possible to  calculate."  Ex  parte  Davies,  1  Dea.  115;  Toppin  v.  Field, 
4  Ad.  &  El.  N.  S.  387 ;  Hinton  v.  Acraman,  2  Man.,  Gran.  &  Scott, 
369. 

In  the  South  Staffordshire  Eailway  Co.  v.  Burnside  (2  Eng.  Law 
and  Eq.  418)  the  holder  of  shares  in  a  corporation,  who  became 
bankrupt,  and  received  his  certificate,  was  held  not  to  be  discharged 
from  his  liability  for  subsequent  calls. 

In  Hankin  v.  Bennett  (14  Eng.  Law  and  Eq.  403)  the  defendant 
executed  a  bond,  whereby  he  became  liable  as  surety  to  pay  the  plain- 
tiff such  costs  as  the  plaintiff  should  in  due  course  of  law  be  liable  to 
pay  in  case  a  verdict  should  pass  for  certain  defendants  in  an  action 
of  scire  facias,  in  which  the  now  plaintiff  sued  as  a  nominal  party. 
"We  think,  however,"  says  Martin,  B.,  "this  liability  was  not  a  debt 
at  all  within  the  meaning  of  the  section.  It  was  a  contract  to  in- 
demnify a  nominal  plaintiff  whose  name  was  used  by  a  third  person, 
against  such  costs  as  the  plaintiff  would  become  liable  to  pay  if  the 
defendants  should  obtain  judgment  in  their  favor.  It  seems  to  us 
impossible  to  consider  that  this  is  a  debt.  It  is  a  contingent  liability, 
but  not  a  contingent  debt." 

The  plaintiff  could  not  have  proved  any  claim  for  breach  of  the 
covenant,  that  the  defendant  would  warrant  and  defend  the  premises 
against  the  lawful  claims  and  demands  of  all  persons,  for  it  had  not 
been  broken.  Whether  there  were  any  such  claims  and  demands  out- 


BY    OPERATION    OF   LAW.  763 

standing,  and  whether  they  embraced  the  whole  or  a  part  of  the 
premises  conveyed,  was  uncertain.  If  any  such  existed,  their  enforce- 
ment was  dependent  on  the  will  of  those  having  such  claims.  The 
plaintiff  could  not  have  presented  any  present  claim  or  existing  de- 
mand. The  possibility  that  one  might  arise  is  not  enough.  In  all 
sales  of  personal  property  the  title  of  the  vendee  may  be  defeated  by 
adverse  and  superior  rights.  In  such  sales  there  may  be  a  breach  of 
the  implied  warranty  of  title  by  subsequent  eviction.  The  vendee  of 
real  or  personal  property,  in  the  undisturbed  enjoyment  of  his  pur- 
chase and  without  any  breach  of  the  covenants,  express  or  implied,  of 
his  vendor,  can  hardly  be  considered  as  having  a  contingent  claim, 
because  of  the  possibility  that  some  unknown  claimant  may  at  some 
indefinitely  remote  period  of  time  interpose  a  superior  title,  by  means 
of  which  he  may  be  deprived  of  the  property  purchased.  If  the  un- 
broken covenants  of  a  deed,  or  the  possible  breach  of  the  implied 
warranty  of  title  in  sales  of  personal  property,  were  to  be  deemed 
claims  within  the  statute,  then  every  grantee  or  vendee  might  present 
his  claim  before  the  commissioner,  and  the  estate  of  the  bankrupt 
would  remain  unadjusted  till  all  possibility  of  a  breach  should  be 
barred  by  the  statute  of  limitations,  for  it  could  not  before  such  time 
be  known  that  they  might  not  arise.  Such  a  position  would  be  entirely 
at  variance  with  the  provision  of  section  10,  which  requires  that  all 
proceedings  in  bankruptcy  shall  be  brought  to  a  close  within  two  years 
after  the  decree  declaring  the  bankruptcy,  if  practicable,  for  it  would 
lead  to  an  indefinite  postponement  of  the  settlement  of  estates.  It  was 
adjudged  in  Bennett  v.  Bartlett  (6  Gush.  225),  in  relation  to  personal 
property,  that  a  discharge  in  bankruptcy  was  no  bar  to  the  creditor's 
right  of  action  against  the  debtor,  on  the  implied  warranty  of  title, 
when  the  breach  occurred  after  such  discharge.  The  reasoning  of 
the  court  in  that  case  is  equally  applicable  to  the  case  at  bar. 

The  result  is,  that  the  discharge  affords  no  defense,  except  as  to 
the  covenant  against  incumbrances,  which  alone  could  have  been 
proved. 

Defendant  defaulted. 

5  Cyc.  398   (37-38). 


INDEX. 


INDEX. 


Acceptance, 
by  conduct,  6. 
by  letter,  21,  39,  42,  84. 
by  silence,  16,  20. 
by  telegraph,  27,  46. 
communicated  when  made  as  indi- 
cated by  offerer,  21. 
contract  springs  from,   1. 
mental  determination  insufficient,  2. 
must    be    absolute     and     uncondi- 
tional, 79. 

must  be  in  manner  prescribed,  39. 
of  guaranty,  30. 
of  offered  reward,  69,  71. 
Accord  and  satisfaction,  709. 
Adequacy  of  consideration,   171,  265. 
Administrator, 

cannot  be  joined  on  joint  promise, 

563. 
promise    under    statute    of    frauds, 

124. 
Agreement, 

discharge  of  contract  by,  588. 
Alteration  of  written  instrument, 
discharge  by,  753,  757,  664. 
effect  of,  753,  757,  664. 
Alternative  performance,  614. 
Anticipatory  breach,  627. 
must  be  acted  upon,  637. 
must  be  unequivocal,  n.  637. 
Arbitration, 

legality  of  agreement  for,  399. 
Assignee, 

entitled  only  to  rights  of  assignor, 

276. 
Assignment,  499. 

by  act  of  parties,  499. 

by  death,  542. 

by   lessee,    532. 

by  lessor,  534. 

by  marriage,  536. 

by  operation  of  law,  532. 

by  statute.  518. 

767 


Assignment  —  continued. 

consideration  for,  520. 

distinguish  from  negotiability,  526. 

in  equity,  514. 

notice,  523,   525. 

of    liabilities,    499. 

of  rights,  510. 

requisites  of,  519. 
Attestation, 

evidence   of,   567. 

of  document,  567. 
Auction, 

offer  and  acceptance,  48. 

Bankruptcy, 

discharge  by,  760. 

revival  of  agreement  barred  by,  263. 
Beneficiary, 

right  of  action  by,  461. 

is  promisee  released,  495. 

must  be  for  direct  benefit,  480,  483. 

on  sealed  contract,  n.  498. 

release    of    promisor    by    promisee, 
493. 

right  to  sue  is  derivative,  n.  498. 
Bill  of  lading, 

negotiability  of,  526. 
Bond, 

for  past  illicit  relations,  442. 
Breach  of  contract, 

anticipatory,  627. 

by  failure  of  performance,  653. 

by    impossibility    before    perform- 
ance due,  639. 

by  impossibility  in   course  of  per- 
formance, 652. 

by   renunciation   in    course  of  per- 
formance, 641. 

discharge  of  contract  by,  627. 

discharge  of  right  of  action  for, 
by  accord  and   satisfaction,  709. 
by  judgment,  717. 
by  release.  707. 


768 


INDEX. 


Breach  of  contract  —  continued. 
installment  contract,  668. 
remedies,  693. 
damages,  693. 
injunction,  703. 
specific  performance,  697. 
Champerty   and  maintenance,   406. 
Check, 

payment  by,  604. 
payment  of  lesser  sum  by,  714. 
Communication, 
of  acceptance,  16. 
of  offer,  9. 
of  revocation,  64. 

Composition    with    creditors,    consid- 
eration for,  243. 
Compromise, 
consideration  for,  199. 
distinguish  from  accord  and  satis- 
faction, ».  717. 

distinguish  from  mistake,  295. 
Concealment, 
fraud,  318. 

innocent,  see  Misrepresentation. 
Conditional    and    unconditional    per- 
formance, 653. 
Conditions, 

as  vital  terms,  679,  690. 
concurrent,  654. 
precedent,  653,  660. 
rules  on,  n.  659. 
subsequent,  598. 
Conflict  of  laws,  454. 
Consent,  reality  of,  269. 
Consideration, 

adequacy,  171,  265. 
composition  with  creditors,  243. 
compromise,    199. 

distinguished  from  liquidated  dam- 
ages, 615. 
distinguished     from     motive,     171, 

179. 

extension  of  debt,  230. 
for  assignment,  520. 
for  revival  of  debt  barred  by  bank- 
ruptcy,  263. 

for  revival  of  debt  barred  by  stat- 
ute of  limitations,  n.  264. 
for  subscriptions,  246. 
for  substituted  contract,  592. 


Consideration  —  continued. 
for  waiver,  588. 
forbearance  to  sue,  194. 
gratuitous   undertaking,   205. 
illegal,  361. 
immoral,  410. 
impossible,   184. 

moved  by  previous  request,  259. 
must  move  from  promisee,  184. 
must  not  be  past,  171,  254. 
necessity  for,   166. 
past  illegal  in  a  bond,  442. 
payment  of  smaller  sum,  232. 
performance    of    existing    contract 

with  promisor,  214. 
performance    of    existing    contract 

with  third  person,  225. 
performance  of  legal  duty,  211, 
performance  of  official  duty,  212. 
reality  of,  179. 
relation  to  seal,  97. 
uncertainty,   188. 
unequal  sums  of  money,  171,  265. 
voluntarily  doing  wliat  another  was 

bound  to  do,  260. 
Construction, 

conditional    or    unconditional    per- 
formance, n.  659. 
rules  of,  577. 
Constructive  service,  723. 
Contingent  fees,  409. 
Contract  by  estoppel,  181. 
Contribution    between    joint    debtors, 

557. 

Covenant  not  to  sue,  552,  554. 
Covenants  running  with  the  land,  532. 
Crime, 

agreement  to  stifle  prosecution,  396. 
Crops,  statute  of  frauds  and  sale  of, 

156. 
Custom,  effect  of,  573. 

Damages,  693. 

breach    of    warranty,    682,    n.  697, 

689. 
delay    in    delivery    of    a    chattel, 

n.  697. 

employment,  693,  n.  698,  723,  724. 
failure  to  deliver  chattel,  n.  697. 
general  rules,  693,  n.  696. 


INDEX. 


769 


Damages  —  continued. 

interest  as,  n.  698. 

liquidated,  584,  615. 

lost  profits,  641,  682,  693. 

mitigation,  216,  651. 

sale  of  goods,  504,  627,  636,  n.  698. 
Death, 

assignment  by,  542. 

discharge  of  contract  by,  542,  547, 
749. 

lapse  of  offer  by,  36,  n.  39. 

of  joint  and  several  promisor,  560, 
563. 

of  joint  promisee,  n.  559. 

of  joint  promisor,  n.  554. 

performance  impossible  by,  749. 
Debt, 

extension  of  as  consideration,  230. 

payment  of  another's,  458. 

payment   of    part   as   consideration 
for  discharge  of,  232. 

promise  to  pay  another's,  127. 
Delivery, 

of  sealed  instrument,  103. 
Description, 

sale  by,  679,  682. 
Discharge  of  contract, 

by  agreement,  588. 

by    alteration    of    written    instru- 
ment, 664,  753,  757. 

by  bankruptcy,  760. 

by  breach,  627. 

by    impossibility    of    performance, 
730. 

by  operation  of  law,  752. 

by  performance,  604. 

contract  providing  for,  598. 
Discharge  of  right  of  action  by  ac- 
cord and  satisfaction,  709. 

by  judgment,  717. 

by   release,  707. 

by  statute  of  limitations,  726. 
Divisible   contracts,   668. 
Divisibility  of  illegal  contracts,  424. 
Divorce,  contract  to  forbear  suit,  414. 
Duress,   348. 

Election, 

upon    joint    and    several    promise, 

561. 
Employment,  damages,  723,  724. 


Equity, 

assignment  in,  514. 
Estoppel, 

as    remedy    for    misrepresentation, 

315. 

contract  by,  n. 19,  181. 
Evidence, 

rules  relating  to,  567. 
Executor, 

cannot  be  joined  on  joint  promise, 

563. 
promise   under    statute    of    frauds, 

124. 

Existence  of  subject-matter,   mistake 
as  to,  284. 

Fact,    fraud   must   be   representation 

of,  330. 
Failure    of    performance,    breach    by, 

653. 

Forbearance,  as  consideration,  194. 
Form,  requirements  of,  90. 
Fraud, 

agreement  to  commit,  383. 

concealment,  318. 

distinguish      from      misrepresenta- 
tion, 302. 

fictitious  name  as,  n.  326. 

guaranty  procured  by,  n.  275. 

intent  necessary,  342. 

is  a  false  representation,  316. 

latent  defects,  327. 

promissory  note  procured  by,  271. 

remedies  for,  346. 

representation  must  be  of  fact,  330. 

representation  must  be  with  knowl- 
edge, 338. 

representation  must  deceive,  344. 

representation  of  law,  330. 

rescission  for,  346. 

title  procured   by,   280. 
Frauds,  Statute  of, 

agreement  in  consideration  of  mar- 
riage, 135. 

does    not    apply    to    executed    con- 
tract, n.  114,  135. 

fourth  section,  124. 

one  year  clause,   141. 

one   year   clause,   executed   on    one 
side,  153. 

parol  modification  of  contract,  596. 


770 


INDEX. 


Frauds,  Statute  of  —  continued. 
promise  of  executor,  124. 
promise  to  answer  for  the  debt  of 

another,  127. 

requirements  of  form,  107. 
sale  of  crops,  156. 
sale    of    goods    distinguished    from 

labor  and  services,  160. 
sale  of  land,  139. 
sale  of  timber,  157. 
seventeenth  section,  156. 
stated,    106. 

sufficiency  of  memorandum,   107. 
what  are  goods  within,  164. 
Fructus    industrales    and    naturales, 

156,  157. 

Goods, 

import  in  statute  of  frauds,  164. 
Gratuitous  undertakings,  205. 
Guaranty, 

acceptance  of,  30. 

procured  by  fraud,  n.  275. 

revocation  by  death,  n.  39. 

Holidays, 

contracts  made  on,  n.  367. 

Identity    of    subject-matter,   mistake, 

283. 
Illegality   of  contract, 

at   common   law,   383. 

breach   of   statute   as,   361. 

champerty  and  maintenance,  406. 

conflict  of  laws,  454. 

contrary  to  good  morals,  410. 

determining  jurisdiction,  404. 

divisibility,  424. 

effect  of,  424. 

effect  on  securities,  442. 

for  contingent  fees,  409. 

holiday  contracts,  n.  367. 

in  restraint  of  trade,  415. 

injuring  public  service,  389. 

injuring   state    in   relation   to    an- 
other state,  389. 

intention  of  parties  in,  434. 

recovery     for     benefits     conferred 
under,  451. 

stock  speculation,  376. 

Sunday  contracts,  363. 


Illegality  of  contract  —  continued. 

to    affect    freedom    or    security    of 
marriage,  412. 

to  arbitrate,  399. 

to  commit  a  fraud,  383. 

to  exempt  from  liability  for  negli- 
gence, 385. 

to  forbear  suit  for  divorce,  414. 

to  pervert  justice,  396. 

to  procure  lobby  service,  389. 

to  stifle  criminal   proceedings,  396. 

wagers  on  rise  and  fall  of  prices, 

370. 

Immoral  consideration,  410. 
Impossibility  of  performance  by  act 
of  law,  732. 

by  death,  749. 

by    destruction    of    subject-matter, 
735. 

created     before     performance     due, 
639. 

discharge  by,  730. 

in  course  of  performance,  652. 

makes  consideration  unreal,  184. 

personal  disability,  749. 
Independent    performance,    657,    664, 
666,  667,  n.  668,  692. 

see  also  Condition. 
Injunction,  703. 
Installment  contracts,  668. 

damages  for  breach,  627. 

failure  to  deliver,  671. 

failure  to  pay,  n.  679. 
Insurance, 

contract  for  renewal,  16. 

misrepresentation  in,  309. 

wagering,  379. 
Interest, 

as  damages,  n.  698. 
Intention, 

effect  of  in  illegal  contracts,  434. 
Interpretation  of  contract,  567. 
Invitation    distinguished    from    offer, 
73. 


Jest, 

offer  and  acceptance  in,  717. 
Joint  and  several  promisors,  560. 

death  of  one,  560,  563. 

effect  of  judgment,  n.  562. 


INDEX. 


771 


Joint   and    several    promisors  —  cont. 

election  to  sue  jointly  or  severally, 

561. 

Joint  debtors,  see  Joint  promisors. 
Joint  or  several  promisees,  563. 
Joint  promisees,  558. 

death  of  one,  n.  559. 
Joint  promisors,  551. 

contribution  between,  557. 

death  of  one,  n.  554. 

effect  of  judgment,  n.  552. 

release  of,  552,  554. 
Judgment, 

as  contract,  90. 

discharge  by,  717. 

upon    joint    and    several    promise, 
n.  562. 

upon  joint  promise,  n.  552. 
Jurisdiction, 

contracts  determining,  404. 

Land, 

covenants   running  with,   532. 

oral  sale  of,  139. 
Latent  defects,  concealment,  327. 
Law, 

fraudulent  representation  of,  330. 
Legal  impossibility,  732. 
Lessee,  assignment  by,  532. 
Lessor,  assignment  by,  534. 
Letter,   offer   and  acceptance  by,  21, 

39,  42,  84. 
Liabilities, 

assignment  of,  499. 

cannot  be  imposed  on  stranger,  458. 
Limitations,   Statute  of, 

discharge  of  right  by,  726. 

revival    of    agreement    barred    by, 

n.  264,  n.  554. 

Limits  of  contract  obligation,  458. 
Liquidated   damages, 

distinguished     from    consideration, 
615. 

distinguished  from  penalty,  584. 
Lobbying  contracts, 

illegality  of,  389. 
Loss  of  written  instrument,  758. 

Maintenance, 
see  Champerty. 


Marriage, 

agreements    affecting    freedom    and 
security  of,  412. 

assignment  by,  536. 

breach  of  promise  of,  410,  411. 

oral    agreement    under    statute    of 

frauds,   135. 
Memorandum, 

under  statute  of  frauds,  107. 
Merger,  752. 
Misrepresentation, 

distinguished  from  fraud,  302. 

effects  of,  305. 

estoppel  as  remedy  for,  315. 

in  contracts  uberrimse  fides,  309. 

in  insurance  contract,  309. 

materiality,  n.  326. 

rescission  for,  305,  n.  309. 
Mistake, 

as  to  existence  of  thing,  284. 

as  to  identity  of  party,  278. 

as  to  identity  of  thing,  283. 

as   to   nature   or   existence   of   the 
contract,  271. 

as  to  subject-matter,  283. 

as  to^  value,  290,  291. 

distinguished      from      compromise, 
295. 

non-agreement  in  terms,  269. 

of  one  party  known  to  the  other, 

298. 

Motive,   distinguished  from  consider- 
ation, 171,  179. 

Negligence,  contract  exempting  from 

liability  for,  385. 
Negotiable  instrument, 

bill  of  lading  as,  526. 

payment  by,  604. 

See  also  Check,  Promissory  note. 
Negotiability,  distinguished  from  as- 
signment, 526. 

Non-agreement  in  terms,  269. 
Notice, 

of  acceptance  of  guaranty,  30,  33. 

of  assignment,  523,  525. 

to  perform,  n.  662. 
Novation,  510. 

Offer, 

accidental  compliance  with.  69. 


772 


INDEX. 


Offer  —  continued. 

by  conduct,  6. 

by  letter,  21,  39,  42,  84. 

by  telegraph,  27,  46,  84. 

continuing,  55,  58,  59,  n.  61. 

contract    springs    from    acceptance 
of,  1. 

distinguished    from    invitation    to 
treat,  73. 

knowledge  of,  9. 

lapse  by  death,  36. 

lapse  by  expiration  of  time,  42. 

lapse  by  failure  to  accept  in  man- 
ner prescribed,  39. 

lapse  of,  36. 

made  when  communicated,  9. 

may  be  revoked  before  acceptance, 
48. 

must  refer  to  creation  of  legal  re- 
lations, 77. 

of  performance,  662,  n.  663. 

of  reward,  69,  71. 

revocation  of,  48. 

under  seal  is  irrevocable,  62. 

see  also  Tender. 

One    year    clause    under    statute    of 
frauds,   141. 

Parol  evidence  rule,  568,  569,  570. 
Parol    modification    of    written    con- 
tract. 596. 
Parties, 

assignment  by  act  of,  499. 
liability  of  stranger,  458. 

see  also  Beneficiary.    Joint  prom- 
isors. 

Partition,  oral,  n.  141. 
Partnership,  to  deal  in  lands,  n.  140. 
Past   consideration   no  consideration, 

171,  254,  442, 
Payment, 

by  installment,  n.  679. 

by  negotiable  instrument,  604. 

discharge  by,  604. 

tender  of,  612. 

see  also  Accord  and  Satisfaction, 
Discharge  of  right  of  action. 
Penalty, 

see  Liquidated  damages. 
Performance, 
alternative,  614. 


Performance  —  continued. 

conditional  and  unconditional,  653. 

discharge  by,  604. 

independent,  664,  666,  n.  668. 

of  existing  contract  with  promisor 
as  consideration,  214. 

of  existing  contract  with  third  per- 
son as  consideration,  225. 

offer  or  tender  of,  662. 

substantial,  617. 

to  satisfaction,  621. 
Privity  of  contract,  458. 

see  also  Beneficiary. 
Promissory  note, 

effect  of  illegality  on,  445. 

procured  by  fraud,  271. 
Public  service, 

agreements  injurious  to,  389. 

Quasi  contract, 

for  benefits  conferred  on  breach  of 

contract,  n.  751. 
illegal  contract,  451,  n.  751. 
where    performance    excused,    742, 

743,  n.  751. 
judgment  as  contract,  90. 

see  also  Rescission. 

Readiness  and  willingness,  662. 
Reality  of  consent,  269. 
Reality  of  consideration,  179. 
Record,  contracts  of,  90. 
Release, 

by  one  joint  promisee,  n.  559. 

discharge  of  right  of  action,  707. 

of  joint  obligor,  552,  554. 

under  seal,  552,  554,  707. 
Remedies, 

for  breach,  693.   ' 

for  fraud,  346. 
Renunciation, 

before  performance  due,  627. 

in  course  of  performance,  641. 
Representations,     distinguished    from 

terms,  302. 
Rescission, 

for  fraud,  346. 

for  misrepresentation,  305,  n.  309. 

for  undue  influence,  357. 

restoration  of  consideration,  n.  347. 
see  also  Mistake. 


INDEX. 


773 


Restraint    of    trade,    agreements    in, 

415. 
Revocation  of  offer,  48. 

in  unilateral  contract,  53. 

communication  of,  64. 

reward,  n.  68. 
Revocation  of  tender,  613. 
Reward, 

offer  and  acceptance  of,  69,  71. 

revocation  of  offered,  n.  68. 
Rights, 

assignment  of,  510. 

Sale  of  goods, 

by  description,  679,  682. 

damages    for    breach    of    contract, 
504,  627,  n.  698. 

see    also     Frauds,     Statute     of, 
seventeenth  section. 
Satisfaction,  performance  to,  621. 

see   also    Accord    and   Satisfaction. 
Seal, 

beneficiary's     action     on     contract 
under,  n.  498. 

contract  under,  95. 

delivery  of  instrument  under,   103. 

effect  of,  97. 

offer  under  is  irrevocable,  62. 

parol  variation  of  contract  under, 
n.  595. 

relation  to  consideration,  97. 

release  under,  552,  554,  707. 

what  constitutes,  95. 

see  also  Release. 
Securities, 

effect  of  illegality  on,  442. 
Services, 

contract    for    goods    distinguished 
from,  160. 

damages,  693,  n.  698,  723,  724. 
Silence, 

as  acceptance,  16,  20. 
Specific  performance,  697. 
Statute, 

assignment  by,  518. 

contracts  in  breach  of,  361. 
Statute  of  frauds, 

see  Frauds,  Statute  of. 
Statute  of  limitations, 

see  Limitations,  Statutes  of. 


Stock  speculation,  illegality  of,  376. 
Subscriptions,  consideration  for,  246. 
Subject-matter,  mistake  as  to,  283. 
Substantial  performance,  617. 
Substituted  contract, 

discharge  of  contract  by,  592. 

distinguish  from  accord  and  satis- 
faction, n.  717. 
Sunday  contracts, 

illegality  of,  363. 

Telegraph,   offer   and   acceptance   by, 

25,  46,  84. 
Tender, 

of  payment,  612. 
of  performance,  662,  n.  663. 
revocation  of,  613. 
Terms, 

distinguished  from  representations, 

302. 

evidence  as  to,  570. 
Tickets,  notice  of  limitations  in,  11, 

14,  15. 
Timber,   statute   of   frauds   and  sate 

of,  157. 
Time, 

as  essence,  580,  672. 

offer  lapses  by,  42. 

period  of  employment,  583. 

Uncertainty,  consideration  unreal  by, 

188. 
Unilateral  contract, 

distinguish  from  bilateral,  3,  59. 

revocation  of  offer  in,  53. 
Undue  influence,  357. 
Usage, 

see  Custom. 

Value, 

mistake  as  to,  290,  291. 
Vital  term, 

see  Condition. 

Wagers,  204,  368. 

in  insurance,  379. 

on  rise  and  fall  of  prices,  370. 
Waiver, 

discharge  of  contract  by,  588. 


774 


INDEX. 


Warranty, 

as  non-vital  term,  689. 
damages  for  breach  of,  689,  n.  697. 
express,  689,  690. 

see  also  Condition. 
Written  contract, 

whether  contemplated,  84. 
see    also    Frauds,    Statute    of, 


Written  contract  —  continued. 

Parol  evidence  rule. 
Written  instrument, 

alteration  of,  753,  757,  664. 
loss  of,  758. 

parol  substitution  of  terms,  596. 
proof  of,  567. 
see  also  Parol  evidence  rule. 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 

Los  Angeles 
This  book  is  DUE  on  the  last  date  stamped  below. 


DEC    81978 


1978 


PSD  1916     8/77 


LOS  ANGELES 


-0 


DC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 


A     000  774  282     8 


